Rivian and Volkswagen recently announced a strategic partnership, as both companies prepare to launch their respective electric off-road vehicles: Rivian’s R1T pickup truck and VW’s Scout concept, which share a common goal of bringing adventurous driving experiences to the market. During a roundtable discussion with Rivian’s CEO, RJ Scaringe, he emphasized that there is ample space for competing electric vehicle manufacturers to coexist and thrive in the market.
Rivian’s software program partnership with Volkswagen has generated considerable interest, particularly given the German automaker’s substantial $5 billion investment and their agreement to collaborate on Rivian’s zonal architecture for the underpinnings of VW’s car communications. This development raises several intriguing questions about how the fine print of the partnership will unfold.
On the forefront of many minds is this question: doesn’t it seem peculiar that the Rivian-like Scout model will now primarily compete with itself in the journey EV market, given its similarities to its own earlier iteration?
The question surrounding this topic was previously addressed, or more specifically, not explicitly addressed, during press conferences that took place at the official launch event of the three-way partnership last week.
Typically, feedback has accompanied Rivian’s efforts to bring its software expertise to life through Volkswagen’s manufacturing facilities, despite the two companies being reticent about confirming whether Scout will utilize Rivian’s software solutions in particular. Regardless, the Volkswagen (VW) subsidiary Scout seems to display an interest in showcasing its autonomy upon entering the market, which might imply that they will develop their own products independently.
At a recent roundtable discussion held prior to the LA Auto Show, it was clear that Rivian is actively working on its Scout electric vehicles. Scaringe stated that the company will support the entire portfolios of Porsche, Audi, Volkswagen and Scout’s respective manufacturers.
Scaringe expressed amusement at the widespread fixation on Scout, viewing it as a potential threat to Rivian’s dominance, rather than focusing on the brand’s broader vision and growth prospects.
According to Scaringe, fewer than five electric vehicles (EVs) that truly impress can be found priced under $50,000 in today’s market – and this estimate might even be overly generous. While exploring alternative energy options, numerous choices abound in the gas market, catering to diverse consumer needs, yet seamlessly integrating with our core focus.
While Rivian has worked tirelessly to carve out its own niche, as exemplified in its distinction from Tesla, the company believes that Scout’s success will not necessarily crowd out similar vehicles, allowing them to peacefully coexist.
Despite the abundance of auto models across various categories, many of them still share common underlying platforms with other manufacturers. Within the electric vehicle (EV) market, the Kia EV6 and Hyundai Ioniq 5 share a common platform, while the Subaru Solterra and Toyota bZ4X demonstrate striking similarities as fellow compact crossovers. Corporations have a long history of collaborating on joint projects to develop similar or identical vehicles, often rebadging them for their respective markets.
While similarities between Scout and Rivian may exist, fundamentally distinct differences lie in their platforms and manufacturing approaches. While collaborating on software shouldn’t be a significant hurdle, it’s reasonable to assume that Scout may potentially erode a portion of the market that Rivian would otherwise dominate. Nevertheless, Rivian can still benefit from the partnership in other ways.
Rivian’s primary objective in recent times has been to reduce its pricing structure. Rivian embarked upon manufacturing expansion during a precarious period – attempting to secure supply chain agreements at the auto industry’s historic peak in 2018, only to face the daunting task of launching a production program during the global pandemic’s turbulent early years (2020-2021).
Scaringe noted that the current situation is ideal: Rivian can claim dominance in its segment, surpassing rival electric and gas-powered brands, while also boasting support from global automotive leaders like Volkswagen. If Volkswagen, the world’s second-largest automaker, has sufficient faith in Rivian to invest $5.8 billion, it’s reasonable to assume that Rivian will remain a viable entity for long enough to warrant purchasing multiple sets of components.
While some corporations might potentially capitalize on their diversified presence to secure larger supply deals, A joint venture between Rivian and Volkswagen could indeed drive significant economies of scale in their quest to develop advanced microcontrollers for automotive applications.
Rumors surrounding Rivian’s potential utilization of Volkswagen’s global sales network to market their vehicles were swiftly dismissed by Scaringe, who categorically stated “there is no interest” in pursuing such a collaboration. Rivian is poised to stick to its blueprint by opening dedicated stores and implementing direct-to-consumer sales strategies.
