German automotive giant Volkswagen (VW) has announced plans to invest up to $5 billion (£3.94 billion) in Tesla’s competitor, Rivian.
This deal establishes a joint venture, enabling VW and the US-based electric vehicle (EV) manufacturer to share technology.
Following the announcement, Rivian’s shares surged by nearly 50%.
The partnership comes amid growing competition among EV manufacturers and as Western countries move to impose tariffs on Chinese imports.
As part of the agreement, VW will initially invest $1 billion in Rivian, with an additional $4 billion to be invested by 2026.
Founded in 2009, Rivian has yet to report a quarterly profit. In the first three months of 2024, the company experienced a net loss exceeding $1.4 billion.
VW, like other major automotive companies, is facing pressure from rivals such as Tesla and China’s BYD as it transitions from fossil fuel-powered vehicles.
Meanwhile, some EV start-ups have struggled to gain traction in the highly competitive market, especially as higher interest rates dampen demand for expensive purchases.
The partnership will grant VW immediate access to Rivian’s software, which the German automaker can integrate into its vehicles.
Automotive giants like VW are also encountering increasing competition from Chinese EV manufacturers, who are expanding their global presence.
Earlier this month, the European Union (EU) announced plans to raise tariffs on Chinese EV imports by up to 38%.
Officials from China and the EU have held talks ahead of a July 4 deadline.
A months-long investigation by the European Commission concluded that Chinese EV companies had been “unfairly subsidised.”
In response, China claimed that the tariffs violated international trade rules and labeled the investigation as “protectionism.”
This plan follows the US’s announcement last month to increase import levies on Chinese EVs from 25% to 100%.
This week, Canada indicated it is considering a similar move to align with its allies.
Additionally, on Tuesday, Tesla announced it would recall most of its Cybertrucks sold in the US due to issues with their windscreen wipers and exterior trim.
The recalls affect over 11,000 vehicles, which first went on sale at the end of November last year.