Volkswagen invests up to $5 billion in Rivian joint venture | DW News
Short Summary:
Volkswagen is investing up to $5 billion in a 50/50 joint venture with Rivian to develop automotive software. Both companies are facing challenges in the EV market: Rivian is experiencing significant losses per vehicle and low stock prices, while Volkswagen has encountered delays and cost overruns in its own software development (CARAD). This partnership aims to leverage Rivian's software expertise and Volkswagen's scale and resources to accelerate software development, reduce costs, and improve the competitiveness of their electric vehicles in the US market. The joint venture will share electric vehicle hardware and software. The deal involves an initial $1 billion investment from VW, with the remainder contingent on Rivian's performance.
Detailed Summary:
Section 1: The Deal
Volkswagen is investing up to $5 billion in a joint venture with Rivian, a US electric vehicle startup. The initial investment is $1 billion, with the remaining amount dependent on Rivian's progress. This creates a 50/50 partnership focused on sharing electric vehicle hardware and software. The primary motivation is the lagging sales and technical challenges faced by both companies in the EV market. Electric vehicle sales are not meeting expectations, and technical issues are proving more difficult to resolve than anticipated.
Section 2: Rivian's Perspective
Rivian is currently losing approximately $440,000 on each EV delivered, and its stock price has been significantly impacted. The Volkswagen investment provides much-needed financial stability. Rivian aims to use this funding to develop and launch new SUV models and reduce production costs by leveraging Volkswagen's scale and resources. Rivian CEO RJ Scaringe highlights the benefits of partnering with a larger company like Volkswagen to gain access to its scale and reach.
Section 3: Volkswagen's Perspective
Volkswagen has struggled with its own in-house automotive software, CARAD, experiencing delays and unexpected costs. The partnership with Rivian offers a chance to overcome these software challenges by incorporating Rivian's expertise. Furthermore, Volkswagen aims to improve its lagging EV sales performance in the US market through this collaboration. The deal is framed as a synergistic partnership, allowing both companies to address their respective weaknesses. The reporter notes that despite its size and experience, Volkswagen has struggled with its EV software.
Section 4: Overall Implications
The joint venture represents a strategic move by both companies to address the challenges and opportunities within the competitive electric vehicle market. It combines Rivian's innovative software capabilities with Volkswagen's established manufacturing and distribution network, aiming for a more efficient and cost-effective approach to EV development and production. The success of the venture hinges on overcoming both companies' existing challenges and effectively integrating their resources and expertise.