Rivian and VW Try to Save Each Other

Cars and Drivers

Published: November 13, 2024 6:20 am

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Volkswagen and Rivian Automotive Inc. (NASDAQ: RIVN) have created a joint venture to help save both.
This comes at a time when electric vehicle sales have slumped.
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Volkswagen, staggered by its lack of success in the electric vehicle (EV) market, and Rivian Automotive Inc. (NASDAQ: RIVN), a small EV company fighting for survival, have created a joint venture to help save both.

VW, which plans to close three plants in its home market in Germany due to slow sales, will invest $5.8 billion in Rivian. The world’s second-largest car maker will have access to Rivian’s technology. In addition, the two companies hope to launch the R2, a Rivian SUV, in 2026. The total investment will include the $1 billion VW has already invested. The money will go into Rivian and a joint venture called the Rivian and VW Group Technology LLC.

“This partnership and this deal secures the capital for us to ensure that we can’t only take Rivian through the launch of R2 at Normal, but secures the launch of and growth of R2 in our Georgia facility and through (to being) cash flow positive for us as a business,” Rivian CEO R.J. Scaringe said. Whether the JV will work is another matter. That is because EV sales in the United States and the European Union are under siege as people stay with gasoline-powered vehicles.

Rivian recently said it would produce between 47,000 and 49,000 vehicles this year, below its previous plan. It blamed part of its supply chain. In the most recent quarter, Rivian had revenue of $874 million and a net loss of $1.1 billion.

EV growth in the U.S. market has slowed. In some parts of Europe, sales are actually falling, including a large dip in Germany throughout the year. Consumers worry about the range of EVs, the length it takes to charge them, low charging levels in cold weather, and high tire wear rates. A joint venture will not change that.

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