Rivian (RIVN)
Shares of Rivian (RIVN) are trading up double digits today (though well off their highs) on news of a staged equity investment and joint venture (JV) with Volkswagen (VWAPY). One of the biggest concerns with Rivian (and other early-stage EV manufacturers) is access to capital and gaining enough manufacturing scale to get to cash flow positive. This deal with Volkswagen addresses much of that concern.
The deal calls for up to $5 billion of investment, starting with a convertible note (converts to stock if certain conditions are met) of $1 billion this year and $1 billion equity investments in each of 2025 and 2026. The JV deal calls for a $1 billion equity investment when the JV launches and a $1 billion loan in 2026.
Suffice it to say, this is a major deal. Yes, there is some dilution. But that was going to happen in some form anyway. I think Volkswagen is a good partner and their brands (VW, Audi, Porsche, etc.) more closely align with Rivian’s brand than any American or Japanese auto manufacturer. There’s an entire discussion about what tech will be shared and what the product roadmap for both companies will evolve into, but we’ll leave that for another day.
For now, this is good news, and while it doesn’t mean shares of RIVN are immediately heading to the moon, it significantly reduces funding risk (the biggest concern) and secures a partner that makes sense, in my eyes, from a product perspective.
If you’re in RIVN for the long haul the stock remains a buy. If you’re not, it’s a hold or even a sell (if you were looking for the exit). I’m in. BUY
