Volkswagen Group (VW) and Tesla rival Rivian have launched a three way partnership, with the German automotive large rising its funding within the partnership.
The 2 corporations say the the deal is now value $5.8bn (£4.55bn) – up from an preliminary pledge from VW of $5bn.
Shares within the US electrical automobile (EV) maker jumped greater than 9% in after-hours buying and selling following the announcement.
The tie-up will see the companies sharing essential expertise at a time of slowing international demand for electrical automobiles and elevated competitors from Chinese language rivals.
The three way partnership gives loss-making Rivian with an important supply of funding because it prepares for the launch subsequent yr of its R2 mannequin – a sports activities utility automobile (SUV) that’s smaller and extra reasonably priced than its present choices.
It additionally means VW will be capable of use Rivian’s expertise in its personal vary of automobiles.
The primary VW fashions outfitted with Rivian expertise are anticipated to be obtainable to clients as early as 2027.
“By combining their complementary experience, the 2 corporations plan to scale back improvement prices and scale new applied sciences extra rapidly,” the 2 corporations mentioned in an announcement.
Below the plan, builders and software program engineers from each companies will initially work facet by facet in California, whereas three different services in North America and Europe might be arrange.
It comes as expectations have grown that VW, Europe’s largest automotive maker, is planning to announce main cost-cutting measures.
The group, which additionally contains manufacturers akin to Audi, Lamborghini and Porsche, has been combating greater prices, weakening gross sales, competitors from Chinese language EV makers and a slower-than-expected transfer away from petrol and diesel automobiles.
Individually, Rivian has taken steps to chop prices amid softening demand for EVs.
The startup, which has but to show a revenue, has been renegotiating contracts with suppliers and making its manufacturing processes extra environment friendly.
In addition to SUVs, Rivian additionally makes electrical supply vans, which it provides primarily to on-line retail large Amazon – its largest shareholder.
Amazon has ordered 100,000 of the automobiles, that are all because of be delivered by the tip of the last decade.
