Rivian Automotive will get a much-needed cash infusion through a new partnership with Volkswagen as carmakers large and small rethink their strategies in a slowing electric-vehicle market.
The surprise tie-up provides the EV maker with a financial lifeline after it has struggled to ramp up production and deliveries of its electric pickup and SUV models. Rivian in March paused plans to build a new manufacturing plant in Georgia to conserve cash while contending with deep losses, which amounted to roughly $39,000 for each vehicle built last quarter.
Volkswagen plans to take the initial $1 billion equity stake in Rivian through an unsecured convertible note that will exchange into Rivian shares on or after December 1st. Amazon.com is Rivian’s largest shareholder with a 16 per cent stake valued at nearly $2 billion as of Tuesday’s close. On a call following the announcement, Rivian chief executive RJ Scaringe said that VW’s support will help Rivian move forward with plans to build the new plant in Georgia. Rivian remains contractually bound to investing $5 billion in the Georgia project by the end of the decade.