Workers assemble second-generation R1 vehicles at electric car maker Rivian's manufacturing facility in Normal, Illinois, on June 21, 2024.
Joel Ángel Juárez | Reuters
volkswagen plans to invest up to $5 billion in electric vehicle startups rivianstarting with an initial investment of $1 billion.
An additional $4 billion is expected by 2026. It includes plans for $1 billion each in 2025 and 2026, followed by $2 billion in 2026 related to an expected joint venture to create electrical architecture and software technology, according to a statement from the automakers on Tuesday.
Rivian shares soared about 40% in after-hours trading Tuesday, two days before an investor event for Rivian, which has been under pressure from Wall Street over its cash burn and significant losses. Rivian stock closed Tuesday at $11.96 per share, down about 49% in 2024.
Volkswagen's initial $1 billion will be in the form of a convertible note, which could be converted into Rivian shares as early as Dec. 1, according to the statement.
Rivian will host an investor call to discuss the partnership on Tuesday at 6 pm ET.
Volkswagen is now the second legacy automaker to take a stake in the California-based company. Ford engine was among Rivian's largest stakeholders, with approximately 12%, along with Amazon when Rivian went public in 2021. The Detroit automaker exited Rivian in 2023 after backtracking on a plan to co-develop electric vehicles with the company.
Provided image of Oliver Blume, CEO of the Volkswagen Group and RJ Scaringe, founder and CEO of Rivian, as the companies announce joint venture plans on June 25, 2024.
Courtesy: Business Wire
The Volkswagen-Rivian partnership comes as automakers shift strategies amid slower-than-expected adoption of electric vehicles. It was not immediately clear what effect, if any, the deal will have on Volkswagen's plans to build a $2 billion electric vehicle plant for its new Scout Motors pickup trucks and SUVs in South Carolina.
Rivian has been on a cost-cutting mission for months. He cut staff, retooled his Illinois plant to increase efficiency and halted construction of a new multimillion-dollar factory in Georgia. That latest move is expected to save more than $2.25 billion in capital expenditures, including the impact of starting production of Rivian's next-generation R2 vehicle at its Illinois plant.
The electric vehicle maker reported a loss of $1.45 billion for the first quarter of this year as it reorganized its plant in Normal, Illinois, to release updated versions of its R1T pickup truck and R1S SUV electric vehicles ahead of its upcoming vehicles. generation in 2026.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments through the end of March, with more than $9 billion in total liquidity.
This is a developing story. Please check back for additional updates.
