Irvine-based Rivian Automotive got a big financial boost Tuesday, when Volkswagen agreed to invest up to $5 billion in a joint venture with the struggling electric truck maker.
Under a partnership announced by the companies, the German automaker will contribute $1 billion initially and up to $4 billion more over time.
The infusion will give VW the ability to leverage the company's technology to develop “next-generation” battery-powered vehicles and software.
The surprise investment comes at a difficult time for the electric vehicle market, which has posed economic headwinds for Rivian and other electric vehicle makers.
With their sleek design, Rivian trucks and sport utility vehicles initially attracted a lot of interest among investors, fueling a blockbuster initial public offering in 2021; the company ended its first day of operations valued at almost $88 billion. Amazon.com is Rivian's largest shareholder.
But analysts said some car buyers were put off by the high price of Rivian's latest vehicle offering: The company's R1T electric pickup truck starts at nearly $70,000, while its R1S SUV starts at nearly $75,000. Dollars.
Rivian reported a net loss of $1.52 billion for the three-month period ending Dec. 31, compared with $1.72 billion during the same period a year earlier.
Signs of stress increased. In March, Rivian postponed plans to build a new $5 billion manufacturing plant in Georgia to save money amid huge losses.
A month earlier, Rivian announced a 10% cut in its workforce and lower production expectations.
Last week, another local electric vehicle maker, Fisker Group Inc. of Manhattan Beach, filed for Chapter 11 bankruptcy protection after failing to secure financing from undisclosed automakers.
Earlier this year, Apple canceled its autonomous electric vehicle program, reportedly after spending $10 billion over a decade.
And Lucid Motors, a maker of luxury electric vehicles in the Bay Area city of Newark, received a $1 billion injection last month from an affiliate of the Saudi sovereign wealth fund, the kind of big backing that Fisker I did not have.
Rivian shares, which took a hit earlier this year, rose 30% in extended trading on Tuesday. Shares closed at $11.96.
Tesla Inc., the largest player in the business, has also been hit by weak sales and declining profits. The company said in April that it would lay off more than 10% of its workforce.
Bloomberg News contributed to this report.
