Rivian’s Stock Soars with Expanded Volkswagen Partnership
Electrifying Collaboration
Rivian’s stock surged up to 16% in early afternoon trading on Wednesday, driven by the electric vehicle (EV) maker’s announcement of an expanded partnership with Volkswagen. The German automaker is investing more heavily in their joint venture, which will utilize Rivian’s cutting-edge electrical architecture and software stack.
Zonal Architecture Takes Center Stage
The joint venture, initially announced in June, will enable the launch of Rivian’s highly anticipated midsize R2 SUV in the first half of 2026. In a significant development, Rivian’s technology will also underpin the expected launch of new Volkswagen EVs as early as 2027. The partnership will begin operations today, initially focusing on North America before expanding to Europe, and will also support the development of EVs in the subcompact segment.
Volkswagen’s Significant Investment
Volkswagen will increase its total deal investment to $5.8 billion, up from the initial $5 billion. The German automaker has already invested $1 billion in the form of a convertible note into the joint venture and will inject around $1.3 billion for background IP licenses and a 50% equity stake. The remaining $3.5 billion will be provided in the form of equity, convertible notes, and debt at future dates, contingent upon meeting specific milestones.
A Key Move for Rivian
Wedbush analyst Dan Ives views this partnership as a crucial step forward for Rivian, providing the necessary capital for the R2 ramp and GA plant R2/R3 midsize platform. While the focus remains on Rivian’s R1 execution plans, production, optimization, and profitability story, this deal marks a significant milestone for the company.
Addressing Supply Chain Issues
Last week, Rivian revealed that it expects a wider-than-expected full-year loss due to supply chain parts issues. However, the company still anticipates a modest gross profit in Q4. Despite these challenges, Wedbush maintained its Outperform rating and $20 price target following the announcement of the expanded deal.
Volkswagen’s Software Woes
Volkswagen’s need for Rivian’s software expertise comes as no surprise, given the development delays and software bugs plaguing its CARIAD software unit. This partnership provides a solution to these issues, ensuring the successful launch of VW group vehicles like the Porsche Macan EV and other Audi models.
A Runway to Production
For Rivian, this capital infusion provides a vital runway to production of the upcoming volume R2 vehicles. As the company continues to navigate supply chain challenges, this partnership marks a significant step towards achieving its production goals.
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