Automotive industry Volkswagen and Rivian: New alliance for electric vehicles

Volkswagen and Rivian have entered into a significant partnership to work together on a new electric vehicle architecture. The first models are due to come onto the market in 2027.

Volkswagen has entered into a strategic partnership with the US electric vehicle manufacturer Rivian. This collaboration aims to develop a new electric architecture that will be used in the first vehicles from 2027, as Oliver Blume, CEO of VW, announced in Palo Alto.

The Wolfsburg-based company has increased its investment in the project to 5.8 billion euros, which is 800 million euros more than originally planned. This partnership gives VW access to Rivian's electrical and software architecture, which is advantageous for both companies.

The two companies had already announced their cooperation in June, which was approved by the German Federal Cartel Office in July. The cooperation focuses on software, control computers and network architecture. A joint company will be founded, which will be managed equally by both manufacturers and will be based on Rivian's existing electronics architecture.

Volkswagen's new electric vehicles will be gradually converted to Rivian's technology and software. The first models with this new technology are scheduled to be launched in 2027. "We are starting with Volkswagen, followed by Audi, Scout, Porsche and finally all other brands," explained Blume. This changeover will affect all vehicle classes, from small cars to luxury and sports cars, which should lead to large production volumes and lower costs. However, Rivian technology will only be used in electric vehicles.

Software problems and delays

Volkswagen has been struggling with challenges in its own software development for years, which has led to delays in several model launches. In contrast, Rivian has developed its own architecture from the outset, which divides the car's electronics into several zones with their own computers and thus manages with fewer control units. The second generation of this platform is already in use.

The new joint venture will commence operations this Wednesday and will be headquartered in Palo Alto, California. Further locations in Europe and North America are planned. The majority of the team will come from Rivian, supplemented by some employees from Volkswagen, according to RJ Scaringe, founder and CEO of Rivian. The company will be managed by one manager from Volkswagen and one from Rivian.

Of the up to 5.8 billion dollars that Volkswagen is providing for the project, 3.5 billion dollars will be allocated to shares in Rivian. A further 2.3 billion dollars will flow into the new joint venture, of which one billion dollars will be in the form of a loan. Originally, three billion dollars were earmarked for the investment in Rivian and two billion for the joint venture, but both sums have been increased, Blume confirmed.

Rivian's financial challenges

For Rivian, this partnership is a much-needed cash injection. Founded in 2009, the company continues to make losses and is facing declining interest in electric vehicles in the US. "This partnership provides us with the capital we need to scale our production," Scaringe said.

Last quarter, Rivian delivered about 10,000 vehicles, generated $874 million in revenue and posted a loss of $392 million. By comparison, the VW Group delivered nearly 2.2 million vehicles in the same period, generated sales of 78.5 billion euros and posted a surplus of 1.58 billion euros despite a significant drop in after-tax profits.

Rivian is active in the popular SUV and pickup vehicle categories in the USA and also produces electric delivery vans for Amazon, which are now also used in Europe. The world's largest online retailer is also an investor in Rivian.

SDA