Volkswagen’s $5bn Investment Gives Rivian Stock A Leg Up

Analysts reportedly regard this financing as an attempt to catch up with industry developments and predicted that it may be years before Volkswagen reaps the benefits. According to CNBC, the head of thematic intelligence at GlobalData, Cyrus Mewawalla, said:

Volkswagen has fallen behind in two areas, on electric vehicles themselves, but also on autonomous driving and other software within the car. And Rivian is strong on both.

The company intends to collaborate with Rivian on the creation of next-generation auto-based software that will feature in the products of both firms. This joint venture will use Rivian’s zonal hardware design as a basis and the EV maker will register its IP rights.

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According to a Yahoo Finance report, Volkswagen will bankroll an initial $1bn as an “unsecured convertible note that will convert into Rivian’s common stock”. It will also invest an additional sum of up to $4bn by 2026.

This news sparked a rise in Rivian stock, which was up 25% during early morning trading on Wednesday 26 June 2024. Oliver Blume, the Volkswagen Group CEO, stated:

The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.

Rivian’s CEO, RJ Scaringe, echoed this, saying:

Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.