Rivian-Volkswagen joint venture deal could reach $5.8 billion

Volkswagen Group has decided to increase its planned investment in an announced joint venture with electric vehicle maker Rivian Automotive ahead of the operations launching Wednesday, according to a detailed report by CNBC.

The companies in a joint press release on November 12, said the size of the deal is now up to $5.8 billion, an increase from an initial investment of up to $5 billion, with the first VW models to use Rivian’s software and electrical architecture arriving as early as 2027, the CNBC report detailed further.

Shares of Rivian rallied by more than 6 per cent during after-hours trading. The increase in investment was a consequence of the companies pulling ahead some potential future capital from VW, as well as changes in the deal’s structure, including in equity investment, officials said Tuesday during an investor call.

CEO of Volkswagen Oliver Blume during a press meeting, on November 12 stated that the German automaker expects to use Rivian’s technologies across a wide range of price points, international markets and brands.

The integration of Rivian’s software is expected to start with the Volkswagen brand, followed by Audi as well as VW’s upcoming Scout brand, Blume stated. He also mentioned that “sports cars” could be included but did not specify any particular brand. VW’s brands also include Bentley, Porsche and Lamborghini, among others.

“We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future,” Rivian CEO RJ Scaringe said in a statement.

Further, both Scaringe and Blume said any other plans such as battery modules, joint production of vehicles or sharing other hardware components would need to be in addition to the announced joint venture deal. The name of the joint venture, which was expected to close during the fourth quarter, is Rivian and VW Group Technology, the CNBC report explained further.

Volkswagen has already made an initial investment of $1 billion

Volkswagen has already made an initial investment of $1 billion in the form of a convertible note, the companies said. At the closing of the joint venture, VW will invest about $1.3 billion “as consideration for background intellectual property licenses and a 50 per cent equity stake in the joint venture.”

The remaining investment of up to $3.5 billion is expected to come by 2027 “in the form of equity, convertible notes, and debt at future dates and based on clearly defined milestones,” according to the companies. The joint venture deal was initially announced in June and came as Rivian sought to raise additional capital as it launched its redesigned models and moved ahead with the production of new “R2” vehicles in early 2026, the CNBC report detailed further.

Scaringe earlier stated that the capital from Volkswagen is expected to carry the company through the production ramp-up of its smaller R2 SUVs at its plant in Normal, Illinois, starting in 2026, as well as production of a midsize EV platform at a plant in Georgia, where Rivian paused construction earlier this year. The joint venture will be headed by Rivian Chief Software Officer Wassym Bensaid and VW Group Chief Technical Engineer Carsten Helbing.

The companies said developers and software engineers from both companies will join the joint venture. Teams will be based initially in Palo Alto, California, and three other sites are in development in North America and Europe. Market participants and investors will carefully follow these developments as this will help them make better and more informed investment decisions.