VOLKSWAGEN TO INVEST $5BN IN TESLA ELECTRIC CAR RIVAL
Volkswagen has announced plans to invest up to $5bn (£3.9bn) in US electric carmaker Rivian, as manufacturers rethink their strategies amid uncertain demand.
The German car manufacturer said it will initially hand $1bn to Rivian, which aims to compete with Tesla by offering so-called “electric adventure vehicles”.
The joint venture will give VW immediate access to Rivian’s technology, clearing the way for a further $4bn of investment by 2026.
The new venture will be “equally controlled and owned” by VW and Rivian, the companies said.
It comes as the electric car sector is grappling with challenges from weakening demand and the risk of a trade war with China.
The latter has been exacerbated in recent weeks as both the European Union and the US have said they will impose tariffs on Chinese electric vehicles (EVs).
The German automotive industry has opposed the introduction of tariffs amid fears that China could hit back with retaliatory measures that harm manufacturers such as BMW and Daimler.
Following the deal, Erik Gordon, a professor at the University of Michigan’s Ross School of Business, told Bloomberg that the “cost of continuing to go it alone is too high” for manufacturers.
This is against the backdrop of a slowdown in sales and high inflation, which has forced carmakers to scale back production.
This includes Ford, which has cut its spending on EVs by $12bn and delayed plans for new battery-powered models and factories.
General Motors recently said it could take “decades” for the EV market to develop.
Mary Barra, General Motors’ chief executive, told NBC earlier this month: “We said back in 2018 that we’re committed to an all-electric future. But as we make this transformation, it’s going to happen over decades. And that’s why I couldn’t be more proud of our gas-powered fleet as well.”
Rivian’s shares jumped 50pc in premarket trading in the US in the wake of the deal, with some analysts calling it a lifeline for the business.
Since listing on the Nasdaq in 2021, Rivian’s share price has fallen by more than 90pc.
Elon Musk’s Tesla has also lost more than a fifth of its value over the past year.
2024-06-26T08:46:20Z dg43tfdfdgfd