Chethma De Mel, Jadetimes Staff
C. J. De Mel is a Jadetimes news reporter covering Entertainment News
Volkswagen Group announced it is expanding its partnership with Rivian—a Tesla key competitor—in a joint venture and significantly increasing its financial commitment. Until now, the valuation of their collaboration, at $5.8 billion (£4.55bn), was VW's initial $5 billion investment.
Shares of Rivian jumped more than 9% on the news in extended trading. The deal would allow both companies to share key technologies as global demand for electric vehicles cools and competition intensifies from Chinese EV manufacturers.
The deal provides vital funding for loss-making Rivian ahead of the planned launch of its R2 model in 2026. The new SUV will be smaller and cheaper than the existing models from Rivian, with the express aim of attracting more customers to the brand. VW also plans to use Rivian's technology for its own electric vehicles, with VW-branded cars featuring Rivian tech due in-market as soon as 2027.
In a joint statement, VW and Rivian referred to the synergy between their experience and said that the partnership aims to slice development costs and also quicken the pace at which new technologies are launched. The developer and software engineer teams from both companies will work in California in the beginning. Three more facilities are on cards in North America and Europe.
The news follows weeks of speculation that VW, Europe's largest car manufacturer, was preparing significant cost cuts in response to soaring costs, slowing sales, rising competition from Chinese EV makers, and a sluggish shift away from fossil fuel-powered vehicles.
Meanwhile, Rivian has focused on streamlining operations in response to weaker demand for electric vehicles. It has been renegotiating supplier contracts and optimizing its manufacturing. Beyond SUVs, Rivian also produces electric delivery vans-primarily for Amazon, which is the company's largest investor. Amazon ordered 100,000 Rivian vans, all of which are to be delivered by the end of this decade.
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