VW launches $5.8bn partnership with Tesla rival Rivian
Volkswagen Group (VW) has formed a joint venture with Tesla rival Rivian, as the German auto giant steps up investment in the partnership.
The companies said the deal is now worth $5.8bn (£4.55bn), higher than previously expected. Volkswagen initially committed $5 billion.
Shares of the U.S. electric vehicle (EV) maker rose more than 9% in after-hours trading following the news.
The tie-up will see the two companies share key technology at a time when global demand for electric vehicles is slowing and competition from Chinese rivals is increasing.
The joint venture provides a vital source of capital for loss-making Rivian as it prepares to launch next year the R2, a smaller and cheaper sport utility vehicle (SUV) than its current offering.
This also means that Volkswagen will be able to use Rivian’s technology in its own models.
The first Volkswagen models equipped with Rivian technology are expected to be available to customers as early as 2027.
“By combining complementary expertise, the companies plan to reduce development costs and market new technologies faster,” the companies said in a statement.
Under the plan, developers and software engineers from both companies will initially work side by side in California, while three additional facilities will be established in North America and Europe.
Expectations are growing that Volkswagen, Europe’s largest carmaker, plans to announce major cost-cutting measures.
The group, which also includes brands such as Audi, Lamborghini and Porsche, has been grappling with rising costs, weak sales, competition from Chinese electric carmakers and a slower-than-expected move away from gasoline and diesel cars.
Separately, Rivian has taken steps to cut costs amid weak demand for electric vehicles.
The pre-profit startup has been renegotiating contracts with suppliers and making its manufacturing processes more efficient.
In addition to SUVs, Rivian also makes electric vans, mainly for its largest shareholder, the online retail giant Amazon.
Amazon has ordered 100,000 of these vehicles, which are expected to be delivered by the end of the decade.
