Volkswagen To Invest US$5 Billion In Rivian For Software Joint Venture

US EV manufacturer Rivian Automotive and Volkswagen Group have announced their intention to form an equally controlled and owned joint venture to create ‘next-generation’ electrical architecture and best-in-class software technology.

The partnership is expected to accelerate the development of software for Rivian and Volkswagen Group, allowing both companies to combine their complementary strengths and lower cost per vehicle by increasing scale and accelerating innovation globally.

Rivian’s “zonal hardware design” and integrated technology platform are expected to serve as the foundation for future software-defined vehicle (SDV) development in the joint venture that will be applied to both companies’ vehicles. Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture.

Both companies aim to launch vehicles benefiting from the technology in the second half of the decade. In the short term, the joint venture is expected to enable Volkswagen Group to use Rivian’s existing electrical architecture and software platform. The partnership aims to accelerate Volkswagen Group’s SDV plans and transition to a pure zonal architecture. Each company will continue to separately operate their respective vehicle businesses.

The two firms said significant work was performed to validate that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles.

The parties expect the completion of the joint venture formation in the fourth quarter of 2024. As part of the deal, Volkswagen Group plans to invest US$5 billion in Rivian.

“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture,” said Oliver Blume, CEO of Volkswagen Group. “Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost. We are also acting in the best interest of our strong brands, which will inspire with their iconic products. The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness.”

Rivian CEO and founder RJ Scaringe said: “We’re very excited to be partnering with Volkswagen Group. Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognised this. Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.”