Rivian Automotive rallies as investors see the boosted Volkswagen commitment as a positive

Rivian Automotive (NASDAQ:RIVN) was the biggest gainer in the automobile sector in Wednesday morning trading after the electric vehicle upstart announced more details on its joint venture with Volkswagen Group (OTCPK:VLKAF). Notably, the Volkswagen (OTCPK:VLKAF) commitment was upsized to $5.8 billion from $5 billion. Through the JV, the auto companies plan to bring next-gen electrical architecture and best-in-class software tech for both companies’ future EVs by leveraging RIVN’s electrical architecture and software tech stack enabling the launch of Rivian’s R2 in 1H26 and support the expected launch of Volkswagen Group’s first models as early as 2027.

Morgan Stanley analyst Adam Jonas said the Rivian (RIVN)-Volkswagen (OTCPK:VLKAF) announcement reinforces confidence in the German auto giant’s commitment to the partnership, despite recent market headwinds. Jonas pointed to realistic and achievable milestones for financing that align with RIVN’s gross profit targets. He also called out that Rivian (RIVN) alluded to an opportunity for material cost savings across electrical hardware components, creating a highly competitive zonal architecture cost structure.

Wedbush Securities analyst Dan Ives expects Rivian Automotive (RIVN) will leverage the opportunity by utilizing the robust capital roadmap to support future growth, while vertically integrating its software platform and electrical architecture. The expectation is the EV maker could achieve further cost savings and deliver improved vehicles down the line. “Importantly, this partnership will provide capital needed for the R2 ramp and GA plant R2/R3 midsize platform, which we view as a large step in the right direction and a key move for Rivian going forward,” highlighted Ives.

Shares of Rivian Automotive (RIVN) jumped 15.6% in early action on Wednesday to trade at their highest level in ten weeks. While there is some concern about the potential impact of President-elect Donald Trump pulling back on EV incentives, Rivian (RIVN) has been looking strategically at its sourcing in an attempt to steer clear of any tariff issues.