Rivien (RIVN) is up 39% premarket after its $5 billion deal with Volkswagen (VWAG).
The deal is broken down into a $3 billion direct investment in Rivian and a $2 billion investment in a 50/50 joint venture.
The company will hold an investor day on Thursday at its Illinois facility, so I think the stock could remain volatile over the weekend.
Here are a few ways to unpack the new Rivian/VW pairing.
Implications for Rivian
Rivian went from worrying Wall Street about the need to raise more funds (speculation was above $4 billion) to removing this risk in the medium term.
“The $3 billion equity injection over the 2024-2026 period should allow Rivian to remain funded through the launch of R2 and the construction of the facility in Georgia,” said Philippe Houchois, analyst at Jefferies , in a customer note.
What this means for the entire auto industry
Piper Sandler’s Alexander Potter says the deal sends a key signal to the auto industry as a whole and its many investors.
“Specifically, it suggests that ECUs, electrical architectures, and proprietary software are necessary for automakers to control themselves. Rivian and Tesla (TSLA) have long advocated for mastering these technologies in-house, and now Volkswagen is (apparently) trying to replicate their approach. New Chinese brands are evolving at unprecedented speed, and only through vertical integration can other automakers hope to keep pace,” Potter said.
Spotlight on Lucid
Citi’s Itay Michaeli calls Lucid a compromise derivative of the deal.
“We highlight Lucid (whose shares are down 41% year-to-date) as a name that could attract more attention given its battery efficiency and openness to licensing to more other automakers. It is also conceivable that the proposed VW-Rivian joint venture could improve the broader sense of electric vehicles,” says Michaeli.
Lucid shares are up 9% premarket. The company’s ticker page is at the top on Yahoo Finance trending ticker page.
