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The joint venture between Germany's Volkswagen Group and Rivian Automotive, a new force in American carmaking, has made new progress.

On Nov. 12, local time, Volkswagen Group announced that it would invest an additional $5.8 billion in Rivian Automotive, a new US car-building power, and its joint venture, up 16 per cent from the previous $5 billion and hold a 50 per cent stake. Rivian shares rose more than 17% on Nov. 13 on the news.

It is understood that the $5.8 billion investment mentioned above includes $1 billion in convertible notes, $1.3 billion in intellectual property licenses, 50 per cent equity and up to $3.5 billion in additional investments related to future milestones. Separately, Volkswagen said the joint venture would operate as an independent company and would be jointly led by Wassym Bensaid, chief software officer of Rivian, and Carsten Helbing, chief technology officer of Volkswagen, who would jointly lead a panel of about 1000 engineers from both companies. The first Volkswagen model with Rivian technology is scheduled to go on sale as soon as 2027.

Volkswagen has previously said that the cooperation between the two companies will accelerate software development and reduce vehicle costs. Commenting on the additional investment of $5.8 billion, Oliver Blume, chief executive of Volkswagen Group, said: "partnering with Rivian is the next step in strengthening its global competitive and technological position." RJ Scaringe, CEO of Rivian, pointed out that he is glad that his technology has been integrated into vehicles other than Rivian and is looking forward to further development.

The Volkswagen Group officially launched a partnership with Rivian in June, when Volkswagen announced plans to invest $5 billion (about 36.3 billion yuan) in a joint venture with Rivian to jointly create electrified architecture and software technology. Then in July, the Federal Cartel Office, Germany's antitrust regulator, formally approved the establishment of a joint venture and allowed Volkswagen to acquire a minority stake in Rivian.

The additional investment of Volkswagen Group is due to the fact that the joint venture between the two sides advanced part of the future investment funds from Volkswagen Group in advance, while adjusting the equity investment. For comparison, of the $5 billion (about 36.3 billion yuan) Volkswagen planned to invest in Rivian, $1 billion (about 7.3 billion yuan) is an immediate investment, and the remaining $4 billion (about 29.1 billion yuan) will be added in 2026. In other words, the additional investment is $800m more than the previous $5 billion.

Compared with Volkswagen Group, the American new power brand Rivian is not well-known in the auto market. Early last month, Rivian released production and sales figures for the third quarter of this year. Data show that Rivian's manufacturing plant in Normal, Illinois, produced 13157 vehicles, down 19.30% from 16304 in the same period last year, and delivered 10018 vehicles, down 35.63% from 15564 in the same period last year. The decline in production and sales data was due to a shortage of shared components on R1 and RCV platforms, which disrupted Rivian production. As a result, Rivian had to lower its annual production target from 57000 to 47000 to 49000; the annual delivery target is expected to be 50500 to 52000.

In addition to the decline in production and sales data, Rivian also faces a lack of 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). To this end, since 2024, Rivian has been reducing costs and efficiency, reducing capital expenditure through layoffs and restructuring plants, and has announced layoffs to reduce costs in February and April this year.

For Volkswagen Group's investment in Rivian, it is generally believed that this fund can effectively alleviate the cash flow pressure that Rivian is currently facing and help its production capacity increase. Although the two sides have previously decided not to work together to build cars, the deal is also beneficial to both sides. With the injection of additional funds from Volkswagen Group, Rivian's R2 model may be able to hit the market faster. It is understood that R2 is a new medium-sized SUV under Rivian, 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 Volkswagen Group, this investment can also upgrade its technology in the field of electric vehicles. With the deepening of Chinese brands in the field of new energy vehicles, Volkswagen is facing greater competitive pressure in the field of new energy vehicles. After the two sides start cooperation, Volkswagen can use Rivian software and electrical technology in electric vehicles, thus accelerating the strategic layout of electric vehicles.

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