On June 27, 2024, Volkswagen announced a mega cap $5 billion bet on Rivian (RIVN). The German automaker committed to a joint venture. VW needed to fast-track its technology advancements in EVs, while Rivian needed the cash infusion. The firms will also share EV platforms.
Partnerships can get messy. VW had an EV strategy to sell inexpensive units to the mass market. However, VW’s poor software is one of the reasons for the weak Audi e-Tron sales. The pair may potentially accelerate innovation with the 2.0 software architecture. By centralizing software-defined vehicle development, the two firms would save money.
VW formed an EV partnership with China’s Xpeng (XPEV) last July 2023 to collaborate on software and an EV platform. However, this deal differs because Xpeng will offer the jointly developed software in China only. Furthermore, Xpeng and VW are developing a joint model whereas VW and Rivian will not do so.
Markets Skeptical on JV
After the VW-Rivian announcement, Tesla (TSLA) stock reacted by continuing its uptrend. Shares gained 8.13% last week, closing at a P/E of 51.6 times last Friday. Markets are betting that the partnership will have no impact on Tesla’s car EV sales nor would it hurt consumer interest in Cybertrucks.
The competitive pressures in the EV market are easing. After Fisker filed for bankruptcy, other weak firms will close down. This increases the strength of Tesla in the EV marketplace.
