Workers assemble second-generation R1 vehicles at electric automaker Rivian’s manufacturing plant in Normal, Illinois, United States, June 21, 2024.
Joel Ángel Juarez | Reuters
Volkswagen takes billion-dollar stake in electric vehicle startup Rivienwhich seeks to reduce costs and consolidate liquidity amid slower-than-expected adoption of electric vehicles.
The companies also plan to create a joint venture, which could increase the investment up to $5 billion through 2026.
The companies announced the deal after markets closed Tuesday — two days before an investor event for Rivian, which has been under pressure from Wall Street over its cash burn and steep losses.
Volkswagen is now the second historic car manufacturer to take a stake in the Californian company. Ford engine was one of Rivian’s largest stakeholders, with around 12%, alongside Amazon when Rivian went public in 2021. The Detroit automaker sold the majority of its Rivian shares by 2023 after abandoning a plan to co-develop electric vehicles with the company.
Rivian reported a $1.45 billion loss in the first quarter of this year as it retooled its Normal, Illinois, factory to launch updated versions of its R1T pickup truck and its EV R1S SUVs before its new generation vehicles in 2026.
The company has been engaged in a cost-cutting mission for months. The company reduced its workforce, retooled its Illinois plant to increase efficiency and suspended construction of a new multibillion-dollar plant in Georgia. This latest move is expected to save more than $2.25 billion in capital expenditures, including the impact of starting production of Rivian’s next-generation R2 vehicle at its Illinois factory.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments at the end of March, with more than $9 billion in total liquidity.
This is a developing story. Please check back for additional updates.
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