Shares of Rivian (RIVN) are up 35% on news that German automotive giant Volkswagen (VOW3) is investing up to $5 billion U.S. in the electric vehicle start-up company.
Volkswagen’s investment in Rivian is beginning with an initial injection of $1 billion U.S.
The additional $4 billion U.S. will be allocated in tranches through 2026.
In a news release, the two companies said that the investment by Volkswagen is being made to create a joint venture with Rivian that will see the two automakers work on electrical architecture and software technology together.
Shares of Rivian soared as much as 50% in after-hours trading on news of the Volkswagen investment. However, that gain has since moderated with the shares up 35%.
Rivian’s stock has been under pressure in recent months due to the company’s cash burn and mounting losses. The electric vehicle maker reported a net loss of $1.45 billion U.S. in this year’s first quarter.
Recently, Rivian has cut staff and retooled its Illinois plant to increase efficiencies. It has also paused construction on a new multibillion-dollar factory in Georgia.
Rivian said that the investment from Volkswagen will carry the company through the production ramp-up of its smaller R2 electric sport utility vehicle (SUV) at its plant in Illinois, as well as production of a new midsize electric vehicle.
Ford Motor Co. (F) had previously had a large stake in Rivian before exiting the position in 2023 and abandoning a plan to co-develop electric vehicles with the start-up company.
Prior to today (June 26), the stock of Rivian had been down 90% since the company went public in November 2021. The shares most recently traded at $11.96 U.S. each.
