Rivian Automotive and Volkswagen Group entered into a transaction agreement to create a new joint venture, Rivian and Volkswagen Group Technologies, in a total deal worth up to $5.8 billion. The venture is expected to start operations today.
The companies plan to bring next-generation electrical architecture and best-in-class software technology for both companies’ future electric vehicles, covering all relevant vehicle segments, including subcompact cars. It is highly complementary reflecting Rivian’s industry-leading software and electrical hardware technology as well as Volkswagen Group’s significant global scale.
The joint venture will be headed by Wassym Bensaid, Rivian chief software officer, and Carsten Helbing, chief technical officer at Volkswagen Group. Developers and software engineers from both companies will join the joint venture. Teams will be based in Palo Alto, California, initially, and three other sites are in development in North America and Europe. By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly.
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The JV will aim to use the existing Rivian electrical architecture and software technology stack, enabling the launch of Rivian’s R2 in the first half of 2026 and support the expected launch of the first models from the Volkswagen Group as early as 2027.
The JV will evolve this modular and flexible electrical architecture. It will scale the technology across a range of price points and international markets, paving the way for new generations of high-volume vehicles that are fully capable of advanced automated driving functions and can integrate over-the-air updates (OTA) and upgrades. Customers will regularly receive new software updates, increasing the added value throughout the entire lifecycle of the vehicle.
Teams from Rivian and Volkswagen Group have already successfully demonstrated the potential of their collaboration. In just twelve weeks, the team developed an initial drivable demonstrator vehicle. A Volkswagen Group vehicle has been retrofitted to run on Rivian’s in-market zonal hardware design and integrated technology platform. The drivable demonstrator vehicle acts as a proof-of-concept for the joint venture.
Volkswagen Group plans to invest up to $5.8 billion in Rivian and the joint venture by 2027. An initial investment of $1 billion in the form of a convertible note has already been made. At closing, Volkswagen Group will invest about $1.3 billion as consideration for background IP licenses and a 50% equity stake in the joint venture. These investments also balance part of lower future costs identified during the technical feasibility tests and the sharing of costs for the inclusion of selected Volkswagen MEB models.
The remaining investment of up to $3.5 billion is expected to come in the form of equity, convertible notes, and debt at future dates and based on clearly defined milestones. Further investments are tied to clear operational, technical, and financial milestones. The joint venture will operate as an independent company.
Through the partnership, Volkswagen Group aims to strengthen consumer benefits surrounding innovation, scalable platform and cost savings potential for both sides, as well as enhancing its R&D cost efficiency and thus sustainably reduce overall expenditure in this area.
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