Workers assemble second-generation R1 vehicles at electric auto maker Rivian’s manufacturing facility in Normal, Illinois, U.S. June 21, 2024.
Joel Angel Juarez | Reuters
Volkswagen is taking a $1 billion stake in electric vehicle startup Rivian, which has been seeking to cut costs and shore up cash amid slower-than-expected adoption of EVs.
The companies also plan to establish a joint venture, which could increase the investment to up to $5 billion until 2026.
The companies announced the deal after markets closed Tuesday – two days ahead of an investor event for Rivian, which has been under pressure from Wall Street due to its cash burn and significant losses.
Volkswagen is now the second legacy automaker to take a stake in the California-based company. Ford Motor was among Rivian’s largest stakeholders, at roughly 12%, alongside Amazon when Rivian went public in 2021. The Detroit automaker sold a majority of its Rivian shares by 2023 after walking back a plan to codevelop EVs with the company.
Rivian reported a loss of $1.45 billion during the first quarter of this year, as it retooled its plant in Normal, Illinois, to launch updated versions of its R1T pickup and R1S SUV EVs ahead of its next-generation vehicles in 2026.
The company has been on a cost-cutting mission for months. It has trimmed staff, retooled its Illinois plant to increase efficiencies and paused construction of a new multibillion-dollar factory in Georgia. That last measure is expected to save more than $2.25 billion in capital spending, including the impact of starting production of Rivian’s next-generation R2 vehicle at its plant in Illinois.
Rivian reported $7.86 billion in cash, cash equivalents and short-term investments to end March, with more than $9 billion in total liquidity.
This is a developing story. Please check back for additional updates.