Workers assemble second-generation R1 vehicles at electric automaker Rivian’s manufacturing facility in Normal, Illinois, on June 21, 2024.

Joel Angel Juarez | Reuters

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 by roughly 49% in 2024.

The initial $1 billion from VW will be in the form of a convertible note, which could be converted to Rivian shares on or after December 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 sold a majority of its Rivian shares by 2023 after walking back a plan to codevelop EVs with the company.

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

Rivian 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 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.

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 is a developing story. Please check back for additional updates.

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