Rivian Auto Inc. (NASDAQ: RIVN), a maker of electric vehicles, is trading up by more than 13 percent in premarket today after Volkswagen Group increased its investment to $5.8 Billion.
Volkswagen had originally planned to invest up to $5 Billion to establish a joint-venture with Rivian.
The German automaker reaffirmed its plans on Wednesday to use Rivian’s electrical and software architecture for vehicles that will be released in the early part of 2027.
RJ Scaringe, the CEO of Rivian stated in a press release today that he was “excited” to see his technology integrated into other vehicles.
Rivian’s stock has risen by about 25% since its low.
Rivian to benefit from VW’s investment
Rivian will be powering both Volkswagen and Audi in the future. VW plans to integrate its electrical and software architecture into some sport cars.
Rivian is committed to becoming an electric vehicle manufacturer that can be profitable in the long-term.
The CEO of Rivian, Scaringe, expects that the VW investment will help Rivian to scale up its operations and pursue ambitious expansion initiatives.
He told CNBC that he had cash available to fund not only the launch of R2, but also the construction of the R2 Platform, which is the foundation for both R2 and R3 at our Georgia facility. This cash allows us to achieve a positive cash flow.
This partnership represents a major step in the direction of profitability, as it allows Rivian’s business to be diversified and access VW’s global market. It could also increase its client base and potential revenue.
Rivian and Volkswagen Group can scale up new technologies faster, reduce development costs, and accelerate the time it takes to bring new products to market.
RIVN and the Trump Administration
Rivian shares should be taken with a grain of salt despite the VW investment.
Why? Why?
Trump is vocally against the EV drive, claiming that the American consumers are being forced into buying electric vehicles. Trump may also eliminate portions of the Inflation Reduction Act that are aimed at boosting EV production.
Rivian reported a larger-than-expected loss for the quarter, but confirmed its intention to record a modestly positive gross profit in Q4 of its fiscal year. Only time will tell if it can remain profitable as Donald Trump assumes office.
Wells Fargo analysts believe that Rivian’s stock is priced fairly at only $1 – AutoForecast CEO Joe McCabe believes bankruptcy could be on the horizon.
The post VW invests in Rivian but there are still significant challenges may change as new information is revealed.
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