by Key Takeaways
- A $5.8 billion joint venture has been established between Rivian and the Volkswagen Group to develop software for software-defined vehicles (SDVs).
- The project intends to support VW Group cars by 2027 and introduce Rivian’s R2 SUV in 2026.
- The agreement coincides with Rivian’s updated production goal and VW’s cost-cutting initiatives.
In order to scale next-generation electric vehicles and create SDV software, Volkswagen Group and Renault have formed a $5.8 billion joint venture.
Compared to the initial $5 billion pledge announced in June, this is a 16% increase. A convertible note was used by the Volkswagen Group to invest $1 billion in the past.
On November 13, Rivian and VW Group Technology, LLC, the joint venture, will start operating independently. According to an official release, the partnership focuses on next-generation software-defined vehicles (SDVs) and leverages the strengths of both partners to develop software and scale electric vehicle frameworks.
Wassym Bensaid of Rivian and Carsten Helbing of the Volkswagen Group will lead the 50/50 joint, according to Rivian and VW. The group intends to open three further locations throughout North America and Europe after starting in Palo Alto, California.
In approximately 12 weeks, a VW test car with Rivian software installed was created and unveiled at Rivian’s Palo Alto headquarters.
Rivian and VW collaborate on SDVs.
SDVs have caused problems for VW’s Cariad business, making remote updates and new features possible. In order to compete with Tesla and make money from in-car services, SUVs are essential.
Rivian’s innovative electrical design will be essential to the joint venture with VW and allow for wireless software updates. Although Cariad’s future is still up in the air, it is anticipated that it will continue to oversee VW’s present software platform, with Rivian providing more expertise. The goals are to support Volkswagen Group goods, including VW, Audi, Porsche, and Scout, by 2027 and launch Rivian’s R2 SUV in 2026.
The New Deal seeks to address the EV industry’s challenges.
The agreement coincides with VW’s major cost-cutting initiatives, which include firing thousands of workers, closing at least three German factories, and reducing pay by 10% as a result of poor EV sales.
Rivian has reduced its 2024 EV manufacturing target to 47,000-49,000 units due to supply chain issues and limited demand. The corporation has experienced several rounds of layoffs in the last two years and anticipates a $2.88 billion deficit for the year.
Both businesses stand to gain if the agreement is successful: VW Group will obtain cutting-edge EV technology, while Rivian would receive finance and diversity. Both expect faster technology scaling and lower development expenses.
