Rivian Automotive (NASDAQ: RIVN) stock surged in pre-market trading Wednesday following reports of a significant investment from German automaker Volkswagen. Volkswagen plans to invest $5 billion in Rivian as part of a joint venture to develop industry-leading vehicle software technology.
In a joint statement released late Tuesday, the automakers said Volkswagen will initially invest $1 billion in Rivian through an unsecured convertible note. This note will convert into Rivian shares on or after December 1. Volkswagen expects to inject an additional $4 billion into Rivian by 2026.
RJ Scaringe, founder and CEO of Rivian, expressed optimism about the partnership, stating,
“Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.”
This joint venture comes after Ford (NYSE: F) exited its majority stake in Rivian last year, abandoning its plans to co-develop plug-in vehicles with the California-based EV startup. Over the past two years, electric vehicle manufacturers have faced challenges such as narrowing profit margins amidst heightened competition from Chinese counterparts and a sales slowdown exacerbated by higher interest rates.
In its most recent quarter, Rivian reported a loss of $1.45 billion as it continues to update its manufacturing facilities in preparation for the launch of its updated vehicle lineup, including pickups, SUVs, and the upcoming R2 and R3 midsize platforms, expected to debut in 2026.
During an investor call on Tuesday evening, Scaringe emphasized that the Volkswagen investment will support Rivian’s path to profitability, facilitating the ramp-up of next-generation vehicle production.
Rivian (NASDAQ: RIVN) Stock Price Action
As of 07:55 a.m. (Eastern Time) Wednesday, RIVN stock traded at $17.11, marking a 43.06% increase compared to the previous trading session.
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