NSERivian Automotive Inc.'s shares jumped 50% in afterhours trading after German automaker Volkswagen AG announced a $5 billion investment in the struggling startup.
Ford was also an early investor in Rivian, but exited its investments when the stock began to collapse from its peak.
In December 2022, Rivian also shelved a deal to build electric vans with Mercedez-Benz.Rivian was the biggest global IPO of 2021, valued at $13.7 billion.
Since its inception in 2009, Rivian has never delivered a quarterly profit and lost $1.5 billion in the January-March quarter.
It lost nearly $40,000 per vehicle in the first quarter of this year.Rivian's shares surged 50% in extended trading to $17.93.
NSE
Rivian Automotive Inc.'s shares jumped 50% in afterhours trading after German automaker Volkswagen AG announced a $5 billion investment in the struggling startup. Volkswagen in a statement said that it will immediately release $1 billion, while the balance amount will be released over time.The investment will enable Rivian to form a Joint Venture with Volkswagen, which, according to a joint statement by both companies, "be equally controlled and owned" and aims to develop next generation battery-powered vehicles and software.Till Monday's close, shares of Rivian had halved this year so far in value.Volkswagen's initial investment intends to be in the form of an unsecured convertible note, which will convert into Rivian's equity shares on or after December 1. Currently, Amazon.com Inc. is Rivian's largest shareholder, with its 16% stake now valued at just $2 billion.Subsequently, Volkswagen will invest an additional $2 billion in shares of Rivian through two equal tranches in 2025 and 2026. The German automaker also intends to add $2 billion into the JV through a payment when the venture is formed in 2026.This fresh source of capital comes as a lifeline for Rivian as the company has struggled to ramp-up production and deliveries of its electric pick-up and SUV models. It is also scheduled to hold an investor day on Thursday. At the end of the first quarter, Rivian was left with $8 billion in cash and cash equivalents.Through this, the German automotive giant gets access to the EV startup’s software and EV architecture after years struggling to roll out plug-in vehicles with efficiency and functionality on par with those from Tesla Inc.But this isn't the first time that Rivian has embarked on a Joint Venture. It earlier abandoned a JV with Ford to build electric vehicles. Ford was also an early investor in Rivian, but exited its investments when the stock began to collapse from its peak. In December 2022, Rivian also shelved a deal to build electric vans with Mercedez-Benz.Rivian was the biggest global IPO of 2021, valued at $13.7 billion. It had priced its IPO at $79, at the height of the IPO frenzy on Wall Street and building on the narrative that it will emerge as a stiff competition to incumbent Tesla. The fact that Amazon was its largest shareholder and had even placed an order for 100,000 delivery vans worth $7 billion, coaxed investors to pile into a pre-revenue company.Within a fortnight of its listing, shares of Rivian surged from its IPO price of $79 to $179 apiece valuing the company at over $100 billion and making it the second-largest EV producer after Tesla in terms of market capitalisation. At one point, Rivian was more valuable than Ford and General Motors, two of US' oldest carmakers.From that peak of $179 in November 2021, shares of Rivian are now struggling to hold on to the $10 mark, having destroyed most of the shareholder value as valuations and reality began to play catch-up with investors. Since its inception in 2009, Rivian has never delivered a quarterly profit and lost $1.5 billion in the January-March quarter. It lost nearly $40,000 per vehicle in the first quarter of this year.Rivian's shares surged 50% in extended trading to $17.93. The stock had risen 9% in regular trading on Tuesday.(With Inputs From Agencies.)
