Volkswagen Group (XETRA:VOW) and US EV maker Rivian Automotive Inc (NASDAQ:RIVN) have forged closer ties with the German car giant agreeing to inject an extra $800 million into the ailing Tesla rival.
Instead of the US$5 billion initially agreed in June, VW will now invest US$5.8 billion split between the joint venture and Rivian itself.
VW has already lent US$1 billion in the form of a convertible note with a further $1.3 billion to be the consideration for background IP licences and a 50% equity stake in the joint venture.
“These investments also balance part of lower future costs identified during the technical feasibility tests and the sharing of costs for the inclusion of selected Volkswagen MEB models,” it said.
The remaining investment of up to $3.5 billion is expected to come in the form of equity, convertible notes, and debt at future dates, said VW, adding that the joint venture will operate independently.
Shares in Rivian jumped almost 10% in after-hours trading following the announcement, with the money to provide funding ahead of launching its more affordable R2 SUV next year.
VW will be able to use Rivian's technology in its range of vehicles with the first of these cars expected in 2027.
"By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly," the two companies said in a statement.
Developers and software engineers work together in California, while three other facilities in North America and Europe are built for the JV.
VW has been battling what has been described as one of the worst crises in its history with job cuts and plant closures planned in Germany.
Rivian has yet to make a profit and last week warned it would be $2.82-$2.87 billion in the red this year though it still expects to make between 47,000-49,000 vehicles for the year.
The company also has a contract to supply 100,000 electric delivery vans to Amazon.