VW will invest $5 billion in Rivian as part of new EV joint venture

Volkswagen is investing $5 billion in Rivian as part of a new joint venture that will give the German auto giant access to the buzzy California EV company’s software and EV platform.

The new venture was announced in a post from Rivian CEO RJ Scaringe, who noted the investment will help the company bring its next generation R2 electric vehicle to market starting in 2026. The R2 is expected to be a more affordable $45,000 model than its current luxury-priced EVs, the R1T and R1S.

Scaringe said the partnership will bring Rivian’s new zonal architecture, available now through its refreshed second-generation R1 vehicles, as well as its software, to a “broader market.” Rivian recently became one of the few companies beyond Tesla to use a zonal architecture for its vehicles that rely on fewer electric control units than usual.

The money will no doubt come in handy, too. Like other EV-only companies, Rivian has been struggling through a period of cooling demand around electric vehicles. The company’s sales are up, but its losses are also increasing. It has $7.9 billion of cash and cash equivalents on hand, but it has acknowledged that cuts could be necessary if it’s ever going to achieve stability. Rivian has already gone through several rounds of layoffs in its short history.

Meanwhile, VW has been going through its own struggles around EVs. The company’s plug-in models are selling well, but its market share in North America is shrinking. And its software has been plagued by bugs and customer complaints.

VW isn’t the first legacy automaker to partner with Rivian. The company was planning to co-develop an electric SUV with Ford, but those plans were cancelled amid the covid pandemic. The plan was to use Rivian’s battery pack and electric motor setup in a Ford or Lincoln branded SUV. Ford invested $500 million in Rivian as part of the plan, along with $700 million from Amazon.

Developing…