Investing.com– Shares of electric vehicle maker Rivian Automotive Inc (NASDAQ:RIVN) rose sharply in aftermarket trade on Tuesday after automaking giant Volkswagen (ETR:VOWG_p) increased its investment in the firm through a joint venture.
Rivian rose 8.4% to $11.47 by 18:21 ET (23:21 GMT).
Rivian and Volkswagen AG (ETR:VOWG) said in a joint statement that the German automaker will invest $5.8 billion in the JV, more than a prior amount of $5 billion, and that their JV planned to begin launching EV models by as early as 2027.
Volkswagen will invest up to $5.8 billion Rivian and the JV by 2027, the two said. The investment will include an initial $1 billion convertible note, $1.3 billion as consideration for intellectual property and an equity stake in the JV. The remaining $3.5 billion will be invested in equity, convertible notes and debt based on performance milestones.
The German carmaker will use Rivian’s software and electrical engineering across a wide variety of vehicles, solidifying its foray into EV production.
The capital gained from the JV will enable the launch of Rivian’s upcoming R2 model in the first half of 2026. The R2 is a smaller, cheaper SUV, and is pivotal to Rivian’s future, as it grapples with waning EV demand, high production costs and slowing sales.
Rivian’s stock has halved in value this year as it clocked weak sales and middling production.