Irvine-based EV maker Rivian gets $5-billion lifeline from Volkswagen
Irvine-based Rivian Automotive got a big financial boost on Tuesday, as Volkswagen agreed to invest up to $5 billion in a joint venture with the struggling manufacturer of electric trucks.
Under a partnership announced by the companies, the German automaker will provide $1 billion initially and as much as $4 billion more over time.
The infusion will give VW the ability to tap the company’s technology to develop “next generation” battery-powered vehicles and software.
Electric truck maker Rivian was once seen as a rising star in the EV space. But now the company says it will lay off 10% of its employees, and its production targets for this year are coming in lower than expected.
The surprise investment comes during a tough time for the electric vehicle market, which has posed economic headwinds for Rivian and other EV makers.
With their sleek design, Rivian trucks and sport utility vehicles initially drew plenty of interest among investors, fueling a massively successful initial public offering of stock in 2021; the company ended its first day of trading valued at nearly $88 billion. Amazon.com is Rivian’s largest shareholder.
But analysts said some car buyers were put off by the high price of Rivian’s latest offering of vehicles — the company’s R1T electric pickup truck starts at nearly $70,000, while its R1S SUV starts at almost $75,000.
Rivian reported a net loss of $1.52 billion for the three-month period that ended Dec. 31, compared with $1.72 billion during the same period a year earlier.
Signs of stress mounted. In March, Rivian postponed plans to build a new $5-billion manufacturing plant in Georgia to save money amid heavy losses.
A month earlier, Rivian announced a 10% cut to its workforce and lower production expectations.
Last week another local EV manufacturer — Fisker Group Inc. of Manhattan Beach — filed for Chapter 11 bankruptcy protection after it failed to secure financing from undisclosed automakers.
Manhattan Beach EV maker Fisker Inc. said it was halting production of its snazzy Ocean SUV, seeking financing and a strategic partner in a further setback for car designer Henrik Fisker.
Early this year, Apple pulled the plug on its self-driving electric vehicle program, reportedly after spending $10 billion over a decade.
And Lucid Motors, a maker of luxury electric vehicles in the Bay Area city of Newark, received a $1-billion infusion last month from an affiliate of the Saudi sovereign wealth fund — the kind of big backer that Fisker didn’t have.
Rivian’s shares, which were pummeled earlier this year, jumped 30% in extended trading on Tuesday. The shares closed at $11.96.
Tesla Inc., the biggest player in the business, also has been squeezed by weak sales and declining profits. The company said in April that it would lay off more than 10% of its workforce.
Bloomberg News contributed to this report.
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