Volkswagen Group (VW) has announced an expanded joint venture with Rivian, the US electric vehicle maker and Tesla competitor, increasing its investment to $5.8 billion from an initial $5 billion commitment. The partnership, designed to facilitate technology sharing between the two companies, arrives at a time when global demand for EVs is cooling and competition from Chinese manufacturers is intensifying.
The announcement sent Rivian’s shares up more than 9% in after-hours trading, signaling investor confidence in the benefits this collaboration will bring to the company. The agreement provides Rivian, which has yet to achieve profitability, with essential funding as it gears up to launch the R2—an upcoming SUV that is smaller and more affordable than its existing models. Additionally, VW will gain access to Rivian’s technology to integrate into its own future EVs, with the first models expected on the market as early as 2027.
The joint venture will involve teams of developers and software engineers from both companies working together in California, alongside three additional facilities set to open in North America and Europe. VW and Rivian released a joint statement saying, “By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly.”
VW has been facing a series of challenges, including rising operational costs, softening sales, and delays in transitioning away from traditional fuel vehicles. The German auto giant, which also owns brands like Audi, Lamborghini, and Porsche, is reportedly preparing major cost-cutting initiatives to navigate these pressures.
Rivian, meanwhile, has been taking steps to streamline operations and cut costs in response to the softening EV market. The startup has renegotiated supplier contracts and optimized its manufacturing processes. Besides producing electric SUVs, Rivian also makes electric delivery vans, with its largest order—100,000 units—coming from Amazon, which is also its largest shareholder. Rivian has committed to fulfilling this order by the end of the decade.
For VW, which has been under pressure to compete with China’s burgeoning EV industry, the partnership with Rivian represents a strategic move to access innovative technology and share development costs. As the EV market faces slower growth than anticipated, the collaboration could give both companies a competitive edge in bringing cost-effective, technologically advanced EVs to market.
