Rivian saw its shares jump over 13% in premarket trading on Wednesday after securing a $5.8 billion investment from German automaker Volkswagen as part of their new joint venture aimed at advancing electric vehicle (EV) technology.
The joint venture, named Rivian and VW Group Technology LLC, is expected to leverage Rivian’s software capabilities and Volkswagen’s advanced electrical infrastructure to drive development in future EV models for both brands. This strategic collaboration comes at a crucial time for Rivian, which is seeking to streamline costs and edge closer to profitability with the planned launch of its smaller, budget-friendly R2 SUV model.
“It [the investment] is a vote of confidence in the EV maker’s prospects, as support for EVs in the U.S. faces a more uncertain future, given Trump is returning to the White House,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Volkswagen’s investment plan includes $1 billion in convertible notes, $1.3 billion for intellectual property licenses and equity, and up to $3.5 billion in future contributions through equity, notes, and debt upon achieving certain milestones by 2027. According to Canaccord Genuity analysts, the venture may help position Rivian as a competitive player in the EV market outside of Tesla’s dominance, especially in the Western world.
Following Trump’s recent election victory, Rivian and other EV stocks experienced a decline, while Tesla shares remained relatively stable. Streeter remarked that “Tesla’s Elon Musk has been given a seat at Trump’s top table,” potentially reshaping the policy landscape for other EV manufacturers.
Rivian’s stock has underperformed this year, dropping nearly 55% before Wednesday’s news. If the early gains hold, Rivian could see its market value increase by approximately $1.45 billion, boosting its standing amidst fierce competition in the EV sector.
