Joint Venture Established... Vehicle Launch by 2030
Rivian Secures Funding... Volkswagen Strengthens SW Capabilities
Rivian After-Hours Trading Up 50% Per Share
German automaker Volkswagen is investing 7 trillion won in the American electric vehicle company Rivian.
On the 25th (local time), Volkswagen announced that it will invest $5 billion (approximately 6.957 trillion won) in Rivian by 2026.
Initially, Volkswagen will invest $1 billion (approximately 1.3914 trillion won) to secure shares in Rivian, and then invest an additional $400 million (approximately 556.6 billion won) to establish a joint venture with Rivian.
The two companies aim to develop vehicles powered by next-generation batteries equipped with advanced software through the joint venture. They plan to launch vehicles incorporating the technology developed by the joint venture by 2030.
Oliver Blume, CEO of Volkswagen, said, "Through the cooperation of the two companies, we will provide the best solutions for vehicles faster and at a lower cost," adding, "We will strengthen our technology and competitiveness."
RJ Scaringe, CEO of Rivian, stated that the joint venture will be led by a balanced management team including co-CEOs, with Rivian appointing the head of technology and Volkswagen appointing the head of operations. He also mentioned that this cooperation will have a positive impact on Rivian's cash flow.
This investment will enable Rivian to secure large-scale funding, which is seen as a stepping stone for a resurgence. Rivian was once regarded as a rival to Tesla but has continued to post losses, recording a $1.45 billion loss in the first quarter of this year. Additionally, a decline in electric vehicle demand and the burden of high interest rates have negatively affected sales, leading to a 10% workforce reduction in February and an additional 1% reduction mainly in support departments in April. Construction of the Georgia plant has also been halted.
The cooperation between the two companies is expected to have a significant impact on the electric vehicle market. Volkswagen will be able to secure Rivian's software and electric vehicle technology.
The New York Times (NYT) stated, "If this partnership succeeds, the two companies will address their weaknesses," adding, "Volkswagen can acquire software expertise, which automotive analysts have pointed out as a weakness, and Rivian can gain the know-how of a manufacturer that produces 10 million vehicles annually, in addition to cash."
Rivian's stock price closed up 8.63% in regular trading on the New York Stock Exchange that day and surged more than 50% in after-hours trading following Volkswagen's investment announcement.
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