Volkswagen’s recently announced partnership with electric vehicle (EV) maker Rivian has taken the auto industry and investors by surprise. The deal, which involves a technology joint venture and a significant investment of up to $5 billion by Volkswagen, is crucial for both companies. For Rivian, the financial lifeline provided by Volkswagen will help the startup navigate a slowdown in EV demand, develop its more affordable R2 SUVs, and ultimately become profitable. Additionally, Rivian stands to benefit from better deals and increased purchasing power with suppliers through Volkswagen’s backing. Following the announcement, Rivian’s shares jumped 23%, indicating investor confidence in the partnership.
For Volkswagen, the collaboration with Rivian presents an opportunity to access low-cost, high-performance EV technology that traditional automakers have struggled to master. The German automaker’s software unit, Cariad, which was established to rival Tesla’s dominance in the EV market, has faced delays and losses due in part to sluggish decision-making. The partnership with Rivian is seen as a way to accelerate progress in this area.
The discussions that led to this collaboration began when Rivian CEO RJ Scaringe and Volkswagen CEO Oliver Blume met privately at Porsche’s experience center in Atlanta. Scaringe revealed that initial conversations revolved around shared interests in vehicles, leading to serious discussions on how the two companies could work together. The companies wasted no time and immediately began working on joint projects. A team from Rivian visited Volkswagen in Germany, and testing was conducted to ensure seamless integration between Rivian’s technology and Volkswagen’s vehicles.
Overcoming the challenges of integrating different work cultures was a key concern for both companies. To address this, Volkswagen decided to embrace Rivian’s agility and nimble software approach, setting clear rules and responsibilities for the joint venture. This move was intended to alleviate investor concerns about potential clashes between Volkswagen’s traditional approach to automaking and Rivian’s software-focused methods.
While the partnership has been kept under wraps, Rivian conducted tests on Audi vehicles at its facility in Palo Alto. These tests, which took place earlier this year, paved the way for financial discussions between the two companies. However, there is still additional testing needed to ensure that Volkswagen vehicles equipped with Rivian software can operate with complete functionality.
Overall, the partnership between Rivian and Volkswagen represents a significant step forward for both companies. For Rivian, it secures the funding needed for growth and provides access to Volkswagen’s resources and supply chain. For Volkswagen, it offers an opportunity to accelerate its EV technology development and catch up with industry leaders like Tesla. With this collaboration, Rivian’s CEO Scaringe, who is a Porsche enthusiast himself, is excited about the prospect of seeing Porsches on the road equipped with Rivian’s technology.