Rivian Gets a Welcome $5 Billion Investment from Volkswagen

Volkswagen Group plans to invest up to $5 billion in electric vehicle startup Rivian, starting with an initial investment of $1 billion. This first amount will be a convertible note, potentially converting to Rivian shares after December 1, 2024. 

The remaining $4 billion will be injected by 2026, with $1 billion each in 2025 and 2026, followed by $2 billion for a joint venture focused on electrical architecture and software technology. 

Shares of Rivian surged over 50% in after-hours trading following the announcement, closing at $11.96 per share on Tuesday, despite being down 49% in 2024. This significant investment is expected to support Rivian's efforts to achieve positive cash flow. 

Rivian CEO RJ Scaringe highlighted that the capital will fund the production ramp-up of smaller R2 SUVs at its Illinois plant starting in 2026, and the midsize EV platform at their Georgia plant, where construction was previously paused.

The partnership will see Volkswagen utilizing Rivian’s electrical architecture and software stack for its vehicles from the latter half of the decade. 

The news comes as a major boost to Rivian, which had been aggressively cutting costs, including staff reductions and pausing the construction of a new factory in Georgia, saving over $2.25 billion in capital expenditures. 

These measures are expected to help Rivian launch its next-generation, more affordable R2 vehicles while keeping negative investor sentiment in check for now. Despite a first-quarter loss of $1.45 billion, Rivian reported $7.86 billion in cash and equivalents at the end of March, with over $9 billion in total liquidity.