Should I go or not? Should I go electric or not? The automotive world is in chaos, with many car companies and even consumers believing much less in the electric, while the axe of the duties by Trump.
In this situation it is to be recorded Volkswagen Group's counter-attack move. The German giant has announced the relaunch with a further investment of 800 million in the joint venture with Rivian, a former prodigy start-up of the American electric car. The total investment of the second world manufacturer thus rises by 16% to 5,8 billion dollars. The JV, called Rivian and VW Group Technology, announced in June, aims to develop architectures and electric vehicle softwareThe German giant entered the company as a white knight at a time of struggling recovery for the former startup, with production of around 60 vehicles in 2024 and a loss of close to 3 billion, over 30 dollars per vehicle in the second quarter.
Le Rivian shares they also ran over 21% and closed yesterday at 12,03 dollars, up 13,71%, pushing the capitalization towards 13 billion even if after the IPO 3 years ago it had flown over 100 billion. Ordinary shares of Vw lost 2,30% in Frankfurt yesterday and today are practically stuck at parity at 82,02 euros.
Rivian's New R2 SUVs and VW's Scout Motors Division
Rivian is preparing to launch a smaller and cheaper suv named R2, but is struggling with high financing costs and declining demand for electric cars. “This partnership and this agreement provides us with the capital we need to not only take Rivian to the R2 launch at the Normal (Illinois) plant, but also to ensure the launch and growth of R2 at our Georgia plant and achieve positive cash flow,” said RJ Scaringe, CEO of Rivian. Construction of the Georgia plant had been postponed, and last month the company applied for a federal loan to get the job done. Volkswagen created the Scout Motors division in 2022 to produce electric cars and off-road vehicles in the U.S. And the division’s new electric SUVs and pickups will be among the first to use the new architecture.
It's a strategy that Volkswagen is following also in China, where with Xpeng aims to use the (Eastern) partner's platform to produce new electric cars designed for the Chinese market by 2026.
It could be the winning move against Trump's tariffs
In times of increased duties announced by the Trump administration also towards European industry, this could prove to be a winning move for the Wolfsburg group.
“Volkswagen’s strategy of further investment in the joint venture with Rivian – comments Dario Duse, EMEA Head of the Automotive & Industrial division and Country Leader Italy of AlixPartners at Sole24ore– could be aimed at bothIncreased market share in North America, having among other things a further local base already advanced on software defined vehicles (Sdv) which would allow bypass the probable obstacle of barriers further that the new American government has loudly promised, both speed up the recovery process that VW itself, like other Western manufacturers, must also do "in-house". From this point of view, it does not seem a coincidence that the joint venture with Rivian sees as top figures precisely the chief software officer of Rivian and the chief technical engineer of the VW group".
The German giant had declined the opportunity to join forces with Renault for low-segment vehicles. Now, Duse continues, VW seems to be aiming to targeted “native” partnerships in North America and China with Xpeng, with possible positive repercussions of skills and approach also on the group's headquarters. These are forms of M&A that are based on the development and sharing of platforms, which offer tangible advantages without necessarily going through larger and more critical mergers or acquisitions to be carried out". In such a complex and weak period for the automotive industry, "those who are most ahead on the Sdv are precisely the new players, including Rivian, Xpeng and another Chinese player, Nio" Duse told Sole24ore".
The joint venture with Rivian could also help VW solve its problems software division, Cariad, plagued by delays and losses since its inception. Recently, rumors have spread that Cariad will become part of the new company. A boost in development time and Sdv is crucial for Volkswagen.
The Wolfsburg giant is in discussions with thethe union an unprecedented cost-cutting plan. There had also been talk of closing three out of 10 production sites in Germany, but then the idea of a 10% reduction in salaries gained traction, the only way to save jobs and remain competitive, after a double profit alarm.
