American electric vehicle startup Rivian and German legacy automaker Volkswagen have just won approval from German regulators to form a joint venture, implying that the recently announced partnership on software development is still progressing.
Rivian, VW get green light for joint venture
The Federal Cartel Office (Bundeskartellamt), the national competition regulatory agency, officially gave its approval for Rivian and Volkswagen’s planned joint venture on Monday.
Bundeskartellamt President Andreas Mundt explained that the approval comes as there are no “serious competition” problems to be feared from the tie-up between the Rivian and Volkswagen, Reuters reported.
“When it comes to cooperation projects set up to develop new products and technologies in key cutting-edge sectors, particularly those involving large companies, we take a close look at competition in innovation. The project does not raise any concerns in this respect, nor does it raise any other serious competition concerns.”
Bundeskartellamt President Andreas Mundt
The Bundeskartellamt further assured that it has “cleared under merger control the formation of a joint venture between Volkswagen and US electric car manufacturer Rivian.” It also authorized VW’s investment in the American EV startup. In addition, the agency also stated in the press release that “there will continue to be a sufficient range of services available to car manufacturers to build E/E architectures.”
Partnership details
Volkswagen announced plans to invest up to $5 billion into Rivian in late June 2024 as they consider forming a new joint venture for “industry-leading” vehicle software tech development.
Basically, the strategic alliance will leverage Rivian’s software expertise to develop an architecture for next-gen electric vehicles.
Of the planned $5 billion investment, $3 billion will reportedly go to Rivian. The remaining $2 billion will fund the joint venture. However, this funding relies on the achievements of “certain milestones.”
Mutual benefit
While Rivian and Volkswagen are technically rivals., their alliance seeks to address their weaknesses in electric vehicle technology.
The Volkswagen Group continues to struggle with vehicle software development like other legacy automakers. Therefore, it seeks to rely on Rivian’s expertise in this area to remain competitive in the rapidly growing market.
On the other hand, Rivian remains unprofitable despite its major advancements in EV and software tech. It needs to secure more funding to support its operations until it can mass produce the $45,000 R2 SUV by 2026. It currently offers the higher-cost R1T pickup and R1S SUV. Therefore, the partnership with Volkswagen may serve as its financial lifeline until it achieves long-term stability.
The new Rivian and Volkswagen JV is expected to be finalized by the end of 2024, considering the German antitrust authority’s approval. It would be interesting to see how Rivian can help fix Volkswagen’s software problems.
