⏳ Final hours! Save up to 60% OFF InvestingProCLAIM SALE

Rivian surges over 13% as Volkswagen lifts JV investment to $5.8 billion

Published 11/13/2024, 07:38 AM
Updated 11/13/2024, 07:00 PM
© Reuters
VOWG
-
VOWG_p
-
RIVN
-

Investing.com-- Shares of electric vehicle maker Rivian Automotive Inc (NASDAQ:RIVN) rose sharply after automaking giant Volkswagen (ETR:VOWG_p) increased its investment in the firm through a joint venture (JV).

Rivian rose more than 13% in premarket trading by 05:52 ET (10:52 GMT).

Rivian and Volkswagen AG (ETR:VOWG) said in a joint statement that the German automaker will invest $5.8 billion in the JV, more than a prior amount of $5 billion, and that their JV planned to begin launching EV models by as early as 2027.

Volkswagen will invest up to $5.8 billion Rivian and the JV by 2027, the two said. The investment will include an initial $1 billion convertible note, $1.3 billion as consideration for intellectual property and an equity stake in the JV. The remaining $3.5 billion will be invested in equity, convertible notes and debt based on performance milestones.

Commenting on the news, Barclays (LON:BARC) analysts led by Dan Levy said the JV close "is incrementally more critical by de-risking the capital needs of RIVN."

"But more than that, it serves as a reminder for the potential expansion of collaboration between RIVN and VW, as well as the potential for RIVN down the line to license its
technology/stack more widely," they added.

"We believe the opportunity exists for RIVN to increasingly work with VW to offset vehicle economics which otherwise seem more challenged."

The German carmaker will use Rivian’s software and electrical engineering across a wide variety of vehicles, solidifying its foray into EV production.

The capital gained from the JV will enable the launch of Rivian’s upcoming R2 model in the first half of 2026. The R2 is a smaller, cheaper SUV, and is pivotal to Rivian’s future, as it grapples with waning EV demand, high production costs and slowing sales.

Rivian’s stock has halved in value this year as it clocked weak sales and middling production.

Ambar Warrick contributed to this report.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.