Rivian Automotive shares climbed over 30 per cent on Wednesday after a $5 billion investment announcement from German automaker Volkswagen.
The Volkswagen investment will boost the loss-making startup, help it roll out new electric vehicle models.
At 11:06 a.m. EDT, Rivian shares were at $15.64, higher $3.68 or 30.73 per cent.
In Wednesday’s pre-market session, Rivian shares soared 40 per cent after the Volkswagen announcement.
On Tuesday, the EV maker’s shares had closed at $11.96.
As per the deal, Rivian will form an equal joint venture with Volkswagen to share EV architecture and software that would eventually be used by VW’s brands including Audi, Porsche and Lamborghini.
Volkswagen’s investment would also provide the company the funding necessary to develop its less expensive Tesla Model Y-competitor R2 SUVs and its planned R3 crossovers, Rivian CEO RJ Scaringe told Reuters.
“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,” RJ Scaringe said in a statement.
Initially, Volkswagen will invest $1 billion in Rivian, with plans to invest up to an additional $4 billion.
That $4 billion includes an additional investment of up to $2 billion in Rivian’s common stock that’s expected to include two installments of $1 billion each in 2025 and 2026.
The $2 billion investment related to the joint venture is expected to be split between a payment at the inception of the JV and a loan available in 2026.
“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture,” Volkswagen Group CEO Oliver Blume said. “Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost.”
Rivian’s stock had lost nearly half its value this year after the EV maker had said in February that it does not expect to produce more vehicles in 2024.
In 2021, Rivian had scrapped a deal to make electric vehicles and commercial vans with Ford and also a deal with Mercedes Benz in 2022.
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Published: 26 Jun 2024, 08:08 PM IST
