Volkswagen Teams Up With Rivian, Will Develop Next-Gen Electrical Architectures and Software

Volkswagen Group and Rivian are teaming up through a new joint venture which sees each party holding equal ownership (50-50), and the aim of which is to develop next-generation electrical architectures and software technology.

Volkswagen Group plans to invest US$1 billion in Rivian through an unsecured convertible note, which will convert to Rivian common stock upon regulatory approval.  The company is expected to invest up to US$5 billion in total as part of this agreement, and both companies will use the partnership to develop their respective vehicles.

Rivian CEO RJ Scaringe further detailed that the joint venture will have a 50-50 ownership structure with two co-CEOs reporting to both companies. 

This joint venture will leverage Rivian's zonal hardware design and integrated software platform, which is essential for future software-defined vehicle development.  Rivian's approach centralises control functions into zones, significantly reducing the need for semiconductor chips throughout the vehicle.

Volkswagen Group CEO Oliver Blume highlighted that Rivian's software will be accessible to all VW Group brands, including Scout Motors. This joint venture aligns with Volkswagen’s comprehensive software strategy, complementing existing collaborations like Cariad and Xpeng in China. 

Blume also emphasised that this partnership will expedite the rollout of software-defined vehicles, addressing previous delays and struggles faced by Volkswagen's Cariad software unit. 

VW Group CEO Oliver Blume (left) with Rivian CEO RJ Scaringe (right).

The partnership will support the launch of Rivian’s two-row R2 crossover at its Illinois plant, as well as the R3 and R3x crossovers at its upcoming Georgia plant, aiding Rivian’s path to positive free cash flow. Despite the joint venture, VW Group and Rivian will maintain separate vehicle operations.

Rivian’s Scaringe further notes that this partnership not only expands the reach of Rivian's software and zonal architecture through Volkswagen's global presence but also secures the capital necessary for substantial growth. 

Rivian will license its existing intellectual property to the joint venture, with the R2 being the first vehicle to utilise the joint software. Subsequent VW Group vehicles, including Audi, Porsche, Lamborghini, and Bentley models, will follow.

Vitaly Golomb, managing partner at Mavka Capital, an investor in Rivian, remarked that this partnership and cash infusion bolster Rivian's prospects for expansion into Europe and Asia. Despite significant losses per vehicle, Rivian has maintained steadier progress compared to other EV startups, avoiding the need to slash prices or declare bankruptcy. 

Rivian has been cutting costs, renegotiating supplier contracts, and producing some parts in-house to stay afloat. Rivian’s cash and short-term investments decreased by about US$1.5 billion in the first quarter (Q1), leaving it with just under $8 billion. 

Before this recent VW deal, Rivian asserted it had sufficient capital to launch the R2. However, this new partnership extends Rivian’s financial runway, aiding the R2's launch.

Volkswagen remains committed to launching 25 EV models in North America by 2030, despite acknowledging slowed growth in the segment. 

Golomb further pointed out that VW is not a major player in the large SUV and pickup segments in the North American market, and the partnership with Rivian creates new opportunities, especially given VW's challenges with its ID4 electric crossover and Cariad software unit.

Rivian has previously explored partnerships with established automakers, such as an abandoned 2021 plan with Ford and a now shelved 2022 deal with Mercedes-Benz to build electric vans. KR

Source: Automotive News Europe