Volkswagen Group has announced it will invest up to USD5 billion (around RM23.5 billion) in Rivian as part of a new joint venture focusing on next-generation electric vehicle (EV) architecture and software.

Each company will continue to operate their production operations separately, but will hold an equal 50% stake in the joint venture, which, upon successful implementation, will provide Volkswagen Group with access to Rivian’s E/E (electrical/electronic) architecture.

Rivian CEO Robert Joseph Scaringe told Reuters the investment will provide the company with the funding needed to develop its less expensive and smaller models, namely the R2 set to be delivered in 2026 as well as the R3/R3X.

In its release, the German company said the actual establishment of the joint venture depends on a series of different parameters, including technical feasibility of the integration of the E/E architecture in Volkswagen vehicles.

Under the terms of the agreement, Volkswagen Group will initially invest USD1 billion (RM4.7 billion) in Rivan through an unsecured convertible note that will convert into a direct shareholding in the latter company, subject to the necessary regulatory approvals before December 1 this year.

In case the joint venture is established successfully, Volkswagen Group intends to make further investments in shares of Rivian, including two tranches of USD1 billion each in 2025 and 2026. Volkswagen Group will also provide a payment of USD 1 billion upon foundation of the joint venture in 2024 and grant a loan in the amount of USD 1 billion in 2026 – it all aggregate in a total of USD5 billion by 2026.

Both companies aim to launch EVs with technology created within the joint venture by the second half of 2030. In the short term, the joint venture will enable Volkswagen Group to use Rivian’s existing EV architecture and software platform. This partnership will also serve to accelerate Volkswagen Group’s software-defined vehicle (SDV) plans and transition to a pure zonal architecture as seen with the refreshed R1T and R1S.

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