Rivian’s share price shot up by 50% in extended trading on Tuesday after Volkswagen, the German carmaker, announced a $5 billion investment in the electric vehicle (EV) startup. This investment is part of a new joint venture where both companies will equally share control, focusing on EV architecture and software.
Market Reaction
Rivian’s shares rose 8.6% on Tuesday and then jumped 49.9% to $17.93 in after-hours trading, boosting the company’s market value by nearly $6 billion. Despite this, the stock is still down over 43% for the year.
Joint Venture Details
Rivian will license its existing technology to the joint venture. The first vehicle to use the joint venture’s software will be Rivian’s R2. Volkswagen’s brands, including Audi, Porsche, Lamborghini, and Bentley, will also use this software later.
Investment Breakdown
Volkswagen will initially invest $1 billion in Rivian through a note that converts to stock on December 1, pending regulatory approval. The company will also pay $1 billion when the joint venture begins, according to Reuters.
Additionally, Volkswagen will invest $2 billion in Rivian stock, with $1 billion each in 2025 and 2026, provided Rivian meets certain goals. Volkswagen will also give Rivian a $1 billion loan in 2026.
CEO’s Statement
Rivian CEO RJ Scaringe said on social media that the partnership will expand Rivian’s software and electronics platform to a wider market through Volkswagen’s global reach. He added that the $5 billion investment will help Rivian develop its next-generation vehicles, like the R2 SUVs set to launch in early 2026 and the planned R3 crossovers.
Financial Impact
Rivian reported a loss of $1.45 billion in its latest quarter. The joint venture is expected to help the EV maker become cash-flow positive.
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