Volkswagen Buys Extra Rivian (RIVN), At Danger Of $1.75 Billion In Fines

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We’ve obtained some optimistic information from Volkswagen and Rivian this month, however we’ve additionally obtained a matter of concern for Volkswagen that may very well be fairly expensive.

Volkswagen × Rivian Going Nicely

Considered one of Volkswagen’s huge EV performs prior to now a number of years has been partnering with Rivian, together with investing within the firm. The German automaker determined it wanted assistance on the software program aspect of automobiles on this period, and Rivian wanted money, so that they grew to become nice companions.

Loads of partnerships like this fizzle and fade away, however this one appears to be going very properly. On the identical time, Rivian is prepping on the market of its first semi-affordable mannequin and able to scale up considerably. So, Volkswagen has simply determined to speculate extra within the younger electrical car firm. Via personal placement, the German large purchased extra shares of Rivian (NASDAQ:RIVN) and grown its stake within the firm to fifteen.9%. That’s fairly a big stake in an organization at Rivian’s stage!

In June 2024, Volkswagen invested $1 billion into Rivian, giving it 8.6% stake within the firm. Naturally, if Volkswagen didn’t like what it was seeing, that will have been that. Nonetheless, the partnership has grown and grown. When Rivian made back-to-back gross revenue in two quarters in 2025, Volkswagen invested one other $1 billion. Final month, the German automaker invested yet one more $1 billion (by shopping for 62,889,522 Class A shares at $15.90 a pop) after Rivian achieved sure testing milestones. In complete, assuming all goes properly, Volkswagen is meant to commit $5.8 billion to Rivian by means of 2027.

€1.5 Billion in Fines for EV Gross sales Shortfall

As soon as upon a time, Volkswagen appeared prefer it had tremendous bold plans for EV gross sales. This adopted the corporate getting busted in an enormous diesel car emissions scandal. It appeared like Volkswagen wished to show issues round and turn out to be a frontrunner within the EV transition globally. And it’s achieved alright in that regard, however not beautifully. For instance, it’s the #1 automaker for EV gross sales in Europe, but it surely’s 4th globally.

Additionally, it’s nonetheless promoting quite a lot of non-electric vehicles. The truth is, the share of its gross sales which might be electrical doesn’t appear to be ample even in Europe in comparison with its general car gross sales. The corporate hasn’t been promoting sufficient electrical automobiles to fulfill its general fleet emissions necessities. It could must pay €1.5 billion (~$1.75 billion) in fines if it could’t flip that round for the 2025–2027 interval.

Volkswagen is claiming this isn’t honest as a result of customers merely don’t need extra EVs. Hmm, have we heard that one earlier than? Ah, sure, we’ve heard that one fairly recurrently for a decade and a half, and automakers claiming this have been confirmed incorrect many instances. On that subject, see: Tesla. Additionally on that subject, take a look at how properly Chinese language EV makers are already doing in Europe with every kind of boundaries.

After all, there’s one other subject. Volkswagen says it makes about 30% extra revenue on non-electric vehicles than electrical ones. That’s not even making an allowance for service income. I’m wondering which powertrain goes to get prioritized….

The market is shifting, however how briskly, we’ll see. The European EV market as soon as led the Chinese language EV market, however now it’s far behind. Maybe Volkswagen’s partnership with Rivian will give it a lift quickly and assist get Volkswagen again on observe.