NORMAL, Ill. (WMBD) – Rivian Automotive and Volkswagen Group announced a $5 billion joint venture on Tuesday to develop software that would be used in their electrical vehicles.
The two groups are working to create “next-generation electrical architecture and best-in-class software technology,” the companies said. The partnership is expected to accelerate the development of software for Rivian and Volkswagen Group.
The German carmaker will make an initial $1 billion investment into Rivian. Later, Volkswagen will kick in the remaining $4 billion as part of the deal.
“Our customers benefit from the targeted partnership with Rivian to create a leading technology architecture. Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” said Oliver Blume, CEO of Volkswagen Group. “We are also acting in the best interest of our strong brands, which will inspire with their iconic products.
“The partnership fits seamlessly with our existing software strategy, our products, and partnerships. We are strengthening our technology profile and our competitiveness,” he said.
By combining their efforts, the companies said, it’s believed they can lower production costs and speed up “innovation.”
Each company expects to roll out vehicles benefiting from the shared technology in about five years. In a short time, it’s expected that Volkswagen will use Rivian’s existing electrical architecture and software platform. This will allow Volkswagen to move faster to develop their own.
Each company will continue to separately operate their respective vehicle businesses.
Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture. Volkswagen Group plans to make a $5 billion investment into Rivian.
Riven’s founder, RJ Scaringe, said he was very excited about the partnership.
“Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this,” he said. “Not only is this partnership expected to bring our software and associated zonal architecture to an even broader market through Volkswagen Group’s global reach, but this partnership also is expected to help secure our capital needs for substantial growth.
“Rivian was created to help the world to transition away from fossil fuels through compelling products and services, and this partnership is beautifully aligned with that mission,” he added.