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VW seals partnership with Rivian: The western counterpart to Xpeng

(dpa/jr) Xpeng in China and Rivian in the USA and the West: As announced, VW is seeking software assistance, in this case from the financially strapped Tesla challenger Rivian. Within twelve weeks, Rivian demonstrated their capability by equipping a VW model with software. The Wolfsburg company is also investing more money.

It's all about the software: Rivian will in the future provide the software for all western electric models of the group in a joint venture. This clearly downgrades its own subsidiary Cariad - and it will be merged into the joint venture in the medium term. | Photo: Paul Sancya/AP/dpa
It's all about the software: Rivian will in the future provide the software for all western electric models of the group in a joint venture. This clearly downgrades its own subsidiary Cariad - and it will be merged into the joint venture in the medium term. | Photo: Paul Sancya/AP/dpa
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Volkswagen has sealed the partnership with the American Tesla challenger Rivian. The first vehicles based on the new electric architecture are expected to roll out as early as 2027, as CEO Oliver Blume announced at the launch of the joint venture in Palo Alto, California. VW increased its investment in the project: the Wolfsburg company is willing to spend 5.8 billion dollars on the collaboration, 800 million more than previously planned. With the joint venture "Rivian Volkswagen Group Technologies," comprising 1,000 employees from both companies, VW will gain access to the American company's electric and software architecture. As proof, the firm equipped a VW model with Rivian software with just a first team in only twelve weeks, making the vehicle ready to drive. This apparently gave the final impulse to take the risk.

The cooperation was already announced by the two companies at the end of June, and in July the German Federal Cartel Office gave its approval. The collaboration involves software, control computers, and network architecture. The plan envisions a joint venture to be developed for both manufacturers and led by them equally. The foundation will be Rivian's existing electronic architecture, which will be further developed.

New electric cars from VW are to gradually switch to Rivian's technology and software. The first models with the new technology are expected to start in 2027, said Blume. "We start with Volkswagen, then Audi, Scout, Porsche, and then all other brands will follow." This involves all vehicle classes, from mini-cars to luxury cars and sports cars. This will enable large volumes and lower costs. However, Rivian technology will only be used in electric cars.

Software problems delay model launches

For years, the Wolfsburg company has been struggling with issues in its in-house software development, repeatedly causing delays. As a result, several model launches were already delayed, in some cases by several years. Rivian, on the other hand, developed its own architecture from the start, where the car electronics are divided into several zones with their own computers, thus requiring significantly fewer control units. In the meantime, the second generation of the platform is already in operation there.

The new joint venture is supposed to begin operations as early as this Wednesday. It will be headquartered in Palo Alto, California, with additional locations planned in Europe and North America. The majority of the team will come from Rivian, and some colleagues from Volkswagen will be added, said the founder and CEO of the US partner, RJ Scaringe. The dual leadership will be formed by one manager from Volkswagen and one from Rivian.

Of the up to 5.8 billion dollars that Europe's largest car manufacturer intends to spend on the project, 3.5 billion dollars are allocated to Rivian shares. Additionally, 2.3 billion dollars are to flow into the new joint venture, with one billion of that as a loan. Previously, there was talk of three billion dollars for the Rivian entry and two billion for the joint venture. Both sums have been increased, confirmed Blume.

392 million dollar loss with 10,000 deliveries

For Rivian, it is a highly welcome cash injection. Founded in 2009, the company is still in the red and currently struggling with declining interest in electric cars in the USA. "Certainly, this partnership and this deal secure for us the capital needed," said Rivian CEO Scaringe, referring to the further ramp-up of their own production. In the past quarter, Rivian delivered around 10,000 vehicles, generating 874 million dollars in revenue and 392 million dollars in losses. The VW Group, during the same period, made almost 2.2 million deliveries, 78.5 billion euros in revenue, and recorded a surplus of 1.58 billion euros after taxes despite a massive profit slump.

Rivian is active in two popular vehicle categories in the USA, producing large SUVs and pickups. Additionally, Rivian manufactures electric delivery vans for Amazon, which are now also seen in Europe. The world's largest online retailer is also an investor.

Translated automatically from German.
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