Michelle ThompsonVolkswagen Group (VW) and Tesla competitor Rivian have formed a joint venture, with VW increasing its investment in the partnership. The deal, now valued at $5.8 billion (£4.55 billion), surpasses the initial commitment of $5 billion.
Following the announcement, Rivian’s shares rose by over 9% in after-hours trading. The collaboration will allow both companies to share key technologies amid declining global demand for electric vehicles (EVs) and growing competition from Chinese manufacturers. The joint venture offers Rivian vital funding as it prepares to launch its R2 SUV model, a smaller and more affordable alternative to its current lineup.
For VW, the partnership provides access to Rivian’s technology for integration into its own vehicles, with the first models featuring Rivian’s technology expected by 2027.
The two companies aim to cut development costs and accelerate the scaling of new technologies by combining their expertise. Initially, their engineers and software developers will collaborate in California, with plans to establish three additional facilities in North America and Europe.
This partnership comes as VW is expected to announce significant cost-cutting measures, given the challenges it faces with rising costs, declining sales, increased competition from Chinese EV makers, and a slower-than-anticipated shift away from traditional petrol and diesel vehicles.
Meanwhile, Rivian is also focusing on cost reductions in response to weaker EV demand, renegotiating supplier contracts, and streamlining its manufacturing processes as it continues to seek profitability.
