Volkswagen, the German automaker, said Tuesday it would invest up to $5 billion in Rivian, an electric truck maker that has struggled to turn a profit, and that the companies would collaborate on software for electric vehicles.
The deal creates an unusual alliance between the world’s second-largest automaker and an electric vehicle start-up that has struggled to meet investors’ expectations that it would achieve the kind of success that made Tesla the most valuable automaker of cars in the world.
If successful, the partnership will address weaknesses in both companies. That would provide Volkswagen with the software expertise that auto analysts say it sorely lacks. And Rivian, in addition to cash, would benefit from the manufacturing expertise of an automaker that produces nearly 10 million vehicles a year, placing it only behind Toyota Motor in the global auto industry.
Volkswagen said it would initially invest $1 billion in Rivian and increase that to $5 billion over time. If regulators approve the transaction, Volkswagen could become a significant shareholder. The infusion represents a huge vote of confidence in Rivian, which loses tens of thousands of dollars on every vehicle it sells.
Rivian’s cars and sports utility vehicles have received rave reviews in the automotive press, but the company has struggled to ramp up production at its plant in Normal, Ill. In recent months, many investors have grown concerned that the company may not survive long enough to become profitable.
RJ Scaringe, Rivian’s founder and chief executive, said the money from Volkswagen would help Rivian launch a midsize SUV called the R2 that will sell for about $45,000 and complete a factory in Georgia. Rivian halted construction of the Georgia plant in March in an effort to save more than $2 billion.
“This is important for us financially,” Mr. Scaringe said of the Volkswagen partnership in a conference call with reporters on Tuesday.
The cheapest vehicle Rivian currently sells, the R1T station wagon, starts around $70,000, a price that has limited its sales to wealthy early adopters. Its R1S SUV starts at $75,000. Even at those prices, Rivian lost $39,000 on every vehicle it sold in the first three months of the year.
Rivian shares jumped more than 50 percent in extended trading Tuesday after the deal was announced.
The electric vehicle market has been split between relatively new companies like Tesla and Rivian, which produce only battery-powered cars, and established automakers like Volkswagen, General Motors and Toyota, which have often struggled to master the new technology.
Other than Tesla, none of the newer American automakers specializing in electric vehicles has gained significant market share. Some, such as Fisker and Lordstown Motors, have ceased production and filed for bankruptcy protection.
Auto analysts have long considered Rivian among the electric vehicle startups most likely to survive, in part because it has raised billions of dollars in investment. Amazon is one of its largest shareholders and a major customer for the company’s delivery vans.
But Volkswagen and Rivian operate very differently and it can be a challenge for them to work together. Volkswagen, which is based in Wolfsburg, Germany, is known for rigid, top-down management and is partly owned by the state of Lower Saxony. Rivian, based in Irvine, California, has the loosest culture of a tech start-up. Rivian said in April it expected to sell 57,000 vehicles this year, far less than Volkswagen sells in a week.
Mr. Scaringe and Oliver Blume, Volkswagen’s chief executive, said the deal blossomed after the two met at a Porsche customer center and bonded over their love of cars.
“We have a very similar mentality,” said Mr. Blume during the call.
Ford Motor was for a time a major shareholder in Rivian, and the two companies once said they would build SUVs together. But this plan never came to fruition and Ford sold most of its stake in Rivian. Ford and Volkswagen have a special partnership that includes the joint development and production of electric vehicles.
The Volkswagen-Rivian alliance could encourage other established carmakers to consider investments or partnerships linking them with start-ups like Lucid Motors – companies that have well-regarded technology but are unprofitable and struggling to make ends meet. located in a crowded market. Another major carmaker, Stellantis, the parent company of Chrysler, Fiat and Peugeot, has invested in a Chinese company, Leapmotor, for access to its electric car technology.
Vehicles using software developed by the new joint venture will go on sale during the second half of the decade, Volkswagen said. Every Volkswagen brand, which includes Audi and Porsche, could use the technology, Mr. Blume said. Scout, the American off-road brand that Volkswagen is reviving at a plant under construction in South Carolina, could also use the software.
But Volkswagen and Rivian will continue to market their cars separately.