Volkswagen and Rivian get the go-ahead to form a joint venture. What will the two companies collaborate for?

Volkswagen and Rivian will collaborate to develop software to be used in new generations of electric cars.

Germany’s competition authority on Monday gave its approval for the establishment of a joint venture between the Volkswagen group and the American vehicle manufacturer Rivian Automotive, reports Reuters via News.ro.

More and more manufacturers are entering into partnerships and alliances to develop electric cars or technologies for them, and the newest partnership will be born between Volkswagen and Rivian. Germany’s competition authority approves the establishment of a joint venture between the two companies.

“There are no serious competition issues” related to the formation of a joint company between the two car manufacturers, said Andreas Mundt, the head of the authority, in a statement.

Volkswagen will invest $5 billion in Rivian

Rivian secured a $5 billion investment from Volkswagen, with the initial investment to be $1 billion in the form of a convertible note that could be converted into Rivian shares on or after December 1, 2024.

The additional $4 billion is expected through 2026 and includes $1 billion each in 2025 and 2026 and another $2 billion in 2026 tied to a joint venture to create electrical architecture and software technology, according to a statement of the car manufacturers that announced the collaboration plans.

Rivian CEO and founder RJ Scaringe said the deal will help Rivian financially with positive cash flow. He said the new capital is expected to support the company ramping up production of the R2 SUV at its plant in Normal, Illinois, starting in 2026, as well as production of the mid-size EV platform at a plant in Georgia, where Rivian has halted construction. at the beginning of this year.

From this joint venture will result only new types of software to be used in the future electric cars of the two manufacturers. Volkswagen is expected to use Rivian’s electrical architecture and software for vehicles starting in the second half of the decade, according to Scaringe.