Rivian is expected to alleviate concerns over its sluggish performance and issues with securing the necessary funds for its next model as it aims to enter a joint venture agreement with the German auto giant for next-generation electric vehicles.
Volkswagen Group announced Tuesday that it is establishing a joint venture with Rivian for next-generation electric vehicles. The collaboration will see Rivian’s industry-leading software built on Volkswagen’s electric vehicles to create the next-generation software-defined vehicle (SDV). Underpinned by the vision of the strategic partnership, Volkswagen plans to secure a stake in Rivian by investing the initial $1 billion, with plans to increase the investment to $5 billion by 2026.
“Through this collaboration, Rivian will enhance its EV competitiveness through its core software expertise, and Volkswagen will utilize its brand recognition and mass production capabilities to boost sales,” said Lee Ji-soo, a Korea Investment & Securities researcher.
Earlier, due to financial issues, Rivian had planned to kick off the initial production of its new model R2 at a new factory in Georgia. However, following the JV agreement, it switched to expanding the production capacity of its existing Normal factory as it has now secured substantial funds through this collaboration.
Volkswagen pursued joint electric vehicle development through equity investment with
Xpeng in July 2023. The collaboration bore fruit as Xpeng’s first quarterly performance improved significantly, with service and sales soaring by 93% year-on-year, as the related R&D service revenue was reflected.
“We look forward to improved performance through Rivian’s collaboration with Volkswagen. With the funding issues resolved, we expect to see positive impacts on our stock,” said Lee from Korea Investment & Securities.
The R2’s production, set to roll out in 2026, is expected to progress smoothly according to the schedule. Following the R1 upgrade carried out in April, production speed and efficiency improvements are seen as positive.
“As Rivian is preparing to launch more affordable models like R2 and R3X compared to R1, additional cost efficiency is crucial,” Lee said, excited about the business synergy between Rivian and Volkswagen.
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