German auto giant Volkswagen Group announced plans to invest up to $5 billion in the US-based startup electric car company, which is known as a strong competitor to Tesla, to jointly establish a joint venture and share electric vehicle architecture and software technology.$Rivian Automotive (RIVN.US)$The investment will be as high as $5 billion, jointly establishing a joint venture and sharing electric vehicle architecture and software technology.

Affected by this news, on Tuesday, June 25, Rivian in post-market trading in the United States once soared by more than 50%. Prior to this, on Tuesday, Rivian had already risen by 8.63%. Volkswagen's US stock also rose slightly by 0.49%.

It is reported that Volkswagen Group will initially invest $1 billion in Rivian and plan to invest an additional $4 billion, with a total transaction value of $5 billion expected. The investment is divided into two parts, with Volkswagen using $2 billion to establish a joint control software company with Rivian. The joint venture is expected to be established in the fourth quarter of 2024.

The joint venture is expected to build a first-class software-defined automobile technology platform based on Rivian's leading software and electrical architecture, and these technologies will be used by the two companies to produce their respective vehicles. Analysis indicates that the two companies are expected to combine complementary advantages and reduce the cost of each vehicle, while also helping Volkswagen strengthen its software department and solve its previous quality control problems. Rivian also stated that the new car will be cheaper than the current starting price of $70,000.

In addition to creating a software company, Volkswagen also plans to invest $3 billion in purchasing Rivian's shares in the next few years, of which $1 billion will be injected into Rivian through an unsecured convertible bond. Then, in 2025 and 2026, it will purchase Rivian's common stock in two batches, each of which is $1 billion.

Edited by Jeffrey