Volkswagen Group is investing up to $5 billion in Rivian Automotive to jointly develop platforms for "software-defined vehicles." Volkswagen and Rivian established a joint venture to create next-generation electrical architecture and software technology.
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Volkswagen Teams Up With Rivian to Develop Software-Defined Vehicle Platforms
Rivian, known for its zonal hardware design and integrated technology platform, will contribute its expertise in electrical architecture to the venture. The partnership intends to integrate Rivian's technology into both companies' vehicle lines, with a focus on accelerating the adoption of software-defined vehicle (SDV) platforms.
Both companies plan to introduce vehicles utilizing technology developed through their joint venture in the latter half of the decade. Initially, the joint venture will allow Volkswagen Group to integrate Rivian's established electrical architecture and software platform.
The partnership aims to expedite Volkswagen Group's SDV initiatives and transition toward a fully zonal architecture. The car companies will maintain separate operations for their respective vehicle businesses in the foreseeable future.
Volkswagen Group CEO Oliver Blume highlighted the strategic benefits of the partnership, noting its alignment with Volkswagen's software strategy and commitment to delivering competitive products. Blume emphasized the partnership's role in bolstering Volkswagen's technological profile and operational competitiveness.
Rivian CEO RJ Scaringe expressed enthusiasm about the collaboration, noting its potential to expand Rivian's market footprint. Scaringe underscored the partnership's alignment with Rivian's mission to promote sustainable mobility solutions and support its growth ambitions.
$5 Billion Investment of Volkswagen in Rivian
Volkswagen Group is investing $5 billion in Rivian, starting with an initial $1 billion investment through an unsecured convertible note. This note will convert into Rivian's common stock, contingent upon regulatory approvals and conditions, expected by December 1, 2024.
Volkswagen Group is anticipated to make an additional $4 billion investment as part of this agreement. According to a joint press release, extensive validation work has been conducted in recent months to confirm the compatibility of Rivian's electrical architecture and software with Volkswagen Group's vehicles.
The formation of the joint venture between the parties is currently projected to be completed in the fourth quarter of 2024. However, all transactions outlined in the announcement are still subject to finalizing definitive agreements, the conditions specified, and the necessary regulatory approvals.
"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," Blume said in the press release.
"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," he added.
Lazard acts as the lead financial advisor, while BDT & MSD Partners are Rivian's financial advisors.
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