Volkswagen and Rivian establish joint venture
Rivian has what Volkswagen needs: a modern software architecture. That is why the giant is investing billions in the US company.
(Image: Franz)
The most serious flaws in Volkswagen's Modular Infotainment Toolkit (MIB) have now been rectified. Nevertheless, the Group realized that it would be better to seek outside help for the challenges ahead. At the end of June, it was announced that Volkswagen was seeking a partnership in the form of a joint venture with the US provider Rivian. This proposal is very welcome there. Now the sum that Volkswagen is putting up for this has been increased again.
800 million dollars more than planned
The first vehicles based on the new electronics architecture are set to roll off the production line as early as 2027, as announced by Group CEO Oliver Blume at the launch of the joint venture in Palo Alto, California. Volkswagen has once again increased its investment in the project: the Wolfsburg-based company intends to spend €5.8 billion on the collaboration, €800 million more than previously planned. The joint venture will give Volkswagen access to the American company's electrical and software architecture.
The two companies had already announced the cooperation at the end of June 2024, and the German Federal Cartel Office also gave its approval in July. The cooperation is primarily about software and network architecture. The plan envisages a joint venture in which development will be carried out for both manufacturers and which they will manage in equal shares. The basis will be Rivian's existing electronics architecture, which will be further developed.
Architecture for all classes
Future electric cars from Volkswagen will then gradually switch to this new architecture and software. The first models with this technology should be launched in 2027, said Blume: "We will start with Volkswagen, then Audi, the US brand Scout, Porsche and then all other brands." This involves all vehicle classes, from subcompact cars to luxury cars and sports cars. This will enable large quantities and lower costs. However, Rivian technology will only be used in electric cars.
Volkswagen has been struggling with problems in its own software development for years. These have also contributed to model launches being delayed, in some cases by several years, including the Porsche Macan and Audi Q6 e-tron. Rivian developed its own architecture in which the car electronics are divided into several zones and therefore manage with significantly fewer control units. The second generation of this architecture is now in use.
Joint top
The new joint venture is scheduled to start operations on November 13. It will be based in Palo Alto in the US state of California, with further locations planned in Europe and North America. The majority of the team will come from Rivian, plus some colleagues from Volkswagen, said the founder and head of the US partner, RJ Scaringe. The dual leadership will consist of one manager from Volkswagen and one from Rivian.
Of the up to 5.8Â billion dollars that Europe's largest car manufacturer intends to spend on the project, 3.5Â billion dollars will be accounted for by Rivian shares. 2.3Â billion dollars are to flow into the new joint venture, one billion of which will be in the form of a loan. Previously, there had been talk of three billion dollars for the Rivian investment and two billion dollars for the joint venture. Blume confirmed that both sums had been increased once again.
High losses at Rivian
It is a very welcome cash injection for Rivian. The company, which was founded in 2009, is still in the red and is currently struggling with declining interest in electric cars in the USA. "This partnership and this deal will certainly provide us with the capital" that we need to continue ramping up our own production, said Rivian boss Scaringe.
Last quarter, Rivian delivered around 10,000 vehicles, generating 874Â million dollars in sales and 392Â million dollars in losses. In the same period, the Volkswagen Group achieved almost 2.2Â million deliveries, 78.5Â billion euros in sales and still posted 1.58Â billion euros in net income after taxes despite a massive drop in profits. Rivian is active in two popular vehicle categories in the USA, building large SUVs and pickups. Rivian also produces electric delivery vans for Amazon, which can now also be seen in Europe. The world's largest online retailer is also an investor.
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(mfz)