Rivian Automotive and Volkswagen Group have announced plans to form a joint venture, equally controlled and owned by both companies, to develop next-generation electrical architecture and advanced software technology. This collaboration aims to accelerate software development for both Rivian and Volkswagen Group, combining their respective strengths to reduce costs per vehicle by increasing scale and speeding up innovation on a global scale.
Rivian’s existing zonal hardware design and integrated technology platform will serve as the foundation for future software-defined vehicle (SDV) development within the joint venture. Rivian will contribute its expertise in electrical architecture and license its existing intellectual property rights to the venture. The objective is to launch vehicles utilizing the technology developed by the joint venture in the latter half of the decade. In the short term, the partnership will enable Volkswagen Group to leverage Rivian’s current electrical architecture and software platform, accelerating Volkswagen’s transition to a pure zonal architecture. Both companies will continue to operate their respective vehicle businesses independently.
Volkswagen Group’s CEO, Oliver Blume, stated that the partnership would benefit customers by creating a leading technology architecture. Blume emphasized that the cooperation would bring solutions to market faster and at a lower cost while maintaining the integrity of their brand. He noted that the partnership aligns with Volkswagen’s existing software strategy and enhances their technology profile and competitiveness.
RJ Scaringe, Founder and CEO of Rivian, expressed enthusiasm for the partnership, highlighting that it validates Rivian’s focus on developing differentiated technology. Scaringe pointed out that the partnership will extend Rivian’s software and zonal architecture to a broader market through Volkswagen’s global reach and secure Rivian’s capital needs for growth. He reiterated Rivian’s mission to transition away from fossil fuels through innovative products and services, and the partnership’s alignment with this mission.
As part of the strategic partnership, Volkswagen Group plans to invest $5 billion into Rivian. Initially, Volkswagen will invest $1 billion through an unsecured convertible note, which will convert into Rivian’s common stock upon regulatory approval and no later than December 1, 2024. An additional $4 billion investment is anticipated as part of the transaction.
Extensive work has been done to ensure compatibility between Rivian’s electrical architecture and Volkswagen Group’s vehicles. The formation of the joint venture is expected to be completed in the fourth quarter of 2024, pending definitive agreements and regulatory approvals. Lazard is serving as the lead financial advisor, with BDT & MSD Partners also advising Rivian.
