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Volkswagen-Rivian partnership

See: Volkswagen-Rivian Partnership | Volkswagen-Rivian Webcast Presentation

• On June 25, 2024, Volkswagen announced that it will create a joint venture with Rivian (50% stake each) for the development of a electrical/electronic architecture for EVs. Here is a summary of the webcast presentation on the joint venture.

Investment amount

• The investments by Volkswagen are: $1 billion in convertible note and $1 billion in equity in 2024 as well as $2 billion distributed in 2025 and 2026 bringing the total investment to $5 billion (min 7:40).
• Oliver Blume said all investments will be subject to the ongoing due diligence, regulatory fillings, definitive agreement and anti-trust approval (min 2:00 and min 10). It will also be subject to certain financial and technical milestones (min 3:18).
• Arno antlitz said the targeted investments will start in Q4 2024 (min 10:25).
• Arno antlitz said the investment in the partnership is not part of the 180 billion euros (since 180 billion is R&D combines and here we are talking about M&A) that was budgeted for 2023 to 2027 but benefits such as license of the software which exists already and the co-development of the architecture will drive down investments in future (which is 170 billion euros)-. He added that they will compensate for a portion of the investment through divestment of non-core businesses (min 18:00).

Source: Volkswagen

Source: Volkswagen

Impact on Volkswagen products

• Oliver Blume said the partnership will hit Volkswagen products that are coming in in the second-half of the decade (min 20:50).

Impact on existing architecture platforms

• The joint venture will fit very well into Volkswagen's platform strategy and architectures developed for their vehicles such as the PPE platform (min 6:30).
• Oliver Blume noted that they will be able to use the results of the cooperation across VW brands including Scout. He added that they will share costs with Rivian (min 17:00).
• Arno antlitz said Cariad that the announcement is not expected to trigger any extraordinary impact on Cariad financials (min 21:15).
• Oliver Blume pointed out that Cariad will continue to play an important part of their EV strategy (min 23:30)
• Arno antlitz added that Cariad will benefit financially since the 2.0 platform will be passed on to the joint venture. Also, Cariad will benefit from the ramp-up of 1.10 and 1.20 platform (min 24).
• Oliver Blume said their focus within the joint venture is developing next-generation architecture and that doesn't affect the current plans at Scout (min 27:00).

Source: Volkswagen

Impact on Volkswagen Group financials

• As a result of the investments, the 2024 net cash flow will be impacted by $2 billion (min 8:20).
• Arno antlitz said they are convinced they will strongly benefit financially from the partnership by reducing cost per vehicle produced (min 8:59).

Insights on Rivian's architecture

• Tim Rokosa, Deutsche Bank analyst noted in the webcast call that there is no doubt that Rivian has great technology (min 12:10).
• Oliver Blume said the intention is to speed up their software technology and that Rivian provides a software solution for the western world (min 13:10).

When did talks start?

• Oliver Blume said the talks with Rivian began some months ago (min 13:10).

Management of the joint-venture

• Oliver Blume said joint venture will be managed by a team from Volkswagen and Rivian (min 5:59).

Source: Volkswagen

About Rivian

Rivian architecture

• Rivian's new electrical architecture and compute platform (zonal architecture) enables it to reduce the number of electronic control units (ECUs) from 17 in the first generation to 7. This allows the company to cut more than 1.6 miles of wiring from each vehicle and to build vehicles faster. The new architecture also supports Rivian's software stack which include real-time operating systems (RTOS) such as thermal dynamics, ADAS and safety systems.
• According to its CEO, the adoption zonal architecture will enable the company to reduce costs per vehicle by "thousands". Customers will also notice an improvement in software performance.
• Rivian is one of the few companies that employs zonal architecture. According to S&P Global, only 2% of all vehicles worldwide were using this architecture in 2022. That number is forecasted to grow to 38% by 2024.

Past partnerships

• In December 2022, Rivian cancelled plans to manufacture EVs in Europe with Mercedes-Benz following supply chain woes.
• In November 2021, Ford abandoned its plan to develop an electric vehicle with Rivian citing that its first round of EVs were seeing extraordinary demand and was laser-focused on scaling and reducing complexity.