Rivian and Volkswagen Group announce plans for joint venture to create industry-leading vehicle software technology and for strategic investment by Volkswagen

Rivian Automotive and Volkswagen Group have announced their intention to form an equally controlled and owned joint venture (JV) to create next-generation electrical architecture and best-in-class software technology.

The partnership is anticipated to accelerate the development of software for Rivian and Volkswagen Group. It is expected to allow both companies to combine their complementary strengths and lower cost per vehicle by increasing scale and speeding up innovation globally. Rivian’s proven in-market zonal hardware design and integrated technology platform are expected to serve as the foundation for future software-defined vehicle (SDV) development in the JV 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 created within the joint venture in the second half of the decade. In the short term, the joint venture is expected to enable Volkswagen Group to utilize Rivian’s existing electrical architecture and software platform. The partnership’s ambition is 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.

Oliver Blume, CEO of Volkswagen Group, says:

“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. 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.”

RJ Scaringe, founder and CEO of Rivian 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 recognized 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. Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission.”

Underpinned by the vision of the strategic partnership, Volkswagen Group plans to make a $5 billion investment into Rivian. Initially Volkswagen Group will invest $1 billion in Rivian through an unsecured convertible note that will convert into Rivian’s common stock subject to certain conditions upon the later of receipt of regulatory approvals and December 1, 2024. Volkswagen Group is expected to invest a further $4B as part of the transaction.

There has been significant work done over the past months to validate that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles. The parties currently expect the completion of the JV formation in the fourth quarter of 2024. All transactions described in this release are subject to the completion of definitive agreements, the conditions included in those agreements, and the receipt of required regulatory approvals. Lazard is serving as lead financial advisor and BDT & MSD Partners is serving as financial advisor to Rivian.

Rivian recently hosted an open investor call. A recording of the call will be available for 12 months.