VW and Rivian have deepened their alliance with VW increasing the value to a staggering $5.8 billion from the initially pledged $5 billion by VW. The cooperation has, on its part, enabled VW to add Rivian’s electric vehicle technology to the list, with the first models expected to arrive by 2027.
The global demand for EVs is slowing, and Chinese producers are turning up the heat on both companies. Rivian will raise money for its new R2 model – an SUV compact and more economical than the R1 – which considers entering into the European market with a joint venture with Geely. VW profits from the EV innovations by Rivian for cutting costs on development.
The collaboration would lead to teams of both companies starting to work together, first in California. Apart from that, facilities will be established in North America and Europe.
This joint venture would benefit VW because the company is moving away from internal combustion engines due to rising operational costs and competition, not to mention the slow adoption of EVs in Europe. Soon, cost-cutting measures will begin at VW, which includes brands Audi and Porsche.
Meanwhile, Rivian is working on efficiency improvements, including renegotiations with suppliers, optimization of manufacturing, and cutting expenses considering lower demand for EVs. Rivian – a company mainly building SUVs and electric vans – makes electric vans, which will go to Amazon, the largest shareholder in Rivian, within an order of 100,000 units by 2030. This strategic play will strengthen Rivian’s capital position as it works towards profitability and production scale-up in such a competitive industry.
