Volkswagen Group mentioned Tuesday it’s going to make investments $1 billion into EV startup Rivian as a part of a broad software program improvement deal that might increase to as a lot as $5 billion.
It’s a boon for Rivian, which has a tenuous path forward because it pushes to develop its mass-market R2 SUV. The startup’s shares shot up greater than 36% in after-hours buying and selling.
But it surely additionally provides Volkswagen an alternative choice for advancing its personal software program chops — one thing it has struggled mightily with throughout this mass transition to electrical autos.
Underneath the deal, Volkswagen will use Rivian’s current electrical structure and software program platform. All Volkswagen Group subsidiaries are included on this deal, which might deliver Rivian DNA into storied manufacturers like Porsche and Audi and even the conglomerate’s personal EV upstart, Scout Motors.
The 2 corporations are additionally making a three way partnership to develop and develop the know-how. It will likely be a 50-50 partnership with co-CEOs, who will report into each Rivian and Volkswagen Group.
It’s doable that the three way partnership will promote its tech to different corporations down the street, too. “However now we have rather a lot to do within the short-term,” Rivian founder and CEO RJ Scaringe mentioned on a convention name. “We’ve numerous merchandise to work on, and so we’re completely eyes-on-the-prize targeted on the merchandise inside Rivian’s portfolio, inside Volkswagen Group’s portfolio, and I’d say [we] couldn’t be extra enthusiastic about what’s to come back.”
Initially, Volkswagen will make investments $1 billion into Rivian through an unsecured convertible be aware that may convert into Rivian’s frequent inventory as soon as sure regulatory approvals are obtained. That’s anticipated to occur within the fourth quarter of this 12 months. The German auto large will then purchase one other $1 billion of Rivian’s frequent inventory in every of 2025 and 2026. The remaining $2 billion will go to the three way partnership, break up between an preliminary funding and a mortgage in 2026.
Scaringe wouldn’t say precisely when the 2 corporations started hashing out the thought of collaborating. However he mentioned the dialog began when he met with Volkswagen Group CEO Oliver Blume at Porsche’s Expertise Middle.
“I grew up an enormous Porsche fanatic. I restored basic 356s, and I’ve owned all kinds of attention-grabbing merchandise from the Porsche/Volkswagen household, so there was instant realization that now we have some shared automobile pursuits,” he mentioned. “However rapidly that led to a critical dialog to say, how can we take a look at working collectively?”
Blume echoed that sentiment on the decision. “From the primary second on, there was an excellent feeling between us, the identical mindset, identical pursuits. And our enterprise is a individuals enterprise, and if you perceive one another, then you may be profitable,” he mentioned, including that Rivian is “very agile with expertise on fashionable software program.”
The information comes simply weeks after Rivian began producing the next-generation of its R1T pickup truck and R1S SUV, an improve that reworked the heart of its autos, altering every little thing from the battery pack and suspension system to {the electrical} structure, inside seats and sensor stack. Rivian’s new electrical structure and compute platform lowered the variety of digital management items (ECUs) used to manage the automobile from 17 completely different ECUs in its first technology to seven. This new zonal structure permits Rivian to chop greater than 1.6 miles of wiring from every automobile — a 44-pound weight financial savings — and to construct its autos quicker.
That new electrical structure — or what Scaringe describes as new automobile topography — is seen internally as a key innovation at Rivian. That new zonal structure helps Rivian’s software program stack, which was additionally developed and deployed in-house. That software program stack consists of every little thing associated to real-time working techniques (RTOS) that handle the automotive, resembling thermal dynamics, ADAS and security techniques, in addition to one other layer associated to the infotainment system.
This story is growing …
