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A German competition authority on Monday gave Rivian the go-ahead to form a new joint venture with Volkswagen, which has been described by analysts as a “core game changer” for the electric truck maker.
Germany’s Bundeskartellamt also approved Volkswagen’s move to acquire a $1 billion stake in Irvine, California-based Rivian. Under the firms’ deal, Volkswagen plans to invest up to $5 billion in the company after the joint venture is established.
“As cars become increasingly digital and connected, the question of the right system architecture is nothing less than a key competition parameter,” Bundeskartellamt President Andreas Mundt said in a statement, adding that the plans do not raise any serious antitrust concerns.
The companies will create an equally-owned joint venture that they say will accelerate the development of software for both Rivian and Volkswagen. The partnership aims to build on Rivian’s current software and electrical architecture. Rivian will license existing intellectual property rights to the joint venture, which is expected to launch during the last three months of this year.
Both Volkswagen and Rivian plan to launch vehicles using the technology between 2025 and 2030. And perhaps most importantly, the companies say that developments from the new venture will help cut production costs. Rivian lost $38,784 for every electric truck it sold between January and March.
Rivian said the initial $1 billion will be primarily used to fund its operations through the production of its new R2, a $45,000 two-row compact SUV with more than 300 miles of range that was announced in March, in its factory in Normal, Illinois. The company last month secured $827 million worth of incentives from Illinois to expand the Normal factory, which currently builds the R1S and R1T and is expected to start R2 production in 2026.
The funding will also help the company as it plans to launch a midsize platform in Georgia, where Rivian delayed plans for a $5 billion plant that was initially meant to start R2 production.
“Rivian is poised to emerge as a future EV leader — particularly as the R2 and R3 have the potential to propel the Rivian brand into the American public’s consciousness,” Canaccord Genuity analyst George Gianarikas wrote in a note after the companies announced their partnership in June. Gianarikas also called the deal a “giant relief” for investors worried about Rivian’s future.
The company has laid off hundreds of workers so far in 2024 across multiple rounds of layoffs. Rivian also expects to lose $2.7 billion this year and released a production forecast for 2024 that disappointed Wall Street.
Rivian stock nudged up more than 1% in pre-market trading Monday. Shares are down about 23% year-to-date, up from 49% down year-to-date before the Volkswagen partnership was revealed. Volkswagen shares are slightly down.
—Francisco Velasquez contributed to this article.