Summary
- Rivian and Volkswagen formed a joint venture to develop the next generation of electric and electronic controls for electric vehicles
- Volkswagen ponied up $5 billion to fund the project, with each company owning 50% of the new enterprise
- The new architecture will start with Volkswagen brand vehicles and then expand to other brands within the Volkswagen Group
- Volkswagen raised its investment in the joint venture by an additional $800 million to show commitment to Rivian
- The JV will be known as Rivian and VW Group Technology, led by co-chief executive officers from both companies and staffed by employees from both companies
Article
Rivian and Volkswagen have formed a joint venture to develop the next generation of electric and electronic controls for electric vehicles. This partnership will focus on creating the architecture that determines how various electrical and electronic functions are designed and embedded in vehicles. While Rivian will contribute its expertise in making electric vehicles, Volkswagen has invested $5 billion in the project. The Federal Cartel Office in Germany has approved the arrangement, stating that the cooperation will help address the evolving digital and connected aspects of the automotive industry.
Volkswagen CEO Oliver Blume announced that the first vehicles using the new architecture are expected to arrive in 2027, beginning with Volkswagen brand vehicles and later expanding to other brands within the Volkswagen Group. The JV will be headquartered in Palo Alto, where the software developed will be utilized by both parent companies and could potentially be marketed to other automakers. This partnership provides a financial boost for Rivian, which has been operating at a loss due to decreased demand for electric vehicles in the US.
The joint venture, known as Rivian and VW Group Technology, will be led by co-CEOs from both companies. About 1,000 employees will work together to develop the software-based vehicle architecture. The collaboration aims to combine Rivian’s nimbleness with Volkswagen’s scale to improve vehicle margins and accelerate decision-making. The Scout brand also plans to utilize technology from this venture, potentially leading to a competition between similar vehicles produced by both companies in the marketplace.
As Volkswagen faces challenges following the 2015 diesel scandal, this partnership with Rivian may prove crucial for the manufacturer’s future. The technology developed will be easily translatable to Volkswagen models, allowing for faster decision-making and development. Despite a decrease in profits, Volkswagen has increased its investment in the joint venture to signify its commitment to Rivian. However, labor unrest at Volkswagen and ongoing negotiations with employees could impact the company’s financial position.
Amidst the partnership with Rivian, questions arise about Volkswagen’s prior link up with XPeng and its ability to develop electric vehicles independently. The cooperation with Rivian raises concerns about Volkswagen’s position at the bargaining table and its ability to navigate the rapidly evolving automotive industry. The future of both companies and their joint venture remains uncertain as they navigate financial challenges and technological advancements in the EV market.
Read the full article here
