Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.Volkswagen will make investments as much as $5bn right into a partnership with American EV start-up Rivian because the German carmaker makes an attempt to quickly enhance its software program, sending the posh electrical truck maker’s share worth up greater than 35 per cent.The tie-up with the maker of electrical vehicles and SUVs comes as Volkswagen appears to beef up its electrical providing within the face of refined competitors from Tesla and Chinese language rivals. VW’s in-house software program developer Cariad has did not ship merchandise on time, delaying its rollout of recent fashions.Upon settlement of a 50/50 three way partnership, Volkswagen would obtain “fast entry” to Rivian’s EV software program to be used in its personal vehicles. The funding in Rivian and the three way partnership quantities to $2bn in 2024 and as much as $5bn by 2026.EV start-ups have not too long ago confronted dearer financing prices as the results of greater rates of interest and weaker-than-expected demand for his or her merchandise, main some to hunt funding with the intention to proceed creating their automobiles and scaling manufacturing. “For Rivian, this can be a lifeline,” stated Scott Sherwood, founding father of the SSO report. “They have been the one and not using a deep-pocketed investor.”“Volkswagen could possibly be taking a look at an extinction occasion with low-priced Chinese language EVs coming into Europe,” he added. “This additionally provides VW a foothold in a extra premium EV phase within the US and doubtlessly Europe”.On the peak of the keenness for electrical automobile start-ups in November 2021, Rivian’s market capitalisation surpassed that of Volkswagen after its IPO. Its share worth has since fallen some 90 per cent.One other EV start-up, Fisker, final week filed for chapter after failing to safe an funding from a longtime automaker, the newest of the category to fold after working out of funds. “This partnership brings Rivian’s software program and zonal electronics platform to a broader market by way of Volkswagen Group’s international attain and scale . . . as we carry our subsequent technology of automobiles to market,” Rivian’s founder and chief government RJ Scaringe stated on X.Rivian’s electrical vehicles and SUVs are premium merchandise, retailing at about $70,000. The corporate misplaced greater than $1.4bn within the first quarter of 2024, shedding over $38,000 per automobile.Volkswagen has accelerated its give attention to EVs, asserting final week that it had made OpenAI’s ChatGPT out there in all electrical ID fashions by way of its voice assistant.Software program emerged as a key stumbling block for Volkswagen’s electrical automobiles, particularly in China the place digital native native rivals like BYD and Nio have been aggressively gaining market share.The primary $1bn from Volkswagen comes within the type of a convertible word, which converts into Rivian inventory in December 2024. The funding consists of $3bn of company fairness and $2bn of funds from Volkswagen associated to the three way partnership.Analysts at analysis agency CFRA maintained their “promote” score on Rivian, citing the “troubling” money burn charge of roughly $1bn per quarter. “The important thing query is why would VW make such an funding in a struggling EV producer that would face going concern danger sooner or later,” the agency stated in a word. “However clearly VW sees worth in having access to Rivian’s automobile structure and software program.”