Volkswagen Unveils $5.8 Billion Partnership with Tesla Competitor Rivian

Volkswagen Group (VW) and electric vehicle (EV) maker Rivian have deepened their partnership with the launch of a joint venture, as VW boosts its investment. The deal is now valued at $5.8 billion (£4.55 billion), up from the initial $5 billion commitment from VW.

Following the announcement, Rivian’s shares surged by more than 9% in after-hours trading.

The partnership will see the two companies share critical technologies at a time when EV sales are slowing, and competition from Chinese automakers is intensifying. For Rivian, which is still operating at a loss, the joint venture provides essential funding as it prepares to launch its more affordable R2 model next year—a smaller SUV aimed at broadening its market appeal.

For VW, the collaboration means integrating Rivian’s advanced technology into its own EV lineup, with the first VW models featuring Rivian tech expected by 2027.

In a joint statement, the companies emphasized that their combined expertise will help lower development costs and accelerate the rollout of new technologies. Developers and software engineers from both firms will initially work together in California, with plans to establish additional facilities in North America and Europe.

This deal comes amid growing expectations that VW, Europe’s largest automaker, is gearing up to announce significant cost-cutting measures. The company, which owns brands like Audi, Lamborghini, and Porsche, has been grappling with rising costs, slowing sales, and fierce competition from Chinese EV makers, while also facing challenges in transitioning away from traditional combustion engines.

Separately, Rivian has also been taking steps to reduce costs, including renegotiating supplier contracts and streamlining its manufacturing processes, as it grapples with softer demand for electric vehicles.

Rivian, which remains unprofitable, also produces electric delivery vans, including those for Amazon, its largest shareholder. Amazon has placed an order for 100,000 of these vans, with all units expected to be delivered by the end of the decade.