Rivian Automotive and Volkswagen Group announced their intention to form an equally controlled and owned joint venture to create next-generation electrical architecture and best-in-class software technology.
Oliver Blume, CEO of Volkswagen Group and RJ Scaringe, Founder and CEO of Rivian announce joint venture plans. (Image: Business Wire)
The partnership is anticipated to accelerate the development of software for Rivian and Volkswagen Group. It’s expected to allow both companies to combine their complementary strengths and lower cost per vehicle by increasing scale and speeding up innovation globally.
Rivian’s proven in-market zonal hardware design and integrated technology platform are expected to serve as the foundation for future SDV development in the JV that will be applied to both companies’ vehicles. Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture.
Both companies aim to launch vehicles benefiting from the technology created within the joint venture in the second half of the decade. In the short term, the joint venture is expected to enable Volkswagen Group to use Rivian’s existing electrical architecture and software platform. The partnership’s ambition is to accelerate Volkswagen Group’s SDV plans and transition to a pure zonal architecture. Each company will continue to separately operate their respective vehicle businesses.
Underpinned by the vision of the strategic partnership, Volkswagen Group plans to make a $5 billion investment into Rivian. Initially Volkswagen Group will invest $1 billion in Rivian through an unsecured convertible note that will convert into Rivian’s common stock subject to certain conditions upon the later of receipt of regulatory approvals and December 1, 2024. Volkswagen Group is expected to invest a further $4B as part of the transaction.
There has been significant work done over the past months to validate that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles. The parties currently expect the completion of the JV formation in the fourth quarter of 2024. All transactions described in this release are subject to the completion of definitive agreements, the conditions included in those agreements and the receipt of required regulatory approvals.
Lazard is serving as lead financial advisor and BDT & MSD Partners is serving as financial advisor to Rivian.
Filed Under: Technology News