VW Group JV with Rivian Update

[Thedude]

Does Rivian get any cash?
The slide says "Mandatory convertible note" and then "Convertible note to equity".
Equity in VW is pretty worthless.

Totally worthless having equity in one of the top vehicle manufacturers in the world…

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[UnsungZero_OldTimeAdMan]

Totally worthless having equity in one of the top vehicle manufacturers in the world…

I think it's referring to joint ownership/stake in the company formed under JV. Not Rivian having a stake in VW itself. The tech/software platform development company VW formed previously is CARIAD. I haven't read anything about that company being transitioned to become the JV; assume it would be a clean slate JV.

 

[Thedude]

I think it's referring to joint ownership/stake in the company formed under JV. Not Rivian having a stake in VW itself. The tech/software platform development company VW formed previously is CARIAD. I haven't read anything about that company being transitioned to become the JV; assume it would be a clean slate JV.

That makes more sense.

 

[docwhiz]

Totally worthless having equity in one of the top vehicle manufacturers in the world…

VW is closing factories, firing people and shrinking because they have been clueless about EVs.
They may not survive.

 

[Thedude]

VW is closing factories, firing people and shrinking because they have been clueless about EVs.
They may not survive.

I’d put the odds firmly in their favor, especially compared to something like Rivian. VAG has a long, long way to fall before anyone is even remotely worried about surviving.

 

[docwhiz]

I think it's referring to joint ownership/stake in the company formed under JV. Not Rivian having a stake in VW itself. The tech/software platform development company VW formed previously is CARIAD. I haven't read anything about that company being transitioned to become the JV; assume it would be a clean slate JV.

CARIAD was VW's software division. They hired thousands of programmers and spent billions and never got anything useful. They finally closed it down and shipped the dregs to China.
Rivian should want nothing to do with CARIAD.

 

[docwhiz]

So... my question remains... Does Rivian get any cash or just dodgy equity?

 

[docwhiz]

I’d put the odds firmly in their favor, especially compared to something like Rivian. VAG has a long, long way to fall before anyone is even remotely worried about surviving.

\"How did you go bankrupt?\". Bill asked. \"Two ways,\" Mike said. \"Gradually and then suddenly.\".

 

[josh0]

I mean, Volkswagen came back from being *literal nazi cars*, so I doubt that stumbling a bit out of the blocks when transitioning to an electric drivetrain is going to be what kills them.

 

[iansriv]

Good opportunity for Rivian to support all VW brands. It really opens up a new "market/product" for Rivian to sustain growth. Thanks for sharing.

 

[George Kaplan]

Thanks for sharing, it’s a good watch, good provocative points about wether Rivian should focus on cars or software, also interesting where VW might want to just buy Rivian.

For VW to buy Rivian, Rivian would first have to be for sale.

It’s true that VW could make a ridiculous offer, but that is unlikely. And the true believers at Rivian know in order to do what they want to do, they must be an independent company.

Rivian as we know it—if a subsidiary of VW—would be a shadow of itself.

 

[RivianMatt]

Does Rivian get any cash?
The slide says "Mandatory convertible note" and then "Convertible note to equity".
Equity in VW is pretty worthless.

Yes, Rivian does get $1 Bn in cash. What I pretty confident the chart is saying is that a) VW injects $1 Bn in cash to Rivian; b) in exchange from a convertible note - i.e., technically a loan from VW to Rivian and that c) upon the signing of definitive agreements, the note that Rivian owes to VW will convert into Rivian common shares - e.g., VW will be an investor in Rivian in addition to a JV partner.

 

[SilverII]

i am just fantasizing that some eccentric billionaire that wants to buy RIVN for $44B

 

[UnsungZero_OldTimeAdMan]

Whether Rivian should focus on cars or software? Is that a joke? It's a software defined car. Rivian has done and is continuing to do both. They just need people to understand and appreciate that it takes time to perfect everything.

It's a computer with wheels. They don't have to deal with complexities of transmissions, combustion and emission. Less complexity and fewer systems to control and coordinate. EVs are actually easier to build than ICE cars. But it still takes time, learning and experience.

 

[RivianMatt]

Yes, Rivian does get $1 Bn in cash. What I pretty confident the chart is saying is that a) VW injects $1 Bn in cash to Rivian; b) in exchange from a convertible note - i.e., technically a loan from VW to Rivian and that c) upon the signing of definitive agreements, the note that Rivian owes to VW will convert into Rivian common shares - e.g., VW will be an investor in Rivian in addition to a JV partner.

I just took a look at a Schedule 13G that Rivian filed with the SEC on October 1st. Per that filing, Rivian and VW entered into a Senior Convertible Promissory Note on June 26th. The Note will convert to 83 million shares of Rivan common stock, for a 7.7% ownership position, on the later of December 1st or upon the satisfaction of certain regulatory approvals. I also took a look at Rivian's 10-Q for the quarter ending June 30th, and that cash from VW was on its balance sheet as of 6/30/24.

So to conclude....VW is currently a lender to Rivian, but that loan should soon convert to equity. What we do not yet know is the final format of the Joint Venture between Rivian and VW. Will they own it 50/50? What will be the responsibilities of each party? etc. That will likely be disclosed to some degree in future regulatory filings.

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