VW and Rivian have simply introduced that the 2 firms will type a three way partnership, bringing Rivian’s software program experience to VW’s merchandise and offering an preliminary $1 billion, and probably as much as an eventual $5 billion, in capital for Rivian to get by its push to ship its upcoming R2 car.
Rivian is at the moment working arduous to get prices down in its quest for profitability. Whereas the corporate has massive money reserves, it’s working by them at comparatively fast charge. The financials get slightly bit higher every quarter, however there may be nonetheless a whole lot of work to be finished.
Just lately, Rivian introduced that it might delay constructing its plant in Georgia with the intention to save over $2 billion within the quick time period, serving to scale back stress on its near-term financials.
Now, right now, the corporate has had one other stress valve launched, as VW and Rivian have introduced they may type a three way partnership to carry Rivian’s software program to VW’s EVs, with VW providing an preliminary $1 billion in capital and probably as much as $5 billion by 2026.
“Our prospects profit from the focused partnership with Rivian to create a number one expertise structure. By means of our cooperation, we’ll carry the perfect options to our autos quicker and at decrease value. We’re additionally performing in the perfect curiosity of our sturdy manufacturers, which is able to encourage with their iconic merchandise. The partnership matches seamlessly with our current software program technique, our merchandise, and partnerships. We’re strengthening our expertise profile and our competitiveness.”
Oliver Blume, CEO of Volkswagen Group
The partnership is effective for VW as properly, as software program has been its largest subject not too long ago. VW’s earlier CEO, Herbert Diess, stepped down in 2022, and it’s thought that software program points have been the principle purpose for his departure. In 2023, VW employed a former Rivian exec to assist with software program. It will need to have appreciated what it obtained, as the businesses are deepening their relationship now.
The partnership begins with VW providing a $1 billion convertible notice to Rivian, which is able to convert into an fairness holding across the finish of this yr.
As well as, the 2 firms will set up a 50/50 three way partnership round “subsequent technology electrical/digital structure.” This can give VW instant entry to Rivian’s electronics structure, which has been seen as one of many main strengths of the corporate.
“We’re very excited to be partnering with Volkswagen Group. Because the earliest days of Rivian, we have now been centered on growing extremely differentiated expertise, and it’s thrilling that one of many world’s largest and most revered automotive firms has acknowledged this. Not solely is that this partnership anticipated to carry our software program and related zonal structure to a fair broader market by Volkswagen Group’s international attain, however this partnership additionally is predicted to assist safe our capital wants for substantial progress. Rivian was created to assist the world to transition away from fossil fuels by compelling services, and this partnership is fantastically aligned with that mission.”
RJ Scaringe, Founder and CEO of Rivian
After the institution of this three way partnership, VW says it can make investments a further $4 billion into Rivian, in $1 billion tranches in 2025 and 2026, contingent on Rivian assembly “sure milestones.”
After the announcement, RIVN inventory is buying and selling up greater than 40% in after hours buying and selling. It had already risen 8% throughout right now’s buying and selling session after an analyst improve. Rivian will maintain an investor name at 3pm Pacific, 6pm japanese right here, and you may learn its investor letter right here.
Electrek’s Take
That is nice information for Rivian, and nice information for VW as properly.
Nonetheless, Rivian has had quite a lot of previous partnerships that didn’t end up.
Rivian had beforehand partnered with Ford to construct Ford/Lincoln EVs and in addition with Mercedes to construct electrical vans. Each of these fell by, with the Mercedes deal together with a three way partnership and the Ford deal together with a giant funding which Ford later trimmed.
Rivian has additionally partnered with Amazon to ship 100,000 supply vans. That partnership goes properly with over 10,000 autos delivered, however the exclusivity portion of the contract not too long ago ran out, and now Rivian is in search of extra purchasers.
On this case, although, I can see a direct purpose for Voltswagen to want Rivian’s assist. Whereas their software program is rather a lot higher now than it was, software program has been the achilles heel of conventional auto firms on the whole, and VW particularly. And with VW’s yearly income ($335 billion in 2023), they’ll spare slightly change to repair considered one of their main issues.
One different attention-grabbing notice: VW not too long ago spun off its basic Scout model right into a Rivian-like journey EV. That was seen as an try to compete in a market that Rivian is at the moment the perfect providing in. We marvel if this partnership will embody utilizing Rivian’s experience for the Scout? Keep tuned.
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