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Shares of electric-vehicle startup Rivian Automotive, Inc. ($RIVN) jumped over 11% in premarket trading on Wednesday after the company announced the setup of its joint venture with German automaker Volkswagen AG ($VWAGY) to be called "Rivian and VW Group Technology, LLC."
Irvine, California-based Rivian said on Tuesday it entered into a transaction agreement with Volkswagen’s American subsidiary to create a joint venture, with the closing expected on Wednesday.
The joint venture will be established as an electrical architecture technology company with a focus on software, electronic control units and related network architecture design and development, Rivian said. The two partners will own 50% interest each in the joint venture, contributing $30 million each to capital.
“The JV will aim to use the existing Rivian electrical architecture and software technology stack, enabling the launch of Rivian’s R2 in the first half of 2026 and support the expected launch of the first models from the Volkswagen Group as early as 2027,” the companies said in a joint statement.
The joint venture will be governed by a board with four directors, with equal representation from both companies. It will be managed by two co-CEOs, namely Wassym Bensaid, Rivian’s chief software officer, and Carsten Helbing, VW’s chief technology officer.
The teams will be initially based out of Palo Alto, California, while three other sites are in development in North America and Europe.
Oliver Blume, CEO of Volkswagen said, "The joint venture demonstrates the potential we want to leverage together in the coming years. We have a clear plan to offer our customers the best products and digital experiences at attractive prices through state-of-the-art development processes, innovative technological approaches, and a competitive cost base driven by synergies."
Rivian CEO R.J. Scaringe said, "We’re thrilled to see our technology being integrated in vehicles outside of Rivian, and we’re excited for the future."
Together, the investment by Volkswagen will amount to $5.8 billion, more than the $5 billion announced earlier when the partnership was unveiled. This include a $1 billion investment in convertible notes that has already been made, and the $1.32 billion cash consideration that will be made at the closing of the venture for background IP licenses and a 50% equity stake in the joint venture.
The remaining investment of up to $3.5 billion is expected to come in the form of equity, convertible notes, and debt at future dates and based on clearly defined milestones.
Retail was largely upbeat on the partnership, with some lauding Rivian’s evolution as a software company.
Another saw reignition of a rally in Rivian stock.
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In premarket trading, as of 6:34 am ET, Rivian stock climbed 11.81% to $11.83.
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