Rivian shares rose 15% after Volkswagen invested $5.8B as part of a joint venture.
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- Shares in Rivian fell more than 15% on Wednesday after the electric car maker announced it would invest $5.8 billion with German automaker Volkswagen as part of their joint venture.
- Shares of Rivian and other electric car makers fell after Trump won his second term as president, with Tesla the only top performer.
- Rivian’s shares are down about 55% this year, underperforming rivals. If the dividend is retained, the company will add more than $1.6 billion to its current market value of $10.8 billion.
Shares in Rivian fell more than 15% on Wednesday after the electric car maker announced it would invest $5.8 billion with German automaker Volkswagen as part of their joint venture.
The increased investment comes at an important time for Rivian, which aims to cut costs, improve profitability, and launch its small, affordable R2 SUV to appeal to budget-conscious buyers.
A joint venture, Rivian and VW Group Technology LLC will integrate Rivian’s advanced electrical infrastructure and software technology into the future electric vehicles of both companies.
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“This (investment) is a vote of confidence in the power of the EV maker, as support for EVs in the US faces an uncertain future, if Trump returns to the White House,” said Susannah Streeter, head of finance and markets at . Hargreaves Lansdowne.
“Tesla’s Elon Musk has been given a seat at Trump’s top table,” Streeter added, which could put EV rivals like Rivian at a disadvantage in future policy decisions.
Workers assemble second-generation R1 vehicles at Rivian’s electric manufacturing facility in Normal, Illinois, on June 21, 2024. (Reuters/Joel Angel Juarez/File Photo / Reuters)
After Trump’s victory announcement last week, shares of Rivian and other electric car makers fell, with Tesla the only outsider.
Last week, Rivian missed third-quarter revenue estimates. The Amazon-backed company has been struggling with parts shortages, which led to a drop in its annual production forecast in October.
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Rivian still faces tough challenges such as lack of scale, increasing competition, capital costs and the “perceived removal” of EV debt, said Garrett Nelson, senior financial analyst at CFRA Research.
The joint venture helps alleviate “a large part of the capital’s concerns” and is likely to establish Rivian’s business with Volkswagen as a platform of choice in Western countries outside of Tesla, Canaccord Genuity analysts said in a note.
Rivian’s shares are down about 55% this year, underperforming rivals. If the dividend is retained, the company will add more than $1.6 billion to its current market value of $10.8 billion.
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