Rivian VW joint venture officially launches. VW investment upped to $5.8 billion [Nov. 12, 2024]

[Katsudon]

https://www.autonews.com/rivian/an-rivian-volkswagen-launch-joint-venture/

https://insideevs.com/news/740763/rivian-vw-technologies-joint-venture/

Rivian and the Volkswagen Group's joint venture now has a name and a launch date. Rivian and VW Group Technology, LLC—or, Rivian and Volkswagen Group Technologies, for short—kicks off Wednesday.

The EV startup and automotive juggernaut announced their intentions to make a deal in June. Now the tie-up is actually happening, and the companies have revealed some key details. One big one: Initially, Volkswagen said it would invest $5 billion into Rivian to leverage the startup's expertise in vehicle software and electrical architectures. Now that's up to $5.8 billion.

The venture will be jointly run by Rivian's Chief Software Officer, Wassym Bensaid, and Carsten Helbing, Volkswagen Group's CTO. They'll serve as co-CEOs. It'll be based in Palo Alto, California, to start. Three more sites are in development North America and Europe, the companies said on Tuesday.

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[Chewy734]

Is the additional $0.8B to cover for the similar Scout designs?

 

[TexasBob]

From Bloomberg:

Volkswagen aims to launch vehicles in 2027 with technology fine tuned by the JV. The companies also aim to develop an all-new software-defined vehicle with more advanced technologies, which they ultimately aim to license to other automakers.​

The prototype shown to a small group of reporters in Palo Alto integrates Rivian’s software-based vehicle architecture into an unmarked VW test vehicle, which Bensaid said was outfitted by the JV’s engineers in a 12-week period. ​

Helbing, who will also serve as chief operations officer of the venture, said the technology will be easily translatable to commercially available Volkswagen models at a similar pace. He added that kind of accelerated decision-making and development timeframe is a side benefit from the collaboration with a smaller and more nimble partner like Rivian.​

“For us, the impressive part was the speed and pace of implementation,” Helbing said in the interview. “The intention is to keep the pace.”​

​

Bensaid said Rivian sees the venture as a way to boost cost savings by leveraging the scale economies enjoyed by its larger partner, and thereby improve its own vehicle margins.​

VW’s new Scout brand also plans to use technology from the Rivian-VW JV, he said.​

 

[Donald Stanfield]

The value isn't in the money for Rivian, it's in the connections. The ability to get access to economies of scale that VW has will significantly improve Rivian's margins and as such, will impact their profitability much sooner than the cash value of the contract.

A significant reason why you want to sell vehicles at volume is the lower per-unit price you get from wholesalers. Generally, the more you order, the cheaper your per-unit price is. Rivian couldn't buy enough materials for their current sales, so they would be stuck at a higher pricing tier until R2 takes off.

Since they can use VW's price now, that is probably why they are so confident they will be cash-flow positive in Q4. Their costs went down substantially.

 

[NY_Rob]

Rivian and the Volkswagen Group's joint venture now has a name and a launch date. Rivian and VW Group Technology, LLC—or, Rivian and Volkswagen Group Technologies, for short—kicks off Wednesday.

The venture will be jointly run by Rivian's Chief Software Officer, Wassym Bensaid, and Carsten Helbing, Volkswagen Group's CTO. They'll serve as co-CEOs.

Wassym the new co-CEO? Wow...

I guess if the SW your division produces is constantly filled with bugs, is always promising to release some promised feature from even years back now but never does release them, and now even a Federal Recall issued due to Halloween joke software safety issues.. that somehow qualifies you for the role of co-CEO ?

Big mistake to make this guy a co-CEO, he'd make a better media spokesperson. On the bright side, maybe Rivian OG is going to be better off without him.

 

[Jiji]

Since they can use VW's price now, that is probably why they are so confident they will be cash-flow positive in Q4. Their costs went down substantially.

Doesn’t make sense to my feeble mind, where are the volume increases in parts Rivian is currently purchasing that would drive down costs today?

After all, the intersection of parts used by Rivian and VW is probably the empty set. Not saying Rivian won’t do it but it is all on Rivian current and previous cost reduction efforts.

 

[Chewy734]

Wassym the new co-CEO? Wow...

I guess if the SW your division produces is constantly filled with bugs, is always promising to release some promised feature from even years back now but never does release them, and now even a Federal Recall issued due to joke software issues.. that somehow qualifies you for the role of CEO ?

Big mistake to make this guy a CEO, he'd make a better media spokesperson. On the bright side, maybe Rivian OG is going to be better off without him.

Co-CEO of the joint venture, I believe, not of Rivian. I think that would make sense in some ways if Rivian will be providing the underlying software architecture to VW.

However, since he’s Co-, that would mean that VW must also explicitly provide some added equivalent value to Rivian. I’m not sure exactly what that this yet, besides the obvious access to VW engineers, supply chains, etc.

 

[Jiji]

Wassym the new co-CEO? Wow...

I guess if the SW your division produces is constantly filled with bugs, is always promising to release some promised feature from even years back now but never does release them, and now even a Federal Recall issued due to joke software issues.. that somehow qualifies you for the role of CEO ?

Big mistake to make this guy a CEO, he'd make a better media spokesperson. On the bright side, maybe Rivian OG is going to be better off without him.

Seems harsh but perhaps the Rivian software contribution is being compared to Cariad so VW likes what they see.

 

[Redline]

Wassym the new co-CEO? Wow...

I guess if the SW your division produces is constantly filled with bugs, is always promising to release some promised feature from even years back now but never does release them, and now even a Federal Recall issued due to joke software issues.. that somehow qualifies you for the role of CEO ?

Big mistake to make this guy a CEO, he'd make a better media spokesperson. On the bright side, maybe Rivian OG is going to be better off without him.

Wassym is a great fit for this role. Rivian's software is THE reason behind this deal.

 

[mkg3]

The value isn't in the money for Rivian, it's in the connections. The ability to get access to economies of scale that VW has will significantly improve Rivian's margins and as such, will impact their profitability much sooner than the cash value of the contract.

A significant reason why you want to sell vehicles at volume is the lower per-unit price you get from wholesalers. Generally, the more you order, the cheaper your per-unit price is. Rivian couldn't buy enough materials for their current sales, so they would be stuck at a higher pricing tier until R2 takes off.

Since they can use VW's price now, that is probably why they are so confident they will be cash-flow positive in Q4. Their costs went down substantially.

The money is the most essential thing for Rivian, who would have had to go raise more money than they already have, if wasn't for this JV. More dilution is not what any investors want to hear.

The connection to the suppliers and VW is very valuable but money is keeping the roof over Rivian's head to get to R2.

 

[1T2022]

Rivian contributes IP/tech and VW contribute $$$$$ for equity in the JV. Rivian gets the cash injection and VW gets the investment ( hopefully a good return). Tomorrow the stock will be at $12. Up up up

 

[McLovin]

Great. Maybe now Audi can fix the Virtual Cockpit for my wife’s A5 (and for thousands of other 2024 Audis). It’s only been 16 months…

 

[140 degrees]

Doesn’t make sense to my feeble mind, where are the volume increases in parts Rivian is currently purchasing that would drive down costs today?

After all, the intersection of parts used by Rivian and VW is probably the empty set. Not saying Rivian won’t do it but it is all on Rivian current and previous cost reduction efforts.

When negotiating a multi-year contract with a vendor, what counts is forecasted volume. A product ramp always starts with no volume. The Joint Venture will be making choices about whose components to design into the product. The components to be chosen will be eventually be used by Rivian plus Volkswagen group manufacturing. If they license their version of zonal architecture to other OEMs, the vendor will have the inside track for design wins with these additional manufacturers. The JV will have a great deal of leverage to help their parent corporations with favorable pricing and terms.

Additionally, there has been mention of custom silicon being part of the joint venture. I was once involved with a design that had fairly high forecasted volume. (Similar order of magnitude to VW shipments.) The vendor that we chose designed custom silicon to our specifications and absorbed the R&D cost. Major accounts are treated very differently. This is a big deal for Rivian.

 

[HeresRonnie]

I’m probably reading way too much into this but it feels like VW would acquire Rivian given the right circumstances…maybe its only a matter of time.

 

[Jiji]

When negotiating a multi-year contract with a vendor, what counts is forecasted volume. A product ramp always starts with no volume. The Joint Venture will be making choices about whose components to design into the product. The components to be chosen will be eventually be used by Rivian plus Volkswagen group manufacturing. If they license their version of zonal architecture to other OEMs, the vendor will have the inside track for design wins with these additional manufacturers. The JV will have a great deal of leverage to help their parent corporations with favorable pricing and terms.

Additionally, there has been mention of custom silicon being part of the joint venture. I was once involved with a design that had fairly high forecasted volume. (Similar order of magnitude to VW shipments.) The vendor that we chose designed custom silicon to our specifications and absorbed the R&D cost. Major accounts are treated very differently. This is a big deal for Rivian.

You totally ignored how this has an impact in the near term. Sure the JV might have better economies of scale but my post was how it helps today when none of this exists.

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