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German car maker Volkswagen to invest up to US$5 billion in Tesla rival Rivian

Volkswagen (VW) plans to invest up to £3.94 billion (US$5 billion) in Rivian, Tesla's rival. VW and Rivian will collaborate and share technology in a joint venture. Rivian shares surged by over 50% on the announcement.

The tie-up will allow VW and Rivian to share technology

Rivian is a US-based electric vehicle (EV) manufacturer that is viewed as a direct competitor to Tesla. This strategic partnership will enable VW and Rivian to collaborate and share technologies as the competition to dominate the EV industry heats up.

The announcement of VW's investment triggered a boom in Rivian's shares, which increased by about 50%. According to the agreement, VW will initially invest £787 million (US$1 billion) in Rivian, with a further £3.15 billion (US$4 billion) to be invested by 2026.

Rivian, founded in 2009, is a relatively new entrant in the EV sector that has yet to generate a quarterly profit. In the first quarter of 2024, the corporation posted a net loss of more than £1.1 billion (US$1.4 billion). However, this relationship with VW may provide Rivian with the essential boost to establish itself as a big market player.

Volkswagen's decision to invest in Rivian comes as the business faces rising competition from Tesla and China's BYD. As the automobile industry transitions away from fossil fuel-powered vehicles, traditional automakers are scrambling to keep up with Tesla's technological advances and market domination.

The agreement with Rivian will provide VW with immediate access to the company's software, allowing the German automaker to incorporate it into its own vehicles. This decision is critical for Volkswagen to remain competitive in the fast changing EV industry.

Furthermore, Volkswagen and other traditional car manufacturers are facing severe competition from Chinese EV manufacturers, which have been growing their global presence. The European Union recently announced plans to increase taxes on Chinese EV imports by up to 38%, alleging unfair subsidies provided to Chinese businesses. This trade dispute between China and the EU underlines the severe competitiveness in the EV industry.

Car manufacturers such as Volkswagen are looking for collaborations and investments in innovative EV businesses such as Rivian in response to rising competition and the need to expedite their EV initiatives. This agreement will help VW while also providing Rivian with the tools and experience needed to develop their operations and compete with industry leaders.

  • German car maker VW to invest up to £3.94bn in Tesla rival Rivian

  • VW and Rivian to collaborate and share technology in joint venture

  • Rivian shares surge by almost 50% following the announcement

Source: BBC

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