Volkswagen invest $5billion in electric vehicle rival Rivian despite falling demand from motorists

Volkswagen will initially invest $1billion (£739million) in Rivian to form a new, "equally controlled joint venture" which will see the two brands share software for future electric vehicles.

Rivian originally made a major splash in the electric vehicle space in 2021 when it began delivering its R1T pick-up trucks, which had a staggering range of up to 400 miles.

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The behemoth pickup truck was then followed by similarly sized electric vehicles, namely the R1S SUV, a cheaper R2 SUV with starting costs of around £40,000 (£31,569) and the recently announced Rivian R3 compact SUV.

However, in recent years, Rivian has dealt with huge losses as it looks to accelerate production of its popular electric pickup trucks and SUVs.

Posting on X, formerly known as Twitter, RJ Scaringe, founder and CEO of Rivian, broke the "exciting news" to his 100,000 followers.

He wrote: "Volkswagen Group CEO Oliver Blume and I are thrilled to announce the formation of a joint venture between our two companies.

"This partnership brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and scale, while providing an expected $5B of capital to Rivian as we bring R2 and our next generation of vehicles to market!"

The 41-year-old later added: "Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this."

According to Reuters, shares of the manufacturer surged by around 50 per cent after the announcement was made, potentially growing Rivian's market value by nearly $6billion (£4.7billion).

Oliver Blume, CEO of Volkswagen Group, said: "Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost.

"We are strengthening our technology profile and our competitiveness."

Vitaly Golomb, managing partner at Mavka Capital, an investor in Rivian, said the investment was "huge" for the fledgling brand.

He added: Getting the support of Volkswagen Group certainly really strengthens their story toward Europe and toward Asia eventually," Reuters reported.

This major investment comes at a time when the electric vehicle sector is on a knife-edge, with falling consumer interest and a seeming lack of action from governments around the world to help drivers switch to electric.

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Experts have consistently called on governments to introduce incentives to help drivers switch, as well as giving them confidence with a more widespread charging network.

Similarly, drivers have been demanding that manufacturers cut the upfront cost of the vehicles, with the vast majority of electric vehicles costing more than £30,000.