Today'ssurge in Rivian's stock value can be attributed to:
Rivian Automotive's (RIVN) shares rocketed this morning, leaping 23.8% in the opening minutes of trading. As of 10:45 a.m. ET on Wednesday, the electric vehicle (EV) stock was climbing 19% higher.
Despite its challenges lately, Rivian has held onto hope due to its partnership with Volkswagen Group. Yesterday, the two companies sealed their largest agreement yet, establishing a multibillion-dollar joint venture (JV) that could potentially change Rivian's fate.
Rivian's monumental deal with Volkswagen
In June, Rivian disclosed plans for a JV worth up to $5 billion with Volkswagen, aiming to finalize it by the fourth quarter of 2024. Today, Rivian confirmed the long-awaited deal.
Rivian and Volkswagen established a JV valued up to $5.8 billion, to be headed by Rivian's Chief Software Officer, Wassym Bensaid, and Volkswagen's Chief Technology Engineer, Carsten Helbing.
Under the partnership, Volkswagen has already invested $1 billion in Rivian through convertible notes; furthermore, Volkswagen will invest an additional $1.3 billion for background IP licenses and a 50% share in the venture. Volkswagen may also contribute up to $3.5 billion in equity, debt, and convertible notes, contingent upon specific milestones.
The JV will primarily focus on developing Rivian's upcoming models, specifically the R2 and R3, with the R2 anticipated for release in the first half of 2026. The most significant aspect of the JV, however, is the potential launch of Volkswagen's first models under this collaboration by early 2027. Volkswagen's cars based on Rivian's technology could position Rivian as a key player in the mainstream automotive industry and potentially open up substantial opportunities in the near future.
What's in store for Rivian's stock?
Recent manufacturing difficulties have hampered Rivian, leading to a 36% decrease in deliveries during the third quarter. The company has adjusted its annual production target to 47,000 to 49,000 units, although it still anticipates delivering 50,500 to 52,000 units this year.
The attention now may center on Rivian's growth strategies and product roadmap. This joint venture with Volkswagen serves as validation for Rivian's EV technology and infuses the EV maker with capital to boost production capacity and roll out new products in a timely manner, as planned. The stock's scorching hot condition today is not surprising, given that shares are still trading around 50% below their 52-week high, as of this writing, despite this significant increase.
In light of the joint venture, Rivian has secured an additional $1.3 billion from Volkswagen for background IP licenses and a 50% share in the venture, indicating a significant financial investment in the company's future. To capitalize on this opportunity, Rivian could strategically invest in expanding its production capacity and introducing new models, potentially increasing its profits and stock value.
According to industry analysts, Rivian's partnership with Volkswagen has the potential to position the company as a key player in the mainstream automotive industry, offering substantial financial opportunities in the near future. As a result, investors may view this as a solid opportunity to invest in Rivian's stock, hoping for its continued growth and potential increase in share value.
