Connect with us

Hi, what are you looking for?

Stock

Rivian secures up to $5 billion from Volkswagen; shares soar 40%

Volkswagen plans to invest up to $5 billion in electric vehicle startup Rivian, starting with an initial investment of $1 billion.

The additional $4 billion is expected by 2026. It includes plans for $1 billion each in 2025 and 2026, followed by $2 billion in 2026 related to an expected joint venture to create electrical architecture and software technology, according to a release by the automakers Tuesday.

Shares of Rivian soared roughly 40% during after-hours trading Tuesday, two days ahead of an investor event for Rivian, which has been under pressure from Wall Street due to its cash burn and significant losses. Rivian stock closed Tuesday at $11.96 a share, down roughly 49% in 2024.

The initial $1 billion from Volkswagen will be in the form of a convertible note, which could be converted to Rivian shares on or after Dec. 1, the release said.

Rivian will host an investor call to discuss the tie-up at 6 p.m. ET Tuesday.

Volkswagen is now the second legacy automaker to take a stake in the California-based company. Ford Motor was among Rivian’s largest stakeholders, at roughly 12%, alongside Amazon when Rivian went public in 2021. The Detroit automaker exited Rivian in 2023 after walking back a plan to codevelop EVs with the company.

The Volkswagen-Rivian partnership comes as automakers shift strategies amid slower-than-expected adoption of EVs. It was not immediately clear what, if any, effect the deal will have on Volkswagen’s plans to build a $2 billion EV plant for its new Scout Motors trucks and SUVs in South Carolina.

Rivian has been on a cost-cutting mission for months. It has trimmed staff, retooled its Illinois plant to increase efficiencies and paused construction of a new multibillion-dollar factory in Georgia. That last measure is expected to save more than $2.25 billion in capital spending, including the impact of starting production of Rivian’s next-generation R2 vehicle at its plant in Illinois.

The EV maker reported a loss of $1.45 billion during the first quarter of this year, as it retooled its plant in Normal, Illinois, to launch updated versions of its R1T pickup and R1S SUV EVs ahead of its next-generation vehicles in 2026.

Rivian reported $7.86 billion in cash, cash equivalents and short-term investments to end March, with more than $9 billion in total liquidity.

This post appeared first on NBC NEWS

You May Also Like

Editor's Pick

After the final lecture of my Fall 2022 International Economic Policy course (an undergraduate offering meant to introduce non-economics majors to the economics of...

Editor's Pick

Real gross domestic product rose at a revised 3.2 percent annualized rate in the third quarter versus a 0.6 percent rate of decline in...

Editor's Pick

For years the North Korean playbook was obvious to the world. The Democratic People’s Republic of Korea wanted to be the center of attention....

Editor's Pick

On April 23, 1985, the Coca-Cola Company made one of the biggest mistakes in American business history: it changed the formula for Coca-Cola. Outraged...



Disclaimer: impactofincome.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


Copyright © 2024 impactofincome.com