Rivian Automotive Inc. saw its stock soar as much as 50% following a major investment announcement from Volkswagen AG. The German automaker plans to inject up to $5 billion into Rivian, starting with an initial $1 billion investment. This includes a $1 billion convertible note, pending regulatory approvals, which could convert to Rivian shares by December 1st.
The investment aims to support a joint venture focused on developing next-generation electrical and electronic architecture for future electric vehicles (EVs). Rivian and Volkswagen will each hold a 50% stake in this venture, with plans to integrate Rivian’s advanced technology into Volkswagen’s upcoming EV models starting in the latter half of this decade.
RJ Scaringe, CEO of Rivian, expressed confidence that the partnership will propel Rivian towards profitability, easing concerns over its significant cash burn. The funds are expected to fund the production ramp-up of Rivian’s R2 SUVs in Illinois and a midsize EV platform in Georgia, among other strategic initiatives.
The deal underscores Volkswagen’s strategic shift towards enhancing its EV capabilities amid a broader automotive industry transition. The joint venture, expected to finalize by the end of 2024, represents a significant milestone for both companies in advancing electric vehicle technology.
This partnership follows Rivian’s ongoing efforts to streamline operations and optimize costs, reflecting its commitment to sustainable growth in the competitive EV market.
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