PRISM EV Index Mover Rivian (RIVN) Finds Power from Volkswagen Investment, Shares Surge

Shares of PRISM Emerging EV Index company Rivian (RIVN), surged in pre-market trading on Wednesday after Volkswagen committed to an immediate $1Bn investment in the struggling electric vehicle maker, with the potential to invest up to $5Bn under a software development agreement.

Rivian’s market value neared $86Bn soon after its 2021 IPO, but the company is in urgent need of funding for its next vehicle and is experiencing significant financial losses. Volkswagen seeks assistance with its software, an area where Rivian is highly regarded. Additionally, Volkswagen announced the rollout of Cerence Chat Pro, a voive over AI software that will be used in its vehicles.

Volkswagen’s additional investment may include up to $2Bn in Rivian’s common stock, expected to be made in two $1Bn installments in 2025 and 2026. Another $2Bn investment related to the joint venture will be split between an initial payment and a loan available in 2026.

Both companies anticipate reducing their per-vehicle production costs while increasing their production scale.

Rivian plans to license its existing intellectual property rights to the joint venture, enabling Volkswagen Group to utilize Rivian’s electrical architecture and software platform.

Vehicles incorporating the technology produced by the joint venture, first announced late Tuesday, are expected to launch in the latter half of the decade.

Rivian, headquartered in Irvine, California, made a significant impact during its 2021 stock market debut, with shares soaring 53% and its market value nearing $86 billion, surpassing Ford and just below General Motors.

Investors were on the lookout for the next major player in the electric vehicle market, and Rivian had already attracted several high-profile backers.

Rivian secured a contract with Amazon.com to produce 100,000 electric delivery vans and received a half-billion dollar investment from Ford.

However, Rivian has yet to turn a profit, and its stock has declined from its previous highs. To conserve cash, Rivian halted construction on a $5Bn electric truck plant in Georgia and announced in March that there is no timetable for resuming work on the plant.

The joint venture with Volkswagen could provide the needed boost, with Wedbush’s Dan Ives describing the agreement as a game changer for Rivian.

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PRISM EV Index Mover Rivian (RIVN) Finds Power from Volkswagen Investment, Shares Surge

Ashlee Vogenthaler

Markets Editor