Rivian‘s founder and CEO RJ Scaringe defended the company’s $5.8 billion software licensing deal with Volkswagen AG in an interview released Thursday, days after German outlet Manager Magazine reported the partnership is facing delays.
Speaking with journalist Kara Swisher, the CEO said the joint venture with the world’s second-largest automaker by volume will help address the lack of compelling EV choices in the market.
“Volkswagen Group, this is the second largest car company in the world by volume, did a $5.8 billion deal with us, a software licensing deal, for us to take our electronics and our software and deploy them across their portfolio brands and products,” Scaringe said.
“That’s really exciting to us because it’s so deeply aligned to the mission, but it answers this question we talked about a moment ago, which is the lack of choice and the need for more choices and highly compelling choices at that,” he added.
The agreement was first announced in November 2024.
German outlet Manager Magazine reported last week that the partnership is falling short of expectations, with Volkswagen CEO Oliver Blume assembling a task force to address mounting delays.
The report cited a mismatch between Rivian‘s software, tailored for pure battery-electric vehicles, and Volkswagen’s broader portfolio that may continue to include combustion engine and hybrid models longer than originally planned.
Scaringe was not asked about the reported delays during the interview.
Legacy Challenges
Scaringe explained why traditional automakers have struggled to develop modern software architectures, tracing the problem back to decisions made in the 1960s.
“One of the things about automotive that is, I think, often maybe overlooked is just the nature of how car companies and the skill sets embedded within car companies evolved over the last, call it, 6 to 7 years,” Scaringe said.
The CEO noted that prior to the 1960s, there was not a single computer or line of code in vehicles.
The first automotive computers were introduced to control fuel injection systems, with automakers outsourcing the electronics to third-party suppliers.
“And not necessarily planned and you could do a whole study on this, but over the course of the subsequent 60 years, anything that started to enter the vehicle that was electrically controlled or controlled through software, had a little computer come with it, what we now call ECUs,” Scaringe said.
“And over the fullness of time, cars went from having no computers to today having 100 to maybe 150 little ECUs that have their own little island of software that’s written by a supplier to control the function of the domain that it’s associated with,” he added.
Clean-Sheet Advantage
Scaringe said this legacy approach is “almost the exact opposite” of how a modern software architecture would be designed from scratch.
“If you’re starting with a clean sheet, you’d very quickly arrive at this idea of centralized compute, more of a zonal architecture,” Scaringe said. “And so Tesla, of course, has an architecture that looks like that and Rivian has that.”
“And we’re the only two companies today that have this very unique” architecture, he added.
No Plans to Exit Vehicle Manufacturing
When asked if Rivian could become solely a software and electronics company working with legacy automakers, Scaringe dismissed the idea.
“I don’t, it’s certainly not the plan,” Scaringe said before addint that the company would do both.
“And the business of, like, we’re quite bullish on the nature of the business, meaning if you have, once you make these investments in these core technologies and provided you’re building a brand that has a level of desire building and excitement around it, there’s really an enormous opportunity to capture customers and market share.”
Scaringe said the introduction of AI and self-driving technology will further expand the margin opportunity.
“And in the margin structure, we think particularly with the introduction of more technology in the form of artificial intelligence and self-driving, only further grows what we think is the business,” he said.
Partnership Background
The joint venture, announced in June 2024 with an initial $1 billion investment later expanded to up to $5.8 billion, aims to leverage Rivian‘s software architecture expertise to overhaul digital systems across Volkswagen’s brands including Audi, Porsche, and the main Volkswagen marque.
Last June, Rivian received a $1 billion equity investment from Volkswagen Group at an effective price of $19.42 per share, after achieving its second quarter of gross profit.
The comments come as Rivian shares have fallen more than 34% from their 2025 high, erasing gains driven by the company’s autonomy roadmap revealed in mid-December.
Since then, shares have tumbled to a two-month low of $14.87 on Thursday before closing at $15.17.
