Rivian (RIVN) stock rises almost 50% after hours off back of investor call

Electric vehicle maker Rivian Automotive Inc (NASDAQ: RIVN) hosted an open investors’ call last night, at 6pm Eastern Time, at which it discussed the new $5 billion dollar deal that sent the Rivian stock price soaring yesterday.

The Rivian stock price

As a result, Rivian’s share price rose $5.97, or 49.92%, in after-hours trading.

At the time of this article going to press, Rivian’s stock was already up 8.63% today in premarket trading, to a current share price of $11.96.

Volkswagen to invest $5 billion into Rivian

On June 25 yesterday, both Volkswagen Group (ETR: VOW3) and Rivian announced that VW will invest a grand total of $5 billion into Rivian, “in a joint venture to create next generation software-defined vehicle (SDV) platforms to be used in both companies’ future electric vehicles.”

Volkswagen Group is to invest an initial $1 billion in Rivian, with up to $4 billion in planned additional investment, for a total expected deal size of $5 billion.

Deal to kick off after 2024

The new joint venture will begin with an initial $1 billion injection from VW, and it appears slated to begin in 2025.

“Under the terms of this agreement, Volkswagen will grant Rivian Automotive a convertible note in the amount of 1 billion USD. The note will convert into a direct shareholding of Volkswagen in Rivian, upon the receipt of the necessary regulatory approvals, but not before 1 December 2024,” Volkswagen said yesterday.

It’s also worth noting that the additional $4 billion investment from Volkswagen, after the initial $1 billion, is conditional upon if the joint venture “would be established successfully” and “achieving certain milestones”, according to Volkswagen’s release.

VW to use Rivian’s software in coming years

Rivian CEP RJ Scaringe provided a further capital breakdown of the venture in last night’s investor call:

With this partnership, we intend to create a joint venture with VW group that is expected to provide $5 billion of capital to Rivian, consisting of $3 billion of corporate equity investments, and $2 billion of payments related to the joint venture. The partnership is intended to focus on software and related electrical architecture, design and development, with Volkswagen planning to utilise Rivian’s own electrical architecture and software stack, beginning in the second half of the decade.”

Scaringe also noted on the call that “the joint venture is expected to develop a software-defined vehicle architecture capable of addressing all segments, from entry-level vehicles to the most premium, high performance vehicles.”

A new co-CEO?

The new partnership could bring with it profound governance changes for Rivian.

According to Scaringe, it will involve to co-CEOs ruling the roost together, with Rivian “appointing the technical leadership”, while the Chief Operating Officer COO will come from Volkswagen.

Who will fill these positions was not revealed.

However, Rivian emphasised that both companies will continue to separately operate their respective vehicle businesses.

Rivian Investors Day announced

In addition to this, Rivian also announced yesterday that it will be hosting an Investor Day tomorrow, on June 27, “to hear an update from Rivian’s leadership on the company’s progress to date and focus on key priorities.”

The event will presumably further contextualise Rivian’s new VW venture, and how it relates to their long-term strategic objectives for the coming years.

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