Volkswagen and Rivian agree on EV partnership for software dominance

26 June 2024

A surprising partnership was born in the electric vehicle world, as Volkswagen and Rivian join forces to develop the software of their future EVs. This is yet another case of established automakers seeking the expertise of EV startups as they migrate their lineups.

Volkswagen, the undisputable giant in the automotive industry, is renowned for its ability to produce and sell millions of cars annually. However, like many traditional car manufacturers, it has struggled to keep pace with the rapid advancements in software technology. Rivian, on the other hand, has made a name for itself with its innovative software and user experience but is facing the manufacturing rampup and financial challenges typical of a young startup.

This unlikely alliance seeks to plug the gaps in both companies' portfolios. Volkswagen will invest a substantial $5 billion in Rivian, providing much-needed financial support for the startup's expansion plans, including the highly anticipated R2 SUV launch in 2026. In return, Rivian will share its knowledge and technology in software and electrical architecture, enabling Volkswagen to accelerate its development of EVs, which are increasingly defined by their software.

The collaboration's initial focus will be on Rivian's R2 SUV, set to hit the market in 2026. This vehicle will be the first to showcase the fruits of the partnership, incorporating Rivian's existing electrical architecture and software platform. Both companies have clarified that they will continue to operate their vehicle businesses independently, maintaining healthy competition while collaborating on the technological front.

Rivian's advanced "zonal architecture" has already proven to be a disruptor, reducing the number of electronic control units and eliminating unnecessary wiring in its vehicles. By integrating this technology into Volkswagen's EVs, both companies can benefit from increased efficiency and reduced costs.

$2 billion of Volkswagen's investment is contingent on Rivian meeting specific financial and technological milestones. However, the potential rewards are significant, as both companies stand to gain from the combined strengths of a seasoned automaker and an innovative EV startup.

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