Volkswagen (VW), the German automotive giant, announced plans to invest up to $5 billion (£3.94 billion) in Rivian, a US-based electric vehicle (EV) manufacturer and Tesla rival. This investment establishes a joint venture enabling both companies to share technology. Following the news, Rivian’s shares surged nearly 50%.
As competition among EV manufacturers heats up and Western nations impose tariffs on Chinese imports, Volkswagen will initially invest $1 billion in Rivian, with an additional $4 billion to follow by 2026. Rivian, founded in 2009, has yet to achieve a quarterly profit, reporting a net loss of over $1.4 billion in the first quarter of 2024.
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VW, facing pressure from competitors like Tesla and China’s BYD, is striving to transition from fossil fuel-powered vehicles to EVs. Meanwhile, many EV start-ups struggle in the competitive market, especially as higher interest rates dampen demand for big-ticket items. This partnership grants VW access to Rivian’s software for its vehicles.
Chinese EV makers have been expanding globally, intensifying competition for established motor industry giants like VW. The European Union recently announced plans to raise tariffs on Chinese EV imports by up to 38%, following a lengthy investigation that concluded Chinese EV companies were “unfairly subsidised.” China criticized the tariffs as “protectionism” and a violation of international trade rules.
The US also plans to increase import levies on Chinese EVs from 25% to 100%, with Canada considering a similar move. Separately, Tesla announced a recall of over 11,000 Cybertrucks in the US due to issues with windscreen wipers and exterior trim.
