VW enters joint venture

Volkswagen is taking another swing in its struggle to catch up with Tesla by investing US$5 billion (NZ$8.2b) into a tie-up with Rivian.

The two companies are set to jointly develop battery-powered vehicles and software, a partnership that will give the German carmaker access to the American company’s technology. 

For loss-making Rivian, the deal is a financial lifeline as manufacturers rethink strategies in a slowing electric vehicle (EV) market.

VW is working on several fronts to regain momentum in its bumpy EV rollout with delays and glitches having put off buyers. 

Under the joint venture, VW will make an initial US$1b investment and as much as US$4b more over time, expanding its footprint in the US where the manufacturer has a history of failed attempts to gain market share. 

The surprise deal with Rivian gives the EV maker financial relief after it has struggled to ramp up production and deliveries of its electric pick-up and SUV models. 

In March, it paused plans to build a new manufacturing plant in Georgia to conserve cash while contending with deep losses, which amounted to roughly US$39,000 for each vehicle built last quarter.