Electrical truck maker Rivian’s $5 billion cope with Volkswagen Group nets Rivian some much-needed money. But it surely additionally provides Volkswagen a path to a future within the auto business it has struggled to achieve by itself.

In its quick lifespan, Rivian has loved reward from the automotive press, acquired chart-topping buyer satisfaction rankings, gone via one of many largest preliminary public choices of all time, and watched its market worth swell to $150 billion.

However since then, Rivian’s shares have plummeted. As of the second quarter, Rivian was shedding someplace round $1.5 billion per quarter — or about $30,000 to $43,000 on each truck it bought previously 5 quarters.

“They’re probably one or two applications [new models] away from chapter,” mentioned Joe McCabe, president and CEO of AutoForecast Options.

And with costs that sometimes begin round $70,000, Rivian’s vans aren’t low-cost.

Monetary pressure and instability within the EV market and the broader economic system have led to a number of rounds of layoffs at Rivian. In March, the automaker introduced it might pause work on a $5 billion manufacturing unit in Georgia the place it had plans to supply its subsequent technology of automobiles. 

Then in late June, VW Group — the second-largest automaker on the earth by quantity — swooped in with a deliberate funding of $5 billion within the cash-strapped EV maker via 2026.

The nick-of-time deal is anticipated to end in some type of three way partnership as early as this fall.

“I feel that this deal ended up being actually consequential for Rivian, for Volkswagen, however I feel perhaps even for the business as an entire,” mentioned Alex Potter, senior analyst at Piper Sandler.

However there are nonetheless challenges: Automotive historical past is suffering from failed partnerships, Rivian and VW are nonetheless rivals, and the EV transition has confirmed rockier than many forecasters had anticipated.

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