Through the agreement, VW and the US-based manufacturer of electric vehicles (EVs) would be able to share technologies through a joint venture.
Shares of Rivian surged by nearly 50% subsequent to the declaration.
The partnership comes as Western nations seek to put taxes on Chinese goods and as the competition between EV manufacturers heats up.
VW stated in the agreement that it will invest $1 billion in the electric truck and SUV manufacturer initially, and an additional $4 billion by 2026.
Rivian was established in 2009 and has not yet reported a quarterly profit. The business experienced a net loss of more than $1.4 billion in the first three months of 2024.
As it attempts to transition away from fossil fuel-powered vehicles, rivals like China’s BYD and Tesla have put pressure on VW, along with other major players in the auto industry.
On the other hand, some electric vehicle start-ups have struggled to establish themselves in the very competitive market as rising borrowing rates have affected the demand for expensive purchases.
Through the collaboration, VW will have instant access to Rivian’s software, enabling the German automaker to incorporate it into its vehicles.
Chinese EV manufacturers have been posing a growing threat to global auto industry heavyweights like Volkswagen.
