Volkswagen Group (XETRA:VOW) is set to invest £3.9 billion (US$5 billion) in US electric truckmaker Rivian Automotive Inc (NASDAQ:RIVN) in a joint venture that will give the German automobile company access to the start-up's technology.
Another £3.15 billion will be invested within the next two years, the carmaker added.
US-listed Rivian's shares surged 50% in premarket trading as a result of the deal.
“We believe the opportunity ahead is significant. This deal is possible because we’re focused on vertically integrating our network architecture, topology, V-CPUs, and associated software platforms,” said Rivian boss and founder RJ Scaringe.
Rivian was boosted in recent months after Joe Biden's administration decided to impose tough tariffs on Chinese EV imports amid a flood of the country's cheaper alternatives in the market.
The European Union unveiled similar plans to implement tariffs on electric vehicles built in the Asian country.
German automakers have expressed concerns about the EU's plans, warning that China could retaliate with counter-measures which hit companies like BMW, Daimler (ETR:DAI) (Daimler (ETR:DAI)) and VW.
Ipek Ozkardeskaya at Swissquote Bank added: "It won’t bring Rivian’s share price to the $180 per share seen right after an incredibly speculative and non-sense IPO, but it could help the company survive and grow at a reasonable pace."