Irvine-based electric vehicle maker Rivian gets $5 billion lifeline from Volkswagen

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Irvine-based electric vehicle maker Rivian gets $5 billion lifeline from Volkswagen

Irvine-based Rivian Automotive got a big financial boost Tuesday as Volkswagen agreed to invest up to $5 billion in a joint venture with the struggling electric truck maker.

Under a partnership announced by the two companies, the German automaker will initially provide $1 billion and up to an additional $4 billion over time.

The injection will give VW the ability to leverage the company’s technology to develop “next generation” battery-powered vehicles and software.

The surprise investment comes during a difficult time for the electric vehicle market, which has posed economic challenges for Rivian and other electric vehicle makers.

With their sleek design, Rivian trucks and sport utility vehicles initially generated a lot of interest among investors, fueling massive success. stock IPO in 2021; the company closed its first day of trading valued at nearly $88 billion. Amazon.com is Rivian’s largest shareholder.

But analysts say some car buyers have been discouraged by the high price of Rivian’s latest vehicle offering – the company’s R1T electric pickup truck starts at almost $70,000, while its R1S SUV starts at almost $75,000.

Rivian reported a net loss of $1.52 billion for the three months ended Dec. 31, compared with $1.72 billion for the same period a year earlier.

The signs of stress have multiplied. In March, Rivian postponed projects to build a new $5 billion manufacturing plant in Georgia to save money despite heavy losses.

A month earlier, Rivian announced a 10% reduction in its workforce and lowered production expectations.

Last week, another local electric vehicle manufacturer — Fisker Group Inc. of Manhattan Beach — filed for Chapter 11 bankruptcy protection after failing to secure financing from undisclosed automakers.

Earlier this year, Apple ended its autonomous electric vehicle program, 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 a subsidiary of Saudi Arabia’s sovereign wealth fund — the kind of big backer of funds that Fisker did not have.

Shares of Rivian, which took a hit earlier this year, jumped 30% Tuesday in extended trading. Shares closed at $11.96.

Tesla Inc., the sector’s largest player, has also been hurt by weak sales and falling profits. The company said in April that it lay off more than 10% of its workforce.

Bloomberg News contributed to this report.

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