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On July 29th local time, the Federal Cartel Bureau, Germany's antitrust regulator, announced that it had approved the German Volkswagen Group to form a joint venture with Rivian Automotive, a new force in American carmaking, while allowing Volkswagen to acquire a minority stake in Rivian. "there is no serious competition problem to worry about in the cooperation between the two," Andreas Mundt, director of Bundeskartellamt, the German competition regulator, said in a statement.

The cooperation between Volkswagen and Rivian began in June this year, when the two sides planned to set up a joint venture to create next-generation electrical architecture and state-of-the-art software technology. based on the strategic partnership, Volkswagen Group plans to invest $5 billion (about 36.3 billion yuan) in Rivian, of which $1 billion (about 7.3 billion yuan) is an immediate investment. The remaining $4 billion (about 29.1 billion yuan) will be added in 2026.

Compared with the German manufacturer Volkswagen, Rivian, from the new power brand in the United States, is not well-known in the domestic market. Rivian was once regarded as Tesla's biggest competitor. however, the position of Rivian in the car market is far inferior to that of Tesla, and like most of the new car makers, Rivian is losing money.

According to the financial report, Rivian's revenue in 2023 was $4.434 billion (about 31.896 billion yuan), an increase of 167.4 percent over the same period last year, a record high, but a loss of $5.432 billion (about 39.076 billion yuan). In this context, Rivian also has to cut costs through layoffs. In April, Rivian announced that it would cut 1 per cent of its jobs in order to cut costs in the face of a general slowdown in demand for electric vehicles; in February, Rivian announced in its fourth-quarter 2023 results that Rivian would cut 10 per cent of its workforce because of slowing demand for electric vehicles and lower costs. The most intuitive reason behind the layoffs is the lack of money.

"Automotive Industry concern" believes that Volkswagen's investment of about 36 billion yuan is undoubtedly a timely help to Rivian. Rivian is not yet profitable. As of the first quarter of this year, Rivian had about $8 billion in paper cash and is expected to use about $9 billion from 2024 to 2026. With the help of Volkswagen, it may ease the cash flow pressure on Rivian and boost its production capacity.

In March, Rivian released a new medium-sized platform, which is the foundation of R2 and R3 product lines. Among them, R2 is Rivian's new medium-sized SUV, with a five-seat design, starting at about $45000 (about 323600 yuan), and delivery is expected to begin in the first half of 2026. For its production and sales target for the new fiscal year, Rivian expects to produce 57000 vehicles in fiscal 2024, roughly the same as in 2023, but well below analysts' expectations of 80, 000. For comparison, the cumulative production of Rivian in 2023 was 57232 vehicles, and the cumulative delivery of 50122 new cars was significantly lower than market expectations.

According to the latest financial report, Rivian delivered a total of 13588 new cars in the first quarter of this year. As of July 29, Rivian shares closed at $16.300, up 0.56%, with a total market capitalization of $16.224 billion.

It is understood that the cooperation between Volkswagen and Rivian will accelerate the software development of the two companies and reduce vehicle costs. As for whether the two sides will work together to build cars, Rivian previously said: "there are no plans to produce cars in partnership with Volkswagen." But even if the car is not built together, the deal is good for both sides. For Volkswagen, it can use Rivian software and electrical technology in electric vehicles to accelerate the strategic layout of electric vehicles; for Rivian, it can use the investment funds to produce low-cost electric models and increase production capacity.

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