Volkswagen Group (VW) and electric vehicle (EV) maker Rivian, a prominent Tesla rival, have launched a joint venture, with the German automaker increasing its investment in the partnership.
The deal, now valued at $5.8 billion (£4.55 billion), marks an increase from VW’s initial commitment of $5 billion. Following the announcement, shares in Rivian, the US-based EV company and Tesla rival, surged more than 9% in after-hours trading.
This collaboration will see both companies share vital technology at a time when global demand for electric cars is slowing, and competition from Chinese automakers is intensifying. For Rivian, this partnership provides crucial funding as it prepares to launch its new R2 model next year—a smaller, more affordable SUV compared to its current offerings.
The deal also enables VW to incorporate Rivian’s advanced technology into its own vehicles, with the first VW models featuring Rivian tech expected to be available as early as 2027.
By combining their complementary expertise, both companies aim to reduce development costs and accelerate the scaling of new technologies. Developers and software engineers from both firms will initially work together in California, with plans to set up three additional facilities in North America and Europe.
This joint venture comes at a time when VW, Europe’s largest automaker, is expected to announce significant cost-cutting measures. The company, which also owns brands like Audi, Lamborghini, and Porsche, has faced rising costs, weakening sales, increasing competition from Chinese EV makers, and a slower-than-expected shift away from petrol and diesel vehicles.
Meanwhile, Rivian has also been working to streamline its operations, renegotiating contracts with suppliers and enhancing manufacturing efficiency to reduce costs amid weakening demand for EVs. Along with SUVs, Rivian manufactures electric delivery vans, most of which are supplied to Amazon—the company’s largest shareholder, which has ordered 100,000 vans, all scheduled for delivery by the end of the decade.
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