What Rivian's venture with Volkswagen means for the EV maker, broader auto industry

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Stock Markets,Rivian Automotive Inc,Volkswagen AG

Rivian's latest partnership with Volkswagen could prove a major boon for investors and the broader auto industry, according to some Wall Street analysts.

Rivian 's latest partnership with Volkswagen could prove a major boon for investors and the broader auto industry, according to some Wall Street analysts. The electric vehicle company and Tesla competitor surged as much as 30% Wednesday, a day after announcing up to $5 billion in funding from German automaker Volkswagen . As part of the plan, Volkswagen will inject $1 billion, followed by an additional $4 billion investment planned by 2026.

mountain Shares pop on Volkswagen venture But Wall Street views the deal as a potential turnaround opportunity that can help limit execution risks and uncertainties surrounding funding that have spooked investors in recent months. "We have assumed RIVN would need to raise more capital, and VW's investments in RIVN will prove valuable in helping it achieve the scale necessary to get to positive free cash flow," and build new facilities, said Bank of America analyst John Murphy.

mountain Shares this year "Rivian and Tesla have long advocated for in-house mastery of these technologies, and now Volkswagen is attempting to replicate their approach," said Piper Sandler analyst Alexander Potter. "New Chinese brands are moving at an unprecedented speed, and only through vertical integration can other automakers hope to keep pace." He added that the venture also highlights the need for proprietary electronic control units and software.

 

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