Rivian and Volkswagen strike software deal

RIVIAN Automotive and Volkswagen Group have announced their intention to form an equally controlled and owned joint venture to create next-generation electrical architecture and what the pair describe as best-in-class software technology.

The partnership is anticipated to accelerate the development of software for the duo and is expected to allow both companies to combine their complementary strengths and lower per-vehicle costs by increasing scale and accelerating innovation globally.

It is understood Rivian’s in-market zonal hardware design and integrated technology platform are expected to serve as the foundation for future Software Defined Vehicle (SDV) development within the joint venture that will be applied to both companies’ vehicles.

Rivian said it plans to contribute its electrical architecture expertise and is expected to licence existing intellectual property rights to the joint venture.

Both Rivian and Volkswagen aim to launch vehicles benefitting from the technology created together in the latter half of this decade.

In the more immediate term, the joint venture is expected to enable the Volkswagen Group to utilise Rivian’s existing electrical architecture and software platform. The partnership aims to accelerate Volkswagen’s SDV plans and its transition to pure zonal architecture.

Each company will continue to separately operate their respective vehicle businesses.

“We’re very excited to be partnering with Volkswagen Group. 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 recognised this,” said Rivian founder and chief executive officer Robert Scaringe.

“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.”

Underpinned by the vision of the strategic partnership, Volkswagen Group plans to make a $US5 billion ($7.45b) investment into Rivian.

Initially Volkswagen Group will invest $US1 billion ($A1.49b) in Rivian through an unsecured convertible note that will convert into Rivian’s common stock subject to certain conditions upon the later of receipt of regulatory approvals by December 1, 2024.

Volkswagen Group is expected to invest a further $US4 billion ($A5.96b) as part of the transaction.

“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 Volkswagen Group chief executive officer Oliver Blume.

“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.”

There has been significant work done over the past months to validate that Rivian’s electrical architecture and software are compatible with Volkswagen Group’s vehicles.

The parties currently expect the completion of the joint venture formation in the fourth quarter of 2024.