Volkswagen Group (VW) and Tesla rival Rivian have formed a joint venture, with the German auto giant increasing its investment in the partnership.
The two companies said the deal is now worth $5.8 billion – up from The initial commitment from VW is $5 billion.
Shares of the US electric vehicle (EV) maker rose more than 9% in after-hours trading following the announcement.
The partnership will see the companies share key technology at a time of slowing global electric car demand and growing competition from Chinese rivals.
The joint venture provides loss-making Rivian with a vital source of funding as it prepares to launch the R2 next year – a sport utility vehicle (SUV) that is smaller and more affordable than its competitors. Present.
It also means VW will be able to use Rivian’s technology in many of its vehicles.
The first VW models equipped with Rivian technology are expected to reach customers as early as 2027.
“By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies faster,” the two companies said in a statement.
According to the plan, developers and software engineers from both companies will initially work together in California, while three other facilities in North America and Europe will be established.
This comes as expectations grow that VW, Europe’s largest carmaker, is planning to announce major cost-cutting measures.
The group, which also includes brands such as Audi, Lamborghini and Porsche, is struggling with higher costs, weakening sales, competition from Chinese electric car makers and a move away from China. Gasoline and diesel vehicles travel slower than expected.
Rivian alone has taken steps to cut costs amid falling demand for electric vehicles.
The still-unprofitable startup has renegotiated contracts with suppliers and made its production process more efficient.
In addition to SUVs, Rivian also produces electric delivery trucks, mainly supplying online retail giant Amazon – its largest shareholder.
Amazon has ordered 100,000 vehicles, all of which will be delivered by the end of the decade.
