The joint venture deal between Rivian and Volkswagen rises to up to $5.8 billion

Volkswagen Group has increased its planned investment in an announced joint venture with an electric vehicle manufacturer Rivian Automotive before the start of operations on Wednesday.

In a joint press release on Tuesday, the companies said the size of the deal is now up to $5.8 billion – an increase from an initial investment of up to $5 billion – with the first VW models, that use Rivian’s software and electrical architecture will come to market as early as 2027.

Rivian shares rose more than 6% in after-hours trading.

The increase in investments was due to the companies withdrawing some potential future capital from VW, as well as changes in the structure of the deal, including capital investments, officials said on Tuesday during an investor call.

VW Group Chief Executive Oliver Blume said at a news conference on Tuesday that the German automaker expects to use Rivian’s technologies across a wide range of price points, international markets and brands.

Integration of Rivian software is expected to begin with the Volkswagen brand, followed by Audi and VW’s upcoming Scout brand, Blume said. He also mentioned that “sports cars” could be included, but did not specify what brand they were. VW’s brands also include Bentley, Porsche and Lamborghini.

“We are excited to see our technology being integrated into vehicles outside of Rivian, and we are excited about the future,” Rivian CEO RJ Scaringe said in a statement.

Both Scaringe and Blume said any further plans such as battery modules, joint production of vehicles or sharing other hardware components would have to be in addition to the announced joint venture deal.

The name of the joint venture, which was expected to close in the fourth quarter, is Rivian and VW Group Technology, LLC.

VW has already invested the first billion US dollars in the form of a convertible bond, the companies said. Upon completion of the joint venture, VW will invest approximately $1.3 billion “in return for background IP licenses and a 50 percent equity interest in the joint venture.”

According to the companies, the remaining investments of up to $3.5 billion will be made “in the form of equity, convertible notes and debt at future dates and based on clearly defined milestones” by 2027.

The joint venture deal was originally announced in June and came as Rivian sought to raise additional capital to launch its redesigned models and prepare for production of new “R2” vehicles in early 2026.

Scaringe previously said that VW’s capital is expected to carry the company through the ramp-up of production of its smaller R2 SUVs at its plant in Normal, Illinois, starting in 2026, as well as production of a midsize EV platform at a plant in Georgia, where Rivian is starting of the year interrupted construction.

The joint venture is led by Wassym Bensaid, Chief Software Officer of Rivian, and Carsten Helbing, Chief Technical Engineer of the VW Group.

The companies announced that developers and software engineers from both companies will join the joint venture. Teams will initially be based in Palo Alto, California, with three additional locations in North America and Europe in development.