Volkswagen plans billions of investment in Rivian to accelerate software development

von Constantin Hoffmann an Jun 26, 2024

Volkswagen plant Milliarden-Investition in Rivian zur Beschleunigung der Software-Entwicklung

Volkswagen (VW) plans to invest up to five billion dollars in the US electric car maker Rivian in the coming years in order to accelerate his software development. The investment is made in two phases: First, VW acquires change bonds worth one billion dollars. In the second step, four billion dollars should flow into a joint company with Rivian, which is led equally by both companies.

Goal: acceleration of software development

With this partnership, VW aims to accelerate the development and integration of new software solutions and at the same time reduce costs. VW CEO Oliver Blume emphasized that the cooperation would bring the best solutions to the VW vehicles faster and cheaper. Rivian's new technology is to be used in the vehicles of the second half of the decade.

Effects on production and financial forecasts

Volkswagen reduced its annual forecast for the amount of payment in vehicle construction to 2.5 to 4.5 billion euros, since up to two billion euros could already be drained off this year as a result of the agreement. This investment is part of VWS larger strategy to focus on the growing electromobility market, especially in the USA, where the group wants to gain market shares.

Technology and advantages of cooperation

Rivian has developed its own vehicle architecture right from the start, which requires fewer control units and thus reduces complexity. This "zone architecture" divides the auto electronics into several zones with its own computers, which shortens the way for data transmission and increases efficiency. This advanced technology makes Rivian a valuable partner for VW.

Financial details and future plans

In the first step of the partnership, VW draws a change bond over one billion dollars, which is to be exchanged in Rivian shares in December at the earliest. In 2025 and 2026, VW plans to invest another billion dollars in Rivian shares. Up to two billion dollars are planned for the joint venture itself, of which part is due for the licensing of the Rivian software when the company was founded at the end of 2024.

Conclusion: a strategic step for both companies

The partnership between VW and Rivian could go to both companies considerably. Rivian receives the required capital to finance the development of its cheaper and smaller R2 off-road vehicle, which is due to be launched in 2026. VW benefits from advanced software technology and strengthens its competitiveness in the field of electromobility.