Topline
Shares for Rivian rose by over 28% on Wednesday, putting the electric vehicle maker on track for its largest single-day gain ever, after the company announced a joint venture with Volkswagen that includes an investment of up to $5 billion.
The two companies will also form a joint venture to develop an automotive software platform.
Key Facts
Rivian shares jumped to more than $15 as of around 10:45 a.m. Wednesday following earlier surges in extended and premarket trading, increasing the company’s market cap from $11.9 billion to over $15 billion.
Prior to Wednesday, the largest single-day gain for Rivian came on Nov. 11, 2021, when shares rose by over 22% on the stock’s opening day.
Rivian and Volkswagen said Tuesday they agreed to form a joint venture, which will develop an automotive software platform based on Rivian’s technology.
Volkswagen Group CEO Oliver Blume said the company would invest $1 billion in Rivian before additional investments of up to $4 billion through 2026 if the partnership achieves unspecified technical milestones.
Blume said the joint venture—which has not been named—will integrate news and entertainment media, wireless connectivity and autonomous driving functions, among other things.
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Key Background
Rivian’s stock has dropped by nearly 88% since trading opened in 2021, including a 25% dip on the year so far, as the company has yet to turn a profit despite increasing production. The electric vehicle maker, backed by Amazon and Ford, debuted as the best-funded auto startup in U.S. history with a $78 IPO and was briefly the second-most-valuable automaker behind Tesla, according to Reuters. Rivian announced $1.2 billion in revenue through its first quarter this year, a slight increase year-over-year while beating analysts' estimates, though it also reported a $1.4 billion net income loss. Rivian said at the time it would increase production for new, cheaper mid-sized SUVs and two compact crossovers.
Tangent
Rivian will receive $827 million from the state of Illinois to expand its plant in Normal, Illinois, the company announced last month. The expansion will begin in the “coming months,” Rivian said, while the facility has manufactured over 100,000 electric vehicles since starting production in 2021. News of the state’s investment followed Rivian indefinitely pausing plans to develop a $5 billion plant in Georgia.
