Volkswagen to invest up to $5 billion in EV maker Rivian

Volkswagen Group , with the approval of its Supervisory Board, is planning to invest $1 billion in Rivian through a Convertible Promissory Note Purchase Agreement.

The agreement details a structured shareholding based on average share prices of Rivian . Volkswagen’s eventual stake in Rivian will be determined partly by the equity interest at the agreement’s conclusion and partly by the equity interest at the conversion date.

In parallel, Volkswagen and Rivian plan to establish a joint venture focused on developing next-generation electrical/electronic (E/E) architecture for electric vehicles. Both companies will hold equal 50% stakes, sharing control of the venture. This partnership will give Volkswagen access to Rivian’s E/E architecture technology for its electric vehicles. However, the joint venture’s finalization hinges on technical feasibility reviews, ongoing negotiations, and regulatory approvals.

Volkswagen’s commitment extends beyond the initial $1 billion investment. If the joint venture materializes, Volkswagen intends to invest an additional $4 billion in Rivian and the joint venture by 2026. This includes two $1 billion investments in Rivian’s shares in 2025 and 2026, contingent on achieving specific milestones. Additionally, Volkswagen will inject $1 billion into the joint venture upon its foundation in 2024 and provide a $1 billion loan in 2026.

The comprehensive investment strategy could result in Volkswagen committing a total of $5 billion by 2026, with $2 billion potentially disbursed in fiscal year 2024. Consequently, Volkswagen has updated its financial forecast for 2024, anticipating net cash flow in the Automotive Division to range between €2.5 billion and €4.5 billion, down from the previous €4.5 billion to €6.5 billion. Net liquidity is expected to be between €37 billion and €39 billion.