Volkswagen bets $5 billion on Rivian: Game-changer or alarm bell?
With AI now the talk of the town, it’s turbocharging the race toward smart electric cars. Whether it’s newbies like $Rivian Automotive, Inc.(RIVN)$ or the old guard, everyone wants a piece of the action in this century-old car revolution.
$Volkswagen AG(VLKAY)$ just dropped a bombshell, pumping a cool $5 billion into Rivian and agreeing to cook up a tech venture together. In return, VW gets dibs on Rivian’s software and electric car tech, teaming up to whip out "next-gen" battery-powered wheels and software with partners.
"Tesla’s nemesis" ?
Post-announcement, Rivian’s stock skyrocketed over 50% in after-hours trading, clawing back half its year-to-date losses.
Once hailed as " $Tesla Motors(TSLA)$ ’s nemesis," Rivian broke records with its 2014 IPO, focusing on electric trucks and SUVs. Their debut R1T truck topped satisfaction charts, making them a rising star in America’s auto startup scene.
However, they’ve been burning cash faster than a bonfire, struggling to ramp up production and eat into those R&D and fixed costs. Q1 of 2024 saw operating losses at $1.484 billion, netting a cool $1.446 billion in the red. Their stock’s down a painful 49% this year.
VW’s cash injection is like a shot in the arm for Rivian, but not everyone’s buying it. CFRA’s Garrett Nelson calls it a "vote of confidence" but won’t fix their money woes or cash burn. After a tepid June, doubts linger if Rivian can deliver on time and make green.
Win-Win OR Weak-Weak?
The partnership between VW and Rivian is not so much a win-win as a "weak-weak alliance." Rivian’s edge was scarce U.S. electric players back then and focusing on trucks and SUVs, Tesla’s blind spot. Now? Not so sharp.
VW’s pivot to electric? About as solid as a marshmallow. Recently, VW hinted $60 billion for next-gen gas guzzlers. See, North America’s electric dip has giants like Audi, $Ford(F)$ , and $General Motors(GM)$ backpedaling.
Why? 'Cause China’s the boss. They soaked up 63.5% of the world’s electric ride sale last year. China's in love with electrics, plowing on with 71 new pure electric models this year. $BYD Co., Ltd.(BYDDF)$ , the comeback kid, smacked Tesla around in 2022, and ain’t slowing.
China’s EVs boom in South America, Brazil’s sales spiked eightfold. CleanTechnica’s 2023 Latin American top-sellers? Six from China in Costa Rica, seven in Uruguay, and six in Colombia.
So, as VW and Rivian shake hands, Chinese firms should cozy up to local cash and cars. A big squeeze? New ideas from top dogs light a spark, drive the EV wave. And hey, folks like us? We're the winners.
Do you think the slowdown in electrification in Europe and USA is a necessity or a delaying tactic? What is the future of electric vehicles this year?
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