Volkswagen Will Invest In Rivian For New Electrical Architecture

Joint Venture Of Software Technology Development, Should Help VW's New Scout Motors Brand...

2025 Rivian R1T. (Rivian).

Volkswagen Group announced plans to invest up to $5 billion in electric vehicle (EV) startup Rivian, with an initial investment of $1 billion. This investment aims to bolster Rivian’s development and production capabilities, signaling a significant partnership in the evolving EV market.

Volkswagen’s initial $1 billion investment will come in the form of a convertible note, which could be converted to Rivian shares on or after December 1. An additional $4 billion investment is planned for the following years, with $1 billion each in 2025 and 2026 and another $2 billion in 2026. This larger investment is linked to an expected joint venture between the two companies to create electrical architecture and software technology.

2025 Rivian R1T. (Rivian).

Shares of Rivian surged more than 50% in after-hours trading following the announcement. This boost comes at a crucial time for Rivian, which has faced pressure from Wall Street due to its high cash burn and significant financial losses. Rivian’s stock closed at $11.96 a share on Tuesday, down approximately 49% for the year.

Rivian CEO and founder RJ Scaringe expressed optimism about the deal during an investor call, highlighting that the capital will help the company become cash flow-positive. The funds are expected to support the production ramp-up of Rivian’s smaller R2 SUVs at its Illinois plant, starting in 2026, and the midsize EV platform at a plant in Georgia, where construction had been paused earlier this year.

“We believe the opportunity ahead is significant. This deal is possible because we’re focused on vertically integrating our network architecture, topology, V-CPUs, and associated software platforms,” Scaringe said. He emphasized the importance of these platforms and their complexity.

In the second half of the decade, Volkswagen plans to use Rivian’s electrical architecture and software stack for its vehicles. However, the joint venture will not include battery technologies, vehicle propulsion platforms, high-voltage systems, autonomy, or electrical hardware. The joint venture’s leadership will include two co-CEOs, with Rivian providing the technical leadership and Volkswagen appointing a chief operating officer.

2025 Rivian R1S. (Rivian).

The partnership marks Volkswagen as the second legacy automaker to invest in Rivian. Ford Motor Company was one of Rivian’s largest stakeholders when the company went public in 2021 but exited its investment in 2023 after revising plans to co-develop EVs with Rivian.

This collaboration comes as automakers adapt to slower-than-expected adoption of EVs. Despite the investment in Rivian, Volkswagen’s commitment to building a $2 billion EV plant for its Scout Motors trucks and SUVs in South Carolina remains unchanged, according to VW corporate communications head Pietro Zollino.

VW’s Scout Motors Teaser. (Scout Motors).

Rivian has been actively cutting costs, trimming staff, and retooling its Illinois plant to increase efficiencies. The company paused the construction of a new factory in Georgia, a measure expected to save over $2.25 billion in capital spending. Instead, Rivian plans to start production of its upcoming, less expensive R2 vehicles in Illinois during the first half of 2026.

Rivian reported a loss of $1.45 billion in the first quarter of this year as it retooled its Illinois plant to launch updated versions of its R1T pickup and R1S SUV EVs. As of the end of March, Rivian had $7.86 billion in cash, cash equivalents, and short-term investments, with more than $9 billion in total liquidity.