Shares of Rivian (RIVN) rose in the hours after the electric vehicle maker announced a joint venture deal with Volkswagen (VWAGY), bringing new capital into Rivian’s coffers.
Shares of Irving, Calif.-based Rivian rose more than 40% in after-hours trading.
Volkswagen has announced that it intends to work with Rivian to create “the next generation of software-defined vehicle (SDV) architectures” for use in both companies’ future electric vehicles. The joint venture will use Rivian’s Zone Device Design and platform to build future vehicles, as well as Rivian’s expertise in vehicle electrical engineering. Rivian will license the existing intellectual property rights to the joint venture.
In return, Volkswagen will invest an initial $1 billion in Rivian through “unsecured convertible notes that will be converted into Rivian common stock,” with up to $4 billion of additional investments to be structured through 2026 for a total of $5 billion. .
“The partnership fits seamlessly into our existing software strategy, products and partnerships. We are strengthening our technology profile and competitiveness,” said Oliver Blume, Volkswagen Group CEO, in a statement.
“Not only is this partnership expected to bring our software and associated territorial architecture to a broader market through the Volkswagen Group’s global reach, but it is also expected to help secure our head Money for significant growth. statement.
this is exciting! Volkswagen Group CEO Oliver Blume and I are pleased to announce the formation of a joint venture between the two companies. This partnership brings Rivian’s software and Regions electronics platform to a broader market through the Volkswagen Group’s global reach and… pic.twitter.com/11XVNUo89J
– RJ Scaringe (@RJScaringe) June 25, 2024
For Rivian, news of the new capital eases concerns about the company’s runway as it heads toward the launch of its next-generation vehicles, the mass-market R2 and R3 SUVs.
Regarding the cash cushion, Rivian said it had $5.98 billion at the end of the first quarter, compared to $7.86 billion at the end of the fourth quarter. Presumably, the extra money from Volkswagen gives the company more runway as it prepares to produce these new vehicles.
Separately, Scaringe told Reuters yesterday that Rivian is working to improve its cost structure and streamline production at its plant in Normal, Illinois through, among other things, plant equipment upgrades.
This story is evolving.
Pras Subramanian is a Yahoo Finance reporter covering the auto industry. You can follow it Twitter and on Instagram.
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