Written by Cláudio Afonso | LinkedIn | X
Volkswagen Group revealed on Tuesday night that it will invest up to $5 billion in the California-based electric vehicle maker Rivian aiming to enhance software technology, electronic control units (ECUs), and related network architecture design.
On late Tuesday, Rivian hosted its annual Investor Day where the leadership team provided further details on the announcement with the VW group and how it will help the company to scale over the next years.
Commenting on the governance aspect between Rivian and the German group, the CEO RJ Scaringe enhanced the enthusiasm seen across multiple brands of the Volkswagen group.
“One of the things that’s been important for us we’ve gone through this process is we’ve you’ve spent a lot of time getting to know not only the senior leadership within Volkswagen. And you know, starting from the earliest discussions of Volkswagen groups, CEO Oliver and I have had an alignment of philosophy and working principles. We’ve seen that manifest across the teams and, importantly, across the brands,” the chief executive stated.
“Whether we’re talking with Porsche brand or the Audi brand, there’s really a tremendous level of excitement to work together to create amazing products for customers, and that alignment around excellence, you know, which starts at the top of Rivian and Volkswagen Group, but also translates into the into the respective leadership team of the brands is really something that we’re looking forward to, and we see highly complimentary,” he added during the Investor Day on late Tuesday.
This investment includes a $1 billion stake and an additional $4 billion to form a joint venture, expected to close in the fourth quarter of 2024.
Scaringe added that the software defined vehicle architecture that will be developed will target all segments from entry level vehicles to the most premium and high performance vehicles.
“The partnership is expected to accelerate Rivian’s impact and the shift to electrification reinforce our mission to help the world transition from fossil fuels compelling products and services. The Joint Venture is expected to develop a software defined vehicle architecture capable addressing all segments from entry level vehicles to the most premium and high performance vehicles,” RJ Scaringe stated.
The chief executive said VW group is “one of the largest and most respected vehicle manufacturers in the world” adding that it “contributes outstanding experience and scale across many strong brands”.
“The governance of the joint venture is expected to be balanced and include two co-CEOs, with Rivian appointing a tactical leadership and Volkswagen Group appointing the joint venture’s Chief Operating Officer,” Scaringe detailed.
“Importantly, both Volkswagen Group and Rivian will continue to independently manage and operate their respective vehicle businesses,” he added.
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As of the time of writing, Rivian shares are trading 37 percent higher on Wednesday pre-market trading at $16.32 per share after soaring to $18.88 on late Tuesday.
Scaringe highlighted that Rivian tech will be able to “reach many more customers, many more places on the alignment with its mission” adding that he views the partnership as “highly complimentary”.
Earlier today, Cantor Fitzgerald analyst Andres Sheppard published a new research note, increasing the firm’s price target for Rivian from $15 to $20 while maintaining an Overweight rating.
In a statement, the German group said that, in case the joint venture would be established successfully, Volkswagen “intends to make further investments in shares of Rivian Automotive, Inc., or in the joint venture in the total amount of 4 billion USD”.
Written by Cláudio Afonso | LinkedIn | X
