German automotive giant Volkswagen (VW) has announced plans to invest up to $5 billion (£3.94 billion) in US-based electric vehicle (EV) manufacturer Rivian, a key rival to Tesla.
This strategic partnership aims to create a joint venture that will enable both companies to share technology and strengthen their positions in the rapidly evolving EV market.
Following the announcement, Rivian’s shares surged by nearly 50%, reflecting investor optimism about the collaboration. VW will initially inject $1 billion into Rivian, with an additional $4 billion to be invested by 2026.
Rivian, founded in 2009, specializes in electric trucks and SUVs but has yet to achieve quarterly profitability, recording a net loss of over $1.4 billion in the first quarter of 2024. The investment from VW comes as the German automaker faces mounting pressure from EV leaders like Tesla and China’s BYD to transition from fossil fuel-powered vehicles to electric alternatives.
The joint venture will grant VW immediate access to Rivian’s advanced software, which the German carmaker plans to integrate into its own vehicles. This move is crucial as VW and other traditional automakers grapple with increasing competition from Chinese EV manufacturers expanding their global footprint.
The partnership announcement coincides with rising trade tensions as Western countries impose tariffs on Chinese imports. The European Union (EU) recently threatened to raise tariffs on Chinese EV imports by up to 38%, following a lengthy investigation that concluded Chinese EV companies were unfairly subsidized. China has condemned the investigation as protectionist and a violation of international trade rules.
Similarly, the US has announced plans to increase import levies on Chinese EVs from 25% to 100%, and Canada is contemplating a similar move to align with its allies.
In a separate development, Tesla has announced a recall of over 11,000 Cybertrucks in the US due to issues with windscreen wipers and exterior trim. The recall affects vehicles sold since their market release at the end of November last year.
As competition in the EV market intensifies and geopolitical tensions influence trade policies, the VW-Rivian partnership signifies a strategic effort by legacy automakers to innovate and remain competitive in the global shift towards electric mobility.