BERLIN, March 27 - Volkswagen's software collaboration with U.S. electric vehicle manufacturer Rivian has cleared a significant hurdle, the German carmaker said, after the first vehicles running the jointly developed software completed winter testing successfully.
The step was described by Volkswagen as an important technical milestone that moves Rivian closer to receiving its next tranche of funding under the partnership. "We’re accelerating towards the future," said CEO Oliver Blume, reflecting the company's tone about the progress.
The joint venture has been set up to create a software platform intended to support a wide-reaching model overhaul. That platform is intended to underpin updates across Volkswagen’s main brand, as well as the U.S. pickup truck project Scout and Audi, Volkswagen’s premium subsidiary.
Volkswagen turned to Rivian, a California-based maker of electric vehicles, after encountering persistent difficulties at its own software unit, Cariad. The partnership represents an effort to bring in outside expertise as the company seeks to improve its capabilities in vehicle software and data-driven systems.
Company officials framed the collaboration as a strategic response to mounting competitive pressures from firms with strong software and data capabilities. Volkswagen has said it needs to close the gap with peers that have integrated software and data into their product and service models.
In November 2024, Volkswagen agreed to fund the collaboration with a total commitment of $5.8 billion through 2027. That arrangement includes a $1 billion tranche that is expected to be released this year upon the completion of certain "technological milestones." A Volkswagen spokesperson said the company would not comment at this time on the details of the transaction.
Summary
The Volkswagen-Rivian software joint venture has completed winter testing of the first vehicles using the shared software, achieving a key technological milestone that advances the timeline for near-term funding and supports a planned model refresh across Volkswagen’s brands.
Key points
- Winter tests of the first vehicles using the joint software were completed successfully, according to Volkswagen.
- The software platform is intended to underpin a model revamp for Volkswagen’s core brand, the Scout pickup truck project and Audi.
- Volkswagen has committed $5.8 billion to the collaboration through 2027, including a $1 billion tranche tied to technological milestones expected this year.
Risks and uncertainties
- Details of the funding transaction have not been disclosed, as Volkswagen declined to comment on specifics at this time.
- The collaboration is a response to previous problems at Volkswagen’s own software unit, Cariad, indicating ongoing integration and execution challenges.
- Volkswagen faces pressure to catch up with competitors that are strong in data and software, which could influence outcomes tied to the joint venture.