Now it’s official: Volkswagen is getting help from US electric car maker Rivian for next-generation car software. To achieve this, the group is once again increasing its investment in a joint venture.
Volkswagen has sealed its partnership with Tesla’s US rival Rivian. It is expected that the first vehicles based on the new electric architecture will be implemented as early as 2027, as announced by CEO Oliver Blume at the start of the joint venture in Palo Alto,
The struggling car manufacturer increased its investment in the project again: the Wolfsburg-based company wants to spend 5.8 billion euros on the collaboration, 800 million more than previously planned. The aim of the joint venture is to give VW access to the Americans’ electrical architecture and software. The group hopes that this will lead to a change in software for new electric cars.
Software problems delayed model launch
The two companies had already announced their collaboration at the end of June, and the Federal Cartel Office finally gave its approval in July. The collaboration involves software, control computers and network architecture. The plan envisages a joint venture in which both manufacturers will develop and manage it equally. The basis is Rivian’s existing electronics architecture, which will be further developed.
Then new electric cars from VW will gradually switch to Rivian technology and software. The first models with the new technology should be launched in 2027, Blume said. ”We will start with Volkswagen, then Audi, Scout, Porsche, and then all the other brands.” This includes all vehicle classes, from small cars to luxury cars and sports cars. This will enable large quantities and falling costs. Rivian technology will only be used in electric cars.
The Wolfsburg-based company has struggled with problems with in-house software development for years, with repeated delays. Difficulties at software subsidiary Cariad have already delayed model launches, in some cases for several years. From the beginning, Rivian developed its own architecture in which the car electronics are divided into different zones with their own computers and therefore they do with fewer control devices. The second generation of the platform is now in use there.
Significant savings are expected
The new joint venture is set to begin operations today. It will be based in Palo Alto, California, with additional locations planned in Europe and North America. Most of the team will come from Rivian, as well as a few colleagues from Volkswagen, said the
Of the up to $5.8 billion that Europe’s largest car manufacturer plans to spend on the project, Rivian’s shares account for $3.5 billion. In addition, $2.3 billion will flow into the new joint venture, including $1 billion as a loan. Previously there was talk of three billion dollars for the Rivian entry and two billion for the joint venture. VW has increased both amounts again - mainly because more cars are going to get the new software than originally planned.
The Wolfsburg-based company expects significant savings from the software collaboration. Chief Financial Officer Arno Antlitz said the investment amount would be offset by lower costs in the joint venture and future savings in investment planning. This is reflected in the fact that the amount of investment for the planning round 2025 to 2029 was reduced to 165 billion euros. Meanwhile, Cariad will continue to play a central role in the VW Group going forward, Blume said, and will, among other things, be responsible for the topic of autonomous driving.
For Rivian, the deal is a very welcome cash injection. The company, founded in 2009, is still in the red and is currently struggling with declining interest in electric cars in the US. “This partnership and this deal definitely secures us the capital” needed to further increase our own production, said Rivian manager Scaringe.
In the last quarter, Rivian delivered about 10,000 vehicles, resulting in $874 million in sales and a $392 million loss. In the same period, the VW Group had almost 2.2 million deliveries, 78.5 billion euros in sales and, despite a huge drop in profit after taxes, still had a surplus of 1.58 billion euros.
Rivian is active in two of the most popular vehicle categories in the US, building large SUVs and pickup trucks. Rivian also produces electric delivery vans for Amazon, which can now also be seen in Europe. The world’s largest online retailer is also an investor. Rivian wants to use VW’s money to fund the development of the cheaper and smaller R2 off-road vehicle, which is due to hit the market in 2026.
What are the potential advantages of Volkswagen’s partnership with Rivian for the electric vehicle market?
Time.news Interview: Volkswagen and Rivian’s Strategic Partnership
Editor: Welcome to this edition of Time.news, where we dive into the latest developments shaping our world. Today, we have a special guest, Dr. Lisa Myers, an automotive industry expert and consultant, to discuss Volkswagen’s recent partnership with Rivian and what it means for the future of electric vehicles. Thank you for coming, Dr. Myers!
Dr. Myers: Thank you for having me! It’s an exciting time in the automotive industry.
Editor: Let’s jump right in. Volkswagen has officially partnered with Rivian, a growing player in the electric vehicle market. What’s the significance of this partnership for Volkswagen?
Dr. Myers: This partnership is crucial for Volkswagen, especially considering the challenges they’ve faced with their in-house software development. For years, they’ve struggled with delays and technical hurdles, particularly through their software subsidiary, Cariad. By partnering with Rivian, they gain access to a proven electrical architecture and advanced software solutions, which could significantly streamline their production and innovation processes.
Editor: It sounds like a strategic move. You mentioned Volkswagen’s difficulties with software. How has this impacted their current electric vehicle lineup?
Dr. Myers: As you rightly pointed out, software issues have caused delays in their model launches, affecting everything from their electric vehicle (EV) rollout to consumer trust. With Rivian’s expertise, which includes a modular approach to vehicle electronics, Volkswagen can expect to overcome these obstacles. The collaboration not only promises to enhance their EV technology but also allows them to pivot quickly in a rapidly changing market.
Editor: Speaking of technology, what specific benefits can we anticipate from leveraging Rivian’s existing architecture?
Dr. Myers: Rivian’s architecture is designed to minimize the number of control devices by dividing car electronics into zones with dedicated computers. This approach increases efficiency, reduces complexity, and ultimately can lower costs. For Volkswagen, this means they can scale their production across various models, from luxury vehicles to more affordable options, all powered by more reliable software.
Editor: Interesting! CEO Oliver Blume mentioned that we might see the first vehicles using this new architecture as early as 2027. Considering the plans to integrate Rivian technology across the Volkswagen group – including Audi, Porsche, and others – how does this affect the competition landscape?
Dr. Myers: This is a game changer. By integrating Rivian’s technology, Volkswagen positions itself to be more competitive against not only traditional manufacturers but also newer entrants in the EV market, like Tesla. The wide range of brands under VW’s umbrella means they can cater to various segments of the market effectively. If they can execute this partnership well, they could significantly enhance their market share and influence in electric mobility.
Editor: That leads us to their investment strategy. Volkswagen is increasing its investment in the joint venture to 5.8 billion euros, with a significant portion directly funding Rivian. What does this indicate about their growth strategy moving forward?
Dr. Myers: This substantial investment indicates that Volkswagen is serious about transforming its vehicle lineup and not just keeping up with the competition but leading the charge in electric vehicles. By committing to such a high figure, they are betting on the necessity of robust software capabilities and the scalability of Rivian’s technology. They’re also looking at long-term savings in production and development costs, which could be a major advantage as the automotive landscape evolves.
Editor: And what are the implications for consumers? Will we see benefits from this partnership in the vehicles themselves?
Dr. Myers: Absolutely! Consumers can expect more reliable vehicles with advanced features and technologies that enhance user experience. The collaboration is likely to result in electric cars that are not only more efficient but also more affordable, thanks to the optimized production processes. Ultimately, this should lead to a wider array of options that appeal to a broader customer base.
Editor: Dr. Myers, it sounds like Volkswagen’s collaboration with Rivian could set new benchmarks in the automotive industry. Thank you for sharing your insights with us today!
Dr. Myers: Thank you! It’s been a pleasure discussing the future of mobility with you.
Editor: We look forward to following this partnership and its developments closely. Until next time, stay tuned to Time.news for more insights into the pressing stories of our time.