Rivian hasn’t yet turned a profit, prompting it to seek outside investment from legacy automakers. The good news is that it has been successful, with Volkswagen (VW) stepping in with the hope of forming a mutually beneficial relationship. VW is investing $1 billion initially in the American electric vehicle (EV) startup; however, additional funding through 2026 is expected to raise the deal to $5 billion.
The money will help the mass-market production of Rivian’s anticipated third vehicle, the R2 SUV. This is Rivian’s low-cost, reliable electric SUV, and CEO R.J. Scaringe plans to sell it at a modest price.
The funds will also go toward a software research and development joint venture. VW has lagged behind competitors in EV software, but Rivian has built an extensive electric architecture and software division.
The companies will share ideas addressing computer issues and making EVs as tech-savvy as possible.
On a conference call in July, Scaringe said VW won’t help build the R2. The companies will work on their respective EV lineups. VW needs a lifeline after it cleared out its EV software department, Cariad, last year.
Photo Courtesy Rivian
Rivian cars have several electronic control units (ECUs) — mini-computers that control parts of the vehicle. ECUs can receive over-the-air updates. The second-generation R1T and R1S, the current Rivian cars available, have some of the best software and user experience. They will share these with VW, while VW shares its leading EV platform and market insights.
Rivian still needs to turn a profit after operating in the negative for the last five years. The company hopes to achieve profitability by the end of the year. Scaringe plans to cut material costs by one-fifth to get there.
The $45,000 starting price tag on the R2 is touted as a scheme to generate more interest in low-cost EVs. Rather than opening a new Georgia plant, R2s will be built at its existing plant in Illinois, saving the company more than $2 billion.
2024 has been a good year for Rivian financially. Per-vehicle losses are under $40,000 since the first quarter. March accounting figures show they had $6 billion in capital. It’s now getting a major lifeline with VW’s investment, pushing Rivian’s stock up 23% in early July.
Photo Courtesy Rivian
Rivian also has backing from Amazon, which utilizes a fleet of Rivian electric vans for Prime deliveries. Having the monetary support of two global conglomerates should help push these gains further.
Reviews for the second-gen R1T and R1S have been positive. The 2025 models have novel electric architecture and ECUs. The model also eliminated around 1.6 miles of copper wiring, which lowers the price of the vehicles. The R1 lineup now has a standard-feature heat pump to improve efficiency, especially in winter.
The vehicles have more cameras, higher resolution, five radar systems, and an improved Highway Assist system. They also have three powertrain configurations to choose from.
It’s been a tough year for America’s startup EV companies. Tesla is still rolling along, but it has recently had massive layoffs, including its charging division. Legacy automakers had declines in EV sales. Fisker filed for bankruptcy after it faced public criticism for issues with the Ocean SUV. Rivian is relatively stable, signifying the Wild West of the EV industry is still going strong, but it is not without its risks.
Photo Courtesy Rivian
Rivian also showed off five concept models at an investor meeting in June. The company is being ambitious as it tries to challenge Tesla at the top. The R2 will also be joined by the R3, an affordable crossover coming soon.
The Adventure charging network is also expanding in earnest. There are now 3,500 chargers across 600 sites in North America. Rivian is also compatible with Tesla Superchargers. More stations are coming to the Mountain West and near the Canadian border.
“R2 and R3 are distinctly Rivian in terms of performance, capability, and usability yet with pricing that makes them accessible to a lot of people,” Scaringe said in a statement on the Rivian website. “I can’t wait to get these to customers.”
