Rivian and Volkswagen Group Announce Plans for Joint Enterprise – Operations

Rivian Automotive and Volkswagen Group are joining forces. The 2 automakers announced their intention to form an equally controlled and owned three way partnership to create software-defined vehicle (SDV) platforms for the businesses’ future electric vehicles. An SDV is any vehicle that permits recent features and manages operations primarily through software.

The partnership, anticipated to speed up software development for Rivian and Volkswagen, is predicted to permit each firms to mix their complementary strengths and lower vehicle costs by increasing scale and innovation globally.

Each firms aim to launch vehicles benefiting from the technology created inside the three way partnership within the second half of the last decade, which could help with integrating more electric vehicles into business fleets in the long run. Within the short term, the three way partnership is predicted to enable Volkswagen Group to utilize Rivian’s existing electrical architecture and software platform

“Through our cooperation, we are going to bring the most effective solutions to our vehicles faster and at lower cost. […] The partnership suits seamlessly with our existing software strategy, our products, and partnerships. We’re strengthening our technology profile and our competitiveness,” Olive Blume, CEO of Volkswagen Group, said.

Rivian’s in-market zonal hardware design and technology platform are expected to function the inspiration for future SDV development, which will likely be applied to each firms’ electric vehicles. Rivian plans to contribute its electrical architecture expertise and license existing mental property rights to the three way partnership.

“For the reason that earliest days of Rivian, we now have been focused on developing highly differentiated technology, and it’s exciting that certainly one of the world’s largest and most respected automotive firms has recognized this,” RJ Scaringe, Founder and CEO of Rivian, said. “Rivian was created to assist the world transition away from fossil fuels through compelling services and products, and this partnership is beautifully aligned with that mission.”

Volkswagen Group to Spend money on Rivian

Volkswagen Group plans to take a position $5 billion in Rivian to support the strategic partnership’s vision.

Initially, Volkswagen Group will invest $1 billion in Rivian through an unsecured convertible note that may convert into Rivian’s common stock subject to certain conditions upon receiving regulatory approvals and reaching December 1, 2024. Volkswagen Group is predicted to take a position an extra $4 billion within the transaction.

“Not only is that this partnership expected to bring our software and associated zonal architecture to a fair broader market through Volkswagen Group’s global reach, but this partnership also is predicted to assist secure our capital needs for substantial growth,” Scaringe said.

Joint Enterprise Plans for Q4 Formation

Over the past months, work has been done to check that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles.

The partnership goals to speed up Volkswagen Group’s SDV plans and transition to a pure zonal architecture. Each company will proceed to operate their respective vehicle businesses individually.

The businesses expect the completion of the three way partnership formation within the fourth quarter of 2024.