Rivian And Volkswagen To Create New $5 Billion Company For Next-Gen Vehicle Software

In the last few years, digital transformation has impacted a wide range of businesses and industries.

This includes the automotive industry, which has seen the widescale adoption and rapid advancement of electric vehicles (EV), autonomous vehicles AKA self-driving cars and software-defined vehicles (SDV).

Just over a month ago, Volvo Group and Daimler Truck announced their intention to create a new joint venture (JV) to develop a software-defined heavy-duty commercial vehicle platform among other enhancements.

Now, two other leaders of the automotive industry announced that they are joining hands to form a new company – Rivian Automotive and Volkswagen Group.

So, what did the two automakers reveal and how will it help their companies? Let’s explore!
 

What Did Rivian And Volkswagen Group Announce?

 

• Through a news release published on its website, Rivian Automotive announced that it was joining hands with Volkswagen Group in planning to establish an equally controlled and owned joint venture (JV).

• The JV will focus on designing and developing next generation electrical architecture and software-defined vehicle (SDV) platforms, which will be used in the EVs manufactured by both companies.

• As per the plan, Volkswagen will make an initial investment of $1 billion through an unsecured convertible note that will convert into Rivian’s common stock, based upon certain conditions and the receipt of regulatory approvals.

• Post this, VW is expected to invest a further $4 billion, taking the total investment up to $5 billion.

• The establishment of the new venture is expected to be completed in Q4 2024.

 

What Is The Rivian And Volkswagen Group Joint Venture About?

 

• The move will reduce the time taken to develop software for both automakers.

• Furthermore, it will serve as a base for both companies to bring their strengths and complement each other, while lowering costs per vehicle and enhancing speed and scalability of innovation globally.

• Rivian’s “proven in-market" zonal hardware design and integrated technology platform will make the foundation of the JV’s SDV development, while its electrical architecture expertise and IP will be licensed to the JV.

• The plan is for both automakers to launch vehicles equipped with products from the JV in the second half of the decade.

• Through the joint venture, Volkswagen will also get to use Rivian’s existing electrical architecture and software platform in the short term, while propelling VW’s own plans for SDVs and transition to a pure zonal architecture.

• As per the release, “There has been significant work done over the past months to validate that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles.”

• Ahead of this, both companies will continue working on their individual vehicle businesses separately.

 

What Did Rivian And Volkswagen Group Executives Say?

 

• Oliver Blume, CEO of Volkswagen Group said, “Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost.”

• [Contd.] “We are also acting in the best interest of our strong brands, which will inspire with their iconic products. The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.”

• RJ Scaringe, Founder and CEO of Rivian said, “We’re very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this.”

• [Contd.] “Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.”

• [Contd.] “Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission.”

Do you think this joint venture by Rivian and Volkswagen Group will help both companies improve their market position? Do you think other automakers should consider making similar moves?

Let us know in the comments below!