A MAJOR car brand is investing billions into an EV maker as it looks to take on Tesla.
The electric vehicle start-up Rivian will have £3.95billion ($5bn) pumped into it after striking the deal.
The money will be coming from the German manufacturer Volkswagen with the companies sharing EV software and platforms.
EV start-ups have faced issues over a slowdown in demand as well as high interest rates and a lack of cash.
Meanwhile, the established car manufacturers have struggled to build EVs as well as advanced software.
The US EV maker Fisker filed for bankruptcy protection last week and earlier this year the UK arm of electric van producer Arrival went into administration.
Robert ‘RJ’ Scaringe, the founder and CEO of Rivian, said Volkswagen’s money will allow it to develop its R2 SUVs, which are set to hit the streets in early 2026 as well as its planned R3 crossovers.
The equally controlled joint venture will help cut Rivian’s operating costs as well, due to supplies including components and microchips.
It will also help Rivian with its cashflow problems as it currently loses nearly £31,600 ($40,000) on each vehicle it delivers.
Under the deal, Rivian, which is seen as a rival to Tesla, will get an immediate investment of £790m ($1bn) via a note which will convert to Rivian stock on December 1, as long as there is regulatory approval.
VW will also pay another £790m when the JV arrives, which is likely in the last three months of the year.
Volkswagen will then invest a further £790m in Rivian stock in 2025 and the same amount in stock the following year, as long as Rivian hits certain milestones, and provide a loan of £790m in 2026.
Vitaly Golomb, managing partner at Rivian investor Mavka Capital, said: “Any cash infusion like that is huge.
“Getting the support of Volkswagen Group certainly really strengthens their story toward Europe and toward Asia eventually.”
Investors and analysists see VW’s cash injection as a way to sort out its software issues.
It’s software division Cariad, which was established under the then VW Group boss Herbert Diess, has gone over budget while failing to reach its goals.
Diess departed VW in September 2022.
Rivian, which was founded in 2009, has been cutting costs in an attempt to stay afloat while attempting to deliver its EVs on time.
Contracts with suppliers have been renegotiated and some parts have been built in-house.
By Ben Shimkus
The Rivian R1T, one of the fastest-growing electric vehicles in the US, has dozens of hidden features laden in its Amazon-inspired cabin.
I took a tour of the Rivian R1T pickup and R1S three-row SUV in the company’s showroom in the Meatpacking District of New York City.
The plush cabins inside the $70,000-plus trucks are filled with hordes of gadgets and gizmos.
But one button, propped on the steering wheel, gives drivers control well beyond the road.
Drivers may even use their voice to access the system instead of a button.
All Rivian trucks have Amazon Alexa capabilities built into the interior.
Drivers can give dozens of voice commands through their cars, according to Amazon.
The button, propped on the left side of the steering wheel, will open Alexa up to a Rivian driver’s request.
If the system is fully voice-operational, drivers can also access the Amazon-based capabilities with their own voice.
Drivers can also make more car-based requests.
“Alexa, take me home,” the company says drivers can command the car.
When activated, Alexa will pull up Rivian’s proprietary navigation screen to suggest routes to incorporate fast charging.
It is yet to post a quarterly profit, while the first quarter of this year saw it make a net loss of more than £1.11bn ($1.4bn), according to the BBC.
So far, the company has produced two models for the American consumer market.
The R1S, the company’s first consumer SUV, sold over 23,000 production models in 2023.
The R1T, the second-fastest pickup truck on the mass market with a 0 to 60 mph time right at 3 seconds, sold just under 20,000 iterations last year.
Customers have reported historically high satisfaction numbers with their Rivians.
Rivian scored the highest recorded satisfaction rate with customers, according to Consumer Reports.
However, the company has not been without its issues.
Rivian was one of the worst automakers with customer-reported quality issues, according to a study by the publication.
