Excluding Ford Motor Co.—which invested around half a billion dollars last year as part of its deal with VW—VW’s subsidiaries Porsche Automobil Holding SE and Audi have stakes worth a total of about €50 million each. MAG acquired the shares directly with the company or through financial intermediaries on behalf of the Group Treasury Department.
This strategic collaboration shall further result in a JV that will help both the companies share technology and have positions scripted better in the fast, changing EV market.
After the announcement, shares of Rivian surged almost 50% as investors seemed to back the deal. VW will initially put $1 billion into Rivian with a further $4 billion more by 2026.
Rivian, founded in 2009, specializes in electric trucks and sport-utility vehicles but has yet to be profitable, reporting a net loss of more than $1.4 billion for the first quarter of 2024. VW’s investment in the US car company comes just in time when the German carmaker is under increased pressure from EV bellwethers like Tesla and China’s BYD to shift production from fossil fuel-run cars to electric ones.
It means that the VW will immediately get access to Rivian’s advanced software, a functionality that it intends to integrate into its vehicles. An investment in Rivian would grant VW immediately usable technology for new kinds of cars.
The partnership announcement dovetails with rising trade tensions, where Western countries are adding tariffs against Chinese imports. The EU recently threatened to raise tariffs from up to 38% on Chinese Electric Vehicle imports following an investigation concluding that the companies were unfairly subsidized. The probe was slammed by China as protectionism in violation of international rules on trade.
On other news, more than eleven thousand cyber trucks have been recalled from the American market over windshields and outer plastics. According to a news source, the recall involves vehicles sold since their release towards the end of November last year.
What is at play here with the VW-Rivian partnership is the strategic need for traditional automakers to innovate and fight for a place in the global shift to electric mobility.
Conclusion
The $5 billion investment call by Volkswagen in Rivian is one of the biggest, mega moves amongst the decision-making by an automobile company in a heatedly competitive arena that is electric vehicles. This new collaboration will provide VW with the platform to enhance the product portfolio and garner much-needed market attraction via Rivian’s ingenious designs and advanced generation. This is an excellent opportunity for Volkswagen since it is a joint venture between the two companies. Other than having a stake in any future developments and innovations that Rivian may come up with, the partnership will allow Volkswagen to expand its product line in cars that run solely on electricity. This rapid development of the electric vehicles underlines again how important it has been to cooperate for economic reasons and how strategically necessary it was to position ourselves early on as partners in shaping mobility.
