Volkswagen Group (VW) has increased its planned investment in a partnership with electric vehicle maker Rivian by 16 percent ahead of operations launching on Wednesday, the two companies announced.
The deal will leverage Rivian’s “industry-leading software and electrical hardware technology” and Volkswagen Group’s “significant global scale and industry-leading vehicle platform competencies” to create next-generation electric vehicle architecture and software for future models, including subcompact cars, according to the two companies.
The first models equipped with Rivian technology are expected to launch from the Volkswagen Group as early as 2027, while Rivian will use its existing technology to launch its R2 vehicle in the first half of 2026.
“By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly,” Rivian and Volkswagen Group said. “The goal is to be able to offer customers the best technological solution as early as possible.”
The joint venture will be headed by Rivian chief software officer Wassym Bensaid and VW Group chief technical engineer Carsten Helbing, and developers and software engineers from both companies will initially work from Palo Alto, California.
Three other sites are also in development in North America and Europe, the two companies said.
Rivian has already received an initial investment of $1 billion from Volkswagen Group in the form of a convertible note. The Tesla rival will also receive around $1.3 billion for intellectual property licenses, a 50 percent equity stake in the venture, and up to $3.5 billion in future equity, notes, and debt at future dates and based on specific milestones.
The joint venture will operate as an independent company, according to the statement.
Shares of Rivian, valued at more than $11 billion, rose nearly 9 percent in extended trading on Tuesday, before dropping down by 4. 17 percent.
The joint partnership between Rivian and Volkswagen comes as slowing global demand for electric vehicles and increased competition from Chinese rivals has prompted some companies to slash production and initiate layoffs.
Announcing the increased investment in the joint partnership between Volkswagen Group and Rivian on Tuesday, Volkswagen Group CEO Oliver Blume said the deal is the “next logical step in strengthening our global competitive and technological position.”
Elsewhere, Rivian founder and CEO RJ Scaringe said the joint venture marks an “important step forward in helping transition the world to electric vehicles.”