Volkswagen is set to invest a massive $5 billion in the electric car industry, with $3 billion of that amount going directly into the company itself and $2 billion used for a joint development project. The focus of this collaboration is on software-based electric cars, with Rivian, an American electric car manufacturer, being the primary partner.
The goal of this joint venture is to develop technology that can be incorporated into the car models of both companies by the end of the decade. Rivian’s software technology will play a key role in this process, with Volkswagen looking to leverage its expertise to accelerate the development of software-based cars.
Financial media reports suggest that Volkswagen’s own Cariad unit has faced challenges in launching new products in a timely manner. By partnering with Rivian, Volkswagen hopes to strengthen its position in the competitive electric car market and overcome these challenges.
For Rivian, this partnership represents much-needed validation of its financial status. The investment will help address the company’s capital needs for growth and expand its software technology to a wider market. Following the announcement of the partnership, Rivian’s stock price surged over 30% in after-hours trading.