)'s depleting cash reserves, move the startup closer to profitability and help it compete better in a market dominated by Tesla also rose 5% as Citi analysts said the deal could spotlight the Saudi Arabia-backed luxury EV which has been open to licensing its technology and already has a tie-up with British automaker Aston Martin.
Rivian CEO RJ Scaringe told Reuters Volkswagen's investment would also provide the company the funding necessary to develop its less expensive Tesla Model Y-competitor R2 SUVs and its planned R3 crossovers. The company was set to add more than $4 billion to its market value of $12 billion, based on premarket movements. Its stock has lost nearly half its value this year after Rivian said in February it does not expect to produce more vehicles in 2024.
"We don't mean to throw cold water on the situation, but this funding isn't free, with $3 billion of dilutive equity investment over time, some of it at a discount to the current price," Shlisky said.