By T. Jayani, JadeTimes News
German automotive giant Volkswagen (VW) has announced plans to invest up to $5 billion (£3.94 billion) in Rivian, a US based electric vehicle (EV) maker and Tesla competitor. This partnership will form a joint venture, allowing VW and Rivian to share technology. Following the announcement, Rivian's shares surged by nearly 50%.
This collaboration comes amidst increasing competition among EV manufacturers and Western nation's efforts to impose tariffs on Chinese imports. VW's initial investment will be $1 billion, with an additional $4 billion to be injected into Rivian by 2026.
Founded in 2009, Rivian has yet to achieve a quarterly profit, reporting a net loss of over $1.4 billion in the first quarter of 2024. Like other major automotive companies, VW faces pressure from rivals such as Tesla and China's BYD as it transitions from fossil fuel powered vehicles to electric ones. Meanwhile, some EV startups have struggled to gain traction in the competitive market, particularly as higher interest rates affect demand for high value purchases.
The partnership with Rivian will grant VW immediate access to Rivian's software, which VW plans to incorporate into its vehicles. Additionally, VW and other established automakers are contending with growing competition from Chinese EV manufacturers expanding globally.
Earlier this month, the European Union (EU) announced plans to raise tariffs on Chinese EV imports by up to 38%. Chinese and EU officials have been in talks ahead of a July 4 deadline. A prolonged investigation by the European Commission concluded that Chinese EV companies had been "unfairly subsidized." In response, China accused the EU of violating international trade rules and labeled the investigation as "protectionism."
The EU's proposed tariffs follow the US's decision to increase import duties on Chinese EVs from 25% to 100% last month. This week, Canada also indicated it is considering similar measures to align with its allies.
In a separate development on Tuesday, Tesla announced a recall of most of its Cybertrucks sold in the US due to issues with windscreen wipers and exterior trim. The recall affects over 11,000 vehicles, which were first released in late November last year.
