Volkswagen, the German car company, said this week that it would invest up to $5 billion in Rivian, the American electric vehicle manufacturer that makes electric pickup trucks, sport utility vehicles and delivery vans.
The deal will help Rivian, which has never turned a quarterly profit, make more electric vehicles and help convince investors of its stability. It will provide Volkswagen with the software expertise that auto analysts say it sorely lacks. And it’s a bet by Volkswagen, which could become a large shareholder of Rivian if regulators approve the deal, that Rivian will meet its promise of becoming “the next Tesla,” something that has so far proved elusive.
Rivian, which was founded in 2009 as Mainstream Motors, had billions in investments by 2021, including from Amazon, BlackRock and Ford.
But as the case with many new electric vehicle companies, Rivian has also experienced hiccups in trying to ramp up to production, made harder by supply chain issues during the pandemic. In March, Rivian said it would pause construction of a $5 billion factory in Georgia to save money. (It already has a factory in Normal, Ill.)
In addition to giving Rivian access to Volkswagen’s managerial expertise, the investment is also important for the company’s financial health. The company loses tens of thousands of dollars for each vehicle it makes, and it reported losses of $5.4 billion in 2023, after losing $6.8 billion the previous year.
R.J. Scaringe, Rivian’s founder and chief executive, said the investment would help the company make a new S.U.V. and finish construction of the factory in Georgia. But he also noted its importance to the company’s bottom line.
“This is important for us financially,” Mr. Scaringe said after the partnership was announced on Tuesday. As of Thursday evening, shares of Rivian were up about 40 percent since the investment was announced.
Source: nytimes.com
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