Photo: Rivian, Scout Motors, Volkswagen
Rivian and Volkswagen made their joint-venture plans official, with the German carmaker raising the investment to $5.8 billion or $800 million more than initially planned. Rivian appears to get the upper hand, as it will only have to fund 25% of the shared platform costs within the joint venture through 2028. However, the 50-50 structure and dual management leave the company prone to disagreements and failure.
Announced in June and confirmed during the third quarter earnings call earlier this month, the Rivian-Volkswagen joint venture has become official. The entity has been named "Rivian and VW Group Technology, LLC," and starting today, it will work on developing a shared vehicle platform for future Rivian and Volkswagen Group vehicles. The company is co-led by Rivian software chief Wassym Bensaid and VW Group chief technology engineer Carsten Helbing, with developers and engineers from both companies assigned to the new entity.
The money is crucial for Rivian to continue the development of its own R2/R3 models and the midsized platform (MSP), considering the current cash burn and limited reserves. As part of this partnership, Volkswagen already invested $1 billion in the form of a convertible note. The German carmaker will invest another $1.3 billion in consideration for the background intellectual property licenses from Rivian and a 50% stake in the joint venture.
The remaining $3.5 billion will come at future dates, based on achieving "clearly defined operational, technical, and financial milestones." Thanks to its intellectual property, Rivian also has an advantage when sharing development costs, as it will only cover 25% of the shared platform costs within the joint venture through 2028. Starting in 2029, the costs will be shared equally, but Volkswagen will increase its contribution by $100 million yearly to reduce Rivian's shared development costs.
Judging by Volkswagen raising the investment plans in Rivian by $800 million, the German carmaker also looks enthusiastic to pursue this partnership. This should help it overcome its humiliation with Cariad, its software division, which botched software for all VW Group's EVs. The Rivian-Volkswagen partnership is not only about the joint venture but also immediate access to Rivian software and electrical architecture for the Volkswagen Group EVs.
The joint venture will continue development on shared automotive platforms based on Rivian's R2 architecture. This will help Rivian offset development costs, and Volkswagen speed up new vehicle development thanks to Rivian's state-of-the-art software-first architecture. The first Volkswagen Group vehicles that will use electrical and software platforms developed by the joint venture will wear the Volkswagen badge in 2027. Next in line will be Audi, Scout, Porsche and then all other brands, as Volkswagen Group CEO Oliver Blume revealed.
That was the first time the two companies officially confirmed that the Scout Traveler and Scout Terra use Rivian's zonal network architecture and infotainment software. Scout Motors announced the zonal architecture without revealing its source, while the infotainment system of the prototypes showcased during the unveiling event clearly ran Rivian software.
The Rivian-Volkswagen joint venture will start operations in Palo Alto, California, with plans to set up three other sites in North America and Europe. While both companies badly need this partnership to work, the equally divided and led joint venture will complicate the decision-making process. Volkswagen has a long history of failed joint ventures and partnerships, and it will have to prove that it can work alongside a more agile partner with a fundamentally different work culture.
The money is crucial for Rivian to continue the development of its own R2/R3 models and the midsized platform (MSP), considering the current cash burn and limited reserves. As part of this partnership, Volkswagen already invested $1 billion in the form of a convertible note. The German carmaker will invest another $1.3 billion in consideration for the background intellectual property licenses from Rivian and a 50% stake in the joint venture.
The remaining $3.5 billion will come at future dates, based on achieving "clearly defined operational, technical, and financial milestones." Thanks to its intellectual property, Rivian also has an advantage when sharing development costs, as it will only cover 25% of the shared platform costs within the joint venture through 2028. Starting in 2029, the costs will be shared equally, but Volkswagen will increase its contribution by $100 million yearly to reduce Rivian's shared development costs.
Judging by Volkswagen raising the investment plans in Rivian by $800 million, the German carmaker also looks enthusiastic to pursue this partnership. This should help it overcome its humiliation with Cariad, its software division, which botched software for all VW Group's EVs. The Rivian-Volkswagen partnership is not only about the joint venture but also immediate access to Rivian software and electrical architecture for the Volkswagen Group EVs.
The joint venture will continue development on shared automotive platforms based on Rivian's R2 architecture. This will help Rivian offset development costs, and Volkswagen speed up new vehicle development thanks to Rivian's state-of-the-art software-first architecture. The first Volkswagen Group vehicles that will use electrical and software platforms developed by the joint venture will wear the Volkswagen badge in 2027. Next in line will be Audi, Scout, Porsche and then all other brands, as Volkswagen Group CEO Oliver Blume revealed.
That was the first time the two companies officially confirmed that the Scout Traveler and Scout Terra use Rivian's zonal network architecture and infotainment software. Scout Motors announced the zonal architecture without revealing its source, while the infotainment system of the prototypes showcased during the unveiling event clearly ran Rivian software.
The Rivian-Volkswagen joint venture will start operations in Palo Alto, California, with plans to set up three other sites in North America and Europe. While both companies badly need this partnership to work, the equally divided and led joint venture will complicate the decision-making process. Volkswagen has a long history of failed joint ventures and partnerships, and it will have to prove that it can work alongside a more agile partner with a fundamentally different work culture.
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