Volkswagen to Invest USD5 Billion in Rivian for Next-Gen EV Joint Venture
Today, EV makers are up on news that Volkswagen is investing USD5 billion in Rivian for next-gen EV joint venture.
Volkswagen AG is set to invest USD5 billion in Rivian Automotive Inc. for the development of next-generation electric vehicles.
The German group is buying a USD1 billion stake in the US-based EV maker and invest another USD4 billion to form the joint benture. The investment will see both companies collaborating in a joint venture aimed at advancing EV technology and expanding their market presence.
"This partnership brings Rivian's software and zonal electronics platform to a broader market through Volkswagen Group's global reach and scale, while providing an expected USD5B of capital to Rivian as we bring R2 and our next generation of vehicles to market!," Rivian CEO RJ Scaringe said.
In a statement, the German group said that, in case the joint venture would be established successfully, Volkswagen "intends to make further investments in shares of Rivian Automotive, Inc., or in the joint venture in the total amount of 4 billion USD".
"The additional investment in shares of Rivian Automotive, Inc., would be made in two tranches of 1 billion USD each in 2025 and 2026 and would be contingent on Rivian Automotive, Inc., and the joint venture achieving certain milestones. With respect to the joint venture Volkswagen would provide a payment in the amount of 1 billion USD upon foundation of the joint venture in 2024 and grant a loan in the amount of 1 billion USD in 2026," VW added.
Earlier in the day, Guggenheim analyst Ronald Jewsikow initiated coverage of the electric vehicle maker Rivian with a Buy rating and an USD18 price target, forecasting a breakeven on gross margins in the last quarter of the year.
Jewsikow projects that Rivian's scalable and vertically integrated architecture, combined with its upcoming R2 and R3 models, will enable the company to achieve high-teens gross margins.
The EV maker has recently sold out its 2023 made models after the introduction of several incentives.
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