Written by Cláudio Afonso | LinkedIn | X
Volkswagen AG is set to invest $5 billion in Rivian Automotive Inc. for the development of next-generation electric vehicles.
The German group is buying a $1 billion stake in the US-based EV maker and invest another $4 billion to form the joint benture. The investment will see both companies collaborating in a joint venture aimed at advancing EV technology and expanding their market presence.
Following the news, Rivian’s shares surged, closing 8.63 percent higher on Tuesday, bringing the company’s market capitalization to $11.90 billion. In after-hours trading, the stock has extended the gains following the news and is rising 35 percent to $16.14 at the time of writing.
On X, Rivian CEO RJ Scaringe wrote, “This is exciting! Volkswagen Group CEO Oliver Blume and I are thrilled to announce the formation of a joint venture between our two companies”.
“This partnership brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and scale, while providing an expected $5B of capital to Rivian as we bring R2 and our next generation of vehicles to market!,” he added.
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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”.
“The additional investment in shares of Rivian Automotive, Inc., would be made in two tranches of 1 billion USD each in 2025 and 2026 and would be contingent on Rivian Automotive, Inc., and the joint venture achieving certain milestones. With respect to the joint venture Volkswagen would provide a payment in the amount of 1 billion USD upon foundation of the joint venture in 2024 and grant a loan in the amount of 1 billion USD in 2026,” VW added.
Earlier in the day, Guggenheim analyst Ronald Jewsikow initiated coverage of the electric vehicle maker Rivian with a Buy rating and an $18 price target, forecasting a breakeven on gross margins in the last quarter of the year.
Jewsikow projects that Rivian’s scalable and vertically integrated architecture, combined with its upcoming R2 and R3 models, will enable the company to achieve high-teens gross margins.
The EV maker has recently sold out its 2023 made models after the introduction of several incentives.
Written by Cláudio Afonso | LinkedIn | X
