Volkswagen to invest $4b in Rivian

According to the International Energy Agency (IEA), current sales of electric vehicles (EVs) totalled to being nearly one in five cars sold in 2023. 14 million EVs were registered that year, bringing the number of EVs on the road to 40 million. 

However, in spite of this registered growth, the IEA said sales of electric vehicles are confined to a few major markets, majorly China at under 60% of registrations; 25% in Europe and 10% in the US. And in 2024, growth of EV sales has dwindled significantly, as part of the boom was attributed to the pandemic. 

As part of the agreement both companies will share technology, including Rivian’s zonal hardware design and integrated technology platform, which it said in the announcement would serve as the “foundation” for future software-defined vehicle (SDV) development which will be applied to both companies’ cars.

It also said that vehicles using this technology are expected to be launched in the later half of the 2020s, and that “significant work” has been done to ensure Rivian’s electrical architecture and software are compatible with VW’s vehicles. 

As reported by the BBC, since its founding in 2009, Rivian has yet to post a quarterly profit and in the first three months of 2024 it experienced a net loss of $1.4 billion. After the announcement, Rivian’s shares jumped significantly.

“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” said Oliver Blume, CEO of Volkswagen Group in the announcement. “We are also acting in the best interest of our strong brands, which will inspire with their iconic products. The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness."

RJ Scaringe, Founder and CEO of Rivian added: “We’re very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this. 

“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. Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission.”