Rivian gets a third major partner, and new cars arrive later this decade.

Up-close image of Rivian's dash screen, showing on-road/off-road settings
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Volkswagen is committing $5 billion to upstart EV company Rivian, with $1 billion in cash upfront and $4 billion over time. The companies aim to use this joint venture to deliver new vehicles “in the second half of the decade,” according to the announcement, and the cash will likely help push along Rivian’s next generation of vehicles, including more affordable models.

Oliver Blume, left, CEO of Volkswagen Group, and RJ Scaringe, founder and CEO of Rivian.
Enlarge / Oliver Blume, left, CEO of Volkswagen Group, and RJ Scaringe, founder and CEO of Rivian.Rivian

Rivian founder and CEO RJ Scaringe wrote on X (formerly Twitter) that the partnership “brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and scale.” VW Group, which also controls Porsche, Lamborghini, Audi, and Ducati, among others, has a lot to gain from working with Rivian, particularly when it comes to software and ride control. Ars and most other reviewers have been impressed by Rivian’s drive engineering and display software on the R1T truckR1S SUV, and the second generations of them both, which majorly reworked the underpinnings and offerings, largely through design and software choices.

Volkswagen’s recent software moves have been on an opposing trajectory. The Group’s 2019 moves to align all its brands’ software under one division, Cariad, with three platforms developed at once, has led to massive leadership shake-ups and restarts. We were not impressed with the ID.4’s infotainment system in 2021, and further bugs in both system and screen software plagued the car, undermining what was otherwise regarded as a good wheels-on-road experience.

Other car and tech companies previously invested in Rivian on its long, expensive path to EV production. Rivian took $500 million from Ford in 2019 after already picking up $700 million from Amazon that year. Part of Ford’s investment centered on a Lincoln SUV developed using Rivian’s battery and motor tech—or “skateboard” platform—but that project was canceled early in the pandemic.

Rivian, which was valued at nearly $86 billion during its public stock debut, has burned through a lot of cash, making well-liked cars that cost a lot to build. In the first quarter of 2024, it sold its cars for an average of $38,784 less than it cost to make them before expenses like research, development, sales, or marketing. Having paused production on a $5 billion truck plant and gone through rounds of recent layoffs, the firm lost $1.51 billion last quarter. Rivian reported $7.86 billion in cash on hand and $4.43 billion in debt.

Hence the likely very useful first $1 billion from VW to Rivian, a convertible note that becomes Rivian common stock after regulatory approval. Two more $1 billion payments should arrive in 2025 and 2026, with a $2 billion loan tied to the joint venture available in 2026.

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