Volkswagen, the German car company, said this week that it will invest up to $5 billion in Rivian, the American electric vehicle maker 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 convince investors of its stability. It will give Volkswagen the software expertise that automotive analysts say it lacks. And it’s a bet by Volkswagen, which could become a big Rivian shareholder if regulators approve the deal, that Rivian will make good on its promise of becoming “the next Tesla,” something that has so far proven elusive.
Rivian, which was founded in 2009 as Mainstream Motors, had billions of dollars in investments in 2021, including from Amazon, BlackRock and Ford.
But as with many EV startups, Rivian has also experienced setbacks in trying to ramp up production, which was hampered 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, Illinois.)
In addition to giving Rivian access to Volkswagen’s management expertise, the investment is also important for the company’s financial health. The company loses tens of thousands of dollars on every vehicle it makes and reported losses of $5.4 billion in 2023, after losing $6.8 billion the year before.
Rivian founder and CEO RJ Scaringe said the investment would help the company build a new SUV and finish building a factory in Georgia, but he also highlighted its importance to the company’s bottom line.
“This is important to us financially,” Scaringe said after the partnership was announced Tuesday. As of Thursday evening, Rivian shares had risen about 40 percent since the investment was announced.
