Volkswagen Group plans to invest up to $5 billion in electric vehicle startup Rivian, starting with an initial investment of $1 billion.
The additional $4 billion is expected by 2026. It includes plans for $1 billion each in 2025 and 2026, followed by $2 billion in 2026 related to an expected joint venture to create electrical architecture and software technology, according to a release by the automakers Tuesday.
Shares of Rivian soared more than 50% during after-hours trading Tuesday, two days ahead of an investor event for Rivian, which has been under pressure from Wall Street due to its cash burn and significant losses. Rivian stock closed Tuesday at $11.96 a share, down roughly 49% in 2024.
The initial $1 billion from Volkswagen will be in the form of a convertible note, which could be converted to Rivian shares on or after Dec. 1, the release said.
The deal will help Rivian on its journey to become cash flow-positive, Rivian CEO and founder RJ Scaringe said Tuesday night during an investor call.
He noted the capital is expected to carry the company through the production ramp-up of its smaller R2 SUVs at its plant in Normal, Illinois, starting in 2026, as well as production of the midsize EV platform at a plant in Georgia, where Rivian paused construction 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,” he said. “I’ve spoken about the importance of these platforms in the past, and how difficult it is to replicate them.”
Volkswagen is expected to use Rivian’s electrical architecture and software stack for vehicles beginning the second half of the decade, according to Scaringe. He said the joint venture does not include anything with battery technologies, vehicle propulsion platforms, high voltage systems or autonomy and electrical hardware.
Scaringe said the expected joint venture will be led by a “balanced” leadership group, including two co-CEOs, with Rivian appointing the technical leadership and Volkswagen appointing a chief operating officer.
The closing of the joint venture is expected in the fourth quarter of this year, according to Rivian Chief Financial Officer Claire McDonough.
Volkswagen will be the second legacy automaker to take a stake in the California-based company. Ford Motor was among Rivian’s largest stakeholders, at roughly 12%, alongside Amazon when Rivian went public in 2021. The Detroit automaker exited Rivian in 2023 after walking back a plan to codevelop EVs with the company.
The Volkswagen-Rivian partnership comes as automakers shift strategies amid slower-than-expected adoption of EVs.
Pietro Zollino, head of VW corporate communications, said the deal with Rivian does not change the German automaker’s plans to build a $2 billion EV plant for its announced Scout Motors trucks and SUVs in South Carolina.
“Our commitment towards Scout has not changed at all,” he said in an email Tuesday night.
Rivian has been on a cost-cutting mission for months. It has trimmed staff, retooled its Illinois plant to increase efficiencies and paused construction of a new multibillion-dollar factory in Georgia. That last measure is expected to save more than $2.25 billion in capital spending, including the impact of starting production of Rivian’s upcoming, less expensive R2 vehicles at its plant in Illinois instead of Georgia during the first half of 2026.
McDonough said Volkswagen’s investment is expected to carry the company through the ramp-up of its new, less expensive R2 vehicles in Illinois as well as the midsize EV platform at its plant in Georgia.
The EV maker reported a loss of $1.45 billion during the first quarter of this year, as it retooled its plant in Normal, Illinois, to launch updated versions of its R1T pickup and R1S SUV EVs ahead of its next-generation vehicles in 2026.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments to end March, with more than $9 billion in total liquidity.
