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Volkswagen seals deal with Rivian, increases investments in the JV by $800 million
- Volkswagen and Rivian have launched their joint venture which was announced 12 weeks ago.
- Volkswagen has increased its planned investments in the JV by $800 million to $5.8 billion since more cars will get the new software than originally planned i.e the architecture will now be used in all relevant vehicle segments.
- Volkswagen has already made an investment of $1 billion in the form of convertible note.
- At closing of the JV, Volkswagen will invest around $1.3 billion euros as background for IP licenses and 50% equity stake in the JV.
- The other $3.5 billion investment will come at future dates based on defined milestones and will be in the form of f equity, a convertible note, and debt.
- The first models based on the JV architecture will roll off the production lines in early 2027.
- Volkswagen said they already successfully deployed Rivian’s architecture and software in a drivable demonstrator vehicle.
Assessment
Originally, Volkswagen planned to use the architecture in only large cars. As such, its decision to now use it in all relevant vehicle segments including subcompact cars shifts the strategy further away from the loss-making Cariad. According to Manager Magazin, by investing in Rivian, Oliver Blume is initiating the liquidation of Cariad. This could be true given the declining relevance of Cariad.