RIVN - Rivian Automotive: Upgrading On Volkswagen Investment And Proposed Joint Venture

2024-06-26 03:42:26 ET

Summary

• After the close of Tuesday's session, shares of electric vehicle manufacturer Rivian Automotive rallied by more than 50% following news of an initial $1 billion investment by Volkswagen.
• In addition, the companies intend to establish a 50:50 joint venture to develop next generation electrical/electronic architecture for electric vehicles.
• Should the proposed joint venture come to fruition, Volkswagen intends to invest an additional $4 billion in shares of Rivian and into the joint venture.
• Essentially, Volkswagen appears to be buying into Rivian's architecture to address persistent issues with its own CARIAD software unit, which have resulted in multi-year delays of some of its highest profile EVs.
• While the proposed transaction will address the greatest individual blind spots of both companies, an outright takeover of Rivian by Volkswagen looks unlikely at this point.
• With further near-term capital raises now unlikely, I am raising my rating on Rivian Automotive's common shares from "Sell" to "Hold".

Note:

I have covered Rivian Automotive, Inc. ( RIVN ) previously, so investors should view this as an update to my earlier article on the company. ...

For further details see: