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Rivian Automobiles (NASDAQ: RIVN) announced that it would form a joint venture with Volkswagen (OTCPK:VLKAF) (OTCPK:VWAGY), sending some shock waves through the entire electric vehicle industry.
Excluding Rivian (RIVN), Volkswagen (OTCPK:VLKAF) has $5 billion in initial and planned investments) The current cash position is expected to help fund the EV maker’s operations through construction of the R2 in Normal, Illinois, and a mid-size platform in Georgia, which is seen as achieving positive free cash. Pathways to flow and meaningful scale.
RJ Scaringe, CEO of Rivian (RIVN), said: “This collaboration will leverage the global reach and scale of the Volkswagen Group to bring Rivian’s software and regional electronics platforms to a broader market.”
Early reaction from analysts is that Volkswagen’s ( OTCPK:VLKAF ) investment will give Rivian ( RIVN ) more flexibility on its path to profitability. While the joint venture does not include collaboration between the companies on electrical hardware, motors, batteries and vehicle platforms, the development of next-generation software-defined vehicle platforms can be shared with other companies. CFRA’s Garrett Nelson warned: “While this announcement is a vote of confidence in Rivian, we don’t think it will do much to change the company’s operational issues and troubling cash burn rate of about $1 billion per quarter. He added: “The key question is why Volkswagen would make such a large investment in a troubled electric vehicle manufacturer that may face going concern risks in the future, but clearly Volkswagen sees the opportunity to obtain RIVN The value of automotive architecture and software.
Rivian Automotive (RIVN) shares rise 49.9% In after-hours trading, it rose 8.6% during the regular trading session. The EV stock is still trading well below its 2021 IPO pricing level of $78 and has an all-time high closing price of $172.01.
Industry Observation: Major automakers are pulling back from aggressive electric vehicle strategies, adding to speculation that partnerships could become more common. Morgan Stanley believes that one option for traditional automakers is to pull the cooperation lever. General Motors (GM), Ford Motor (F) and Stellantis (STLA) could partner with China, work with EV startups, work closely with each other, or even work with Tesla (TSLA) on licensing or supply deals. The strategy would mark a reversal from previous plans to copy Tesla Inc. It is worth noting that Tesla (TSLA) CEO Elon Musk said last year that the company was negotiating with another major automaker to license fully autonomous driving software. Some analysts believe NIO’s aggressive moves in Europe could be a harbinger of major partnerships with local companies.
