Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer Logins
Rivian Partnership Boosts Volkswagen's Vertical Integration Goals
Electric vehicle startup Rivian and legacy automaker Volkswagen have announced plans for an alliance that will give VW access to Rivian's electrical architectures and software. In return, VW will inject $5 billion into Rivian via a combination of convertible notes, cash and loans spread over the coming three years.
Rivian is not yet financially self-sufficient
The deal mutually benefits both parties: Young Rivian needs capital to offset ongoing free cash burn (around $6 billion in each of the last two years). Having begun mass production of electric vehicles in 2021, the company has more scaling to do before attaining financial self-sufficiency. We do not foresee a significant uptick in volumes until the second generation R2 models scale up in 2027 and 2028.
Collaboration boosts VW's vertical integration goals
By contrast, VW needs technology. It has struggled in recent years to build its own software development capabilities via its troubled Cariad subsidiary. We believe VW sees particular value in Rivian's 'over-the-air' (OTA) update technologies. Its primary electric competitor, Tesla, has achieved a clear technological differentiation by building more in-house.
Future Rivians could be built in VW plants
The VW-Rivian partnership does not include any plant-sharing dimension today. However, there is arguably significant scope for Germany-based Volkswagen to help US-based Rivian scale up. The German group has systematically underperformed its own growth aspirations in North America, and if VW sought to retool excess production capacity for Rivian, there could be benefits for both sides.
Nearer term, questions remain around how Rivian will impact VW's pre-existing plans to revive their Scout brand via new electric SUV models. Construction of a new production site in Columbia, South Carolina broke ground in February, and we forecast the plant to come online in late 2026.
Try out a free 3-week trial of our Supply Chain Technology - now on Xpressfeed / Snowflake.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.