Volkswagen unlocks $1 billion for Rivian after testing milestone

The completion of winter testing for the VW ID.EVERY1 vehicle has unlocked another $1 billion investment from Volkswagen Group into Rivian. The VW ID.EVERY1 is the first vehicle under a joint venture—a business arrangement between two companies—established between the automotive group and the electric vehicle manufacturer. Under this partnership, the vehicle is equipped with Rivian’s software and electrical architecture. The successful completion of the cold-weather testing program serves as the formal milestone required to release the next phase of funding.

The newly unlocked $1 billion injection is split into two portions. The breakdown of this funding phase includes:

• About $750 million delivered in the form of an equity investment, which represents an investment in exchange for ownership shares in the company.
• The other $250 million structured as either equity or convertible debt—debt that can be converted into equity—depending on the specific prototypes that Volkswagen Group provided to Rivian for testing, a detail the companies did not make immediately clear.

This milestone builds on a deep financial relationship between the two companies. Volkswagen Group has previously invested a little more than $3 billion in Rivian as part of the joint venture. The broader agreement contains provisions for continued capital access as the partnership matures. Specifically, Rivian will be able to borrow up to $1 billion from Volkswagen Group starting in October. Rivian is also scheduled to receive another $460 million equity investment from Volkswagen after the first vehicle utilizing the joint venture’s technology officially goes on sale. All told, the total deal could be worth as much as $5.8 billion to Rivian.

The milestone payment is delivered just months before the company starts selling the R2 SUV. Rivian is banking on a very fast scaling of R2 production and sales. RJ Scaringe, the founder and CEO of Rivian, has highlighted the critical nature of this launch, stating that the vehicle is “maybe the most important thing we’ve launched to date.”

Why it matters

The successful testing milestone and subsequent capital injection solidify the partnership between Volkswagen Group and Rivian. The funding secures additional capital for Rivian as the company prepares to scale production of its upcoming R2 SUV.