Volkswagen, the German automobile firm, stated this week that it could make investments as much as $5 billion in Rivian, the American electrical automobile producer that makes electrical pickup vans, sport utility automobiles and supply vans.
The deal will assist Rivian, which has by no means turned a quarterly revenue, make extra electrical automobiles and assist persuade traders of its stability. It will present Volkswagen with the software program experience that auto analysts say it sorely lacks. And it’s a wager by Volkswagen, which might turn out to be a big shareholder of Rivian if regulators approve the deal, that Rivian will meet its promise of turning into “the following Tesla,” one thing that has up to now proved elusive.
Rivian, which was based in 2009 as Mainstream Motors, had billions in investments by 2021, together with from Amazon, BlackRock and Ford.
But because the case with many new electrical automobile firms, Rivian has additionally skilled hiccups in attempting to ramp as much as manufacturing, made more durable by provide chain points throughout the pandemic. In March, Rivian stated it could pause building of a $5 billion manufacturing unit in Georgia to economize. (It already has a manufacturing unit in Normal, Ill.)
In addition to giving Rivian entry to Volkswagen’s managerial experience, the funding can also be vital for the corporate’s monetary well being. The firm loses tens of 1000’s of {dollars} for every automobile it makes, and it reported losses of $5.4 billion in 2023, after dropping $6.8 billion the earlier yr.
R.J. Scaringe, Rivian’s founder and chief government, stated the funding would assist the corporate make a brand new S.U.V. and end building of the manufacturing unit in Georgia. But he additionally famous its significance to the corporate’s backside line.
“This is vital for us financially,” Mr. Scaringe stated after the partnership was introduced on Tuesday. As of Thursday night, shares of Rivian have been up about 40 p.c because the funding was introduced.
