Rivian Automotive Shares Surge On $5 Bln Volkswagen Investment In Joint Venture

(RTTNews) - Rivian Automotive (RIVN) and Volkswagen Group (VKW.L, VLKAF.PK, VOW.BE) plan to form an equally controlled and owned joint venture to create next-generation software-defined vehicle or SDV platforms for use in both companies' future electric vehicles. Volkswagen plans to invest $5 billion into Rivian, the companies said in a statement.

RIVN closed Tuesday's regular trading at $11.96 up $0.95 or 8.63%. In the after-hours trading, the stock further gained $5.97 or 49.92%.

As part of the new joint venture, Volkswagen Group will initially invest $1 billion in Rivian through an unsecured convertible note. This note will convert into Rivian's common stock, subject to certain conditions, upon the later of receipt of regulatory approvals or December 1, 2024. Volkswagen Group is also expected to invest an additional $4 billion.

The partnership is anticipated to accelerate the development of software for Rivian and Volkswagen Group.

Rivian plans to contribute its electrical architecture expertise and is expected to license existing intellectual property rights to the joint venture.

The companies aim to launch vehicles benefiting from the technology created within the joint venture in the second half of the decade. In the short term, the joint venture is expected to enable Volkswagen Group to utilize Rivian's existing electrical architecture and software platform. Each company will continue to separately operate their respective vehicle businesses.

The companies currently expect the completion of the joint venture formation in the fourth quarter of 2024.