EQS-Adhoc: VOLKSWAGEN AKTIENGESELLSCHAFT: Volkswagen AG resolves on investment by Volkswagen of initially 1 billion USD in Rivian Automotive, Inc., and intends to establish a joint venture

Volkswagen AG resolves on investment by Volkswagen of initially 1 billion USD in Rivian Automotive, Inc., and intends to establish a joint venture with Rivian Automotive, Inc., in the area of E/E architecture. Total investments from Volkswagen in Rivian Automotive, Inc., and the joint venture could grow to up to 5 billion USD until 2026.

The Management Board of Volkswagen AG today resolved with the approval of the Supervisory Board of Volkswagen AG that Volkswagen will enter into a Convertible Promissory Note Purchase Agreement with Rivian Automotive, Inc. Under the terms of this agreement, Volkswagen will grant Rivian Automotive, Inc., a convertible note in the amount of 1 billion USD. The note will convert into a direct shareholding of Volkswagen in Rivian Automotive, Inc., upon the receipt of the necessary regulatory approvals, but not before 1 December 2024. The size of the shareholding is determined in accordance with certain average share prices of the shares of Rivian Automotive, Inc., for one half of the equity interest as of the time of the conclusion of the Convertible Promissory Note Purchase Agreement and for the other half of the equity interest as of the conversion day.

In addition, Volkswagen and Rivian Automotive, Inc., intend to establish a joint venture for the purpose of the joint creation of next generation electrical/electronic architecture (so-called E/E-architecture) for electric vehicles. Volkswagen and Rivian Automotive, Inc., shall each hold a 50 % stake in the joint venture, and it shall be equally controlled. Upon successful implementation of the joint venture, Volkswagen would receive immediate access to Rivian Automotive’s current E/E-architecture technology for using it in its electric vehicles. The actual establishment of the joint venture depends on a series of different parameters, in particular, the final results of the further review of the technical feasibility of the integration of the E/E-architecture in vehicles of Volkswagen, the further negotiations between the parties as well as regulatory approvals. Against this background, a final decision on the establishment of the joint venture has not been made yet.

In case the joint venture would be established successfully, Volkswagen intends to make further investments in shares of Rivian Automotive, Inc., or in the joint venture in the total amount of 4 billion USD. The additional investment in shares of Rivian Automotive, Inc., would be made in two tranches of 1 billion USD each in 2025 and 2026 and would be contingent on Rivian Automotive, Inc., and the joint venture achieving certain milestones. With respect to the joint venture Volkswagen would provide a payment in the amount of 1 billion USD upon foundation of the joint venture in 2024 and grant a loan in the amount of 1 billion USD in 2026. If the joint venture will be successfully implemented and certain further milestones are achieved, the total investment of Volkswagen in shares in Rivian Automotive, Inc., as well as in equity and debt in the joint venture would aggregate in a total amount of 5 billion USD by 2026; a part of which in the amount of 2 billion USD would be paid out still in fiscal year 2024.

The announced transaction could result in an unplanned cash outflow of up to 2 billion EUR in the current fiscal year. Therefore, Volkswagen AG is updating its financial forecast for fiscal year 2024 as follows: In the Automotive Division, Volkswagen AG now expects net cash flow to range between 2.5 billion EUR and 4.5 billion EUR (previously: 4.5 billion EUR to 6.5 billion EUR) and net liquidity between 37 EUR billion and 39 billion EUR.