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Volkswagen AG will invest $5 billion to form a joint venture with electric vehicle maker Rivian Automotive Inc., throwing a lifeline to the struggling startup and giving the German automaker access to the American EV company’s technology.
VW said in a release that it will invest $1 billion immediately in Rivian and an additional $4 billion over time. The companies said the new venture will be “equally controlled and owned.” The companies said they will develop “next generation” battery-powered vehicles with leading edge software.
Rivian’s shares jumped in aftermarket trading, gaining as much as 37%. Through Tuesday’s close, Rivian’s stock had fallen 49% on the year.
“Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” Oliver Blume, VW’s CEO, said in a statement. “We are strengthening our technology profile and our competitiveness.”
The pact provides Rivian with a much-needed source of fresh capital after the company struggled to ramp up production and deliveries of its electric pickup and SUV models.
For VW, the German automotive giant gets access to the EV startup’s software and EV architecture after years struggling to roll out plug-in vehicles with efficiency and functionality on par with those from Tesla Inc.
Both companies plan to introduce vehicles featuring technology created by the joint venture in the second half of this decade, according to the companies’ joint statement.
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