Rivian soars after new joint venture partner Volkswagen invests $5B
Rivian Automotive (NASDAQ:RIVN) soared in postmarket trading on Tuesday after the electric vehicle maker disclosed that it intends to form a joint venture with Volkswagen (OTCPK:VLKAF) to create next-gen electrical architecture and best-in-class software technology.
The partnership is anticipated to accelerate the development of software for Rivian (RIVN) and Volkswagen (OTCPK:VLKAF). The partnership is seen as allowing both companies to combine their complementary strengths and lower the cost per vehicle by increasing scale and speeding up innovation globally. Rivian (RIVN) 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 (OTCPK:VLKAF) to utilize Rivian’s existing electrical architecture and software platform.
As part of the partnership, Volkswagen (OTCPK:VLKAF) will make a $5 billion investment in Rivian (RIVN). Initially, Volkswagen will invest $1 billion in Rivian through an unsecured convertible note that will convert into common stock subject to certain conditions upon the latter of receipt of regulatory approvals and December 1, 2024. Volkswagen (OTCPK:VLKAF) is expected to invest a further $4 billion as part of the transaction.
Shares of Rivian were up 36% in after-hours trading.