Share costs of Rivian (NASDAQ: RIVN) surged greater after the maker of electrical autos (EV) obtained a sizeable funding from German automaker Volkswagen (OTC: VWAGY). Regardless of the latest value features, the inventory remains to be down practically 43% in 2024.Let us take a look at the significance of this funding, the way it may assist Rivian, and whether it is too late to purchase the inventory.Volkswagen investmentVolkswagen introduced it should make investments as much as $5 billion in Rivian over three years in addition to type a 50/50 three way partnership (JV) between the businesses. Volkswagen will initially make investments $1 billion within the firm within the type of a convertible be aware, which is able to convert to Rivian shares as soon as it receives regulatory approvals, however not earlier than Dec. 1, 2024.If the JV is accredited, the German automaker would look to take a position one other $4 billion into Rivian or the JV by 2026, together with one other $1 billion this yr upon the implementation of the JV. The aim of the JV shall be to develop next-generation electrical/digital (E/E) structure for EVs.For the JV, Rivian will contribute its experience within the discipline of digital structure for software-defined autos and the related IP through a totally paid-up license. The formation of the JV will even enable Volkswagen to make use of Rivian’s present digital structure in its personal autos, which incorporates its new zonal {hardware} design.For Volkswagen, the deal brings with it quick entry to much-needed know-how to develop its subsequent technology of EVs. Rivian is likely one of the few non-Chinese language automakers outdoors of Tesla thus far to develop zonal structure.For Rivian, in the meantime, this can be a enormous money infusion that can enable the corporate to proceed to scale its enterprise. Together with the present $7.9 billion in money on its steadiness sheet, this could give Rivian ample room to ramp up manufacturing of its lower-priced R2 SUV fashions at its Illinois plant, in addition to construct out its deliberate $5 billion manufacturing campus in Georgia, which it briefly paused development on earlier this yr.Volkswagen will even lend a few of its manufacturing experience, which may also help Rivian proceed to chop manufacturing prices. Rivian has performed an excellent job creating fashionable luxurious electrical SUVs, but it surely has not been capable of promote them for a revenue, shedding cash on every automobile it sells. At its investor day following the Volkswagen announcement, the corporate spent a lot of its time discussing lowering the prices of its autos so it may receive a constructive gross margin.The corporate reiterated its forecast to be close to a constructive gross margin within the fourth quarter, and it set a long-term goal of a 25% gross margin. Additionally it is searching for a ten% free money move margin and a high-teens adjusted revenue margin over the long run.Story continuesImage supply: Getty Photos.Is it too late to purchase the inventory?The Volkswagen funding, if the JV is accredited, ought to give Rivian the money it must scale its enterprise and make it viable. Unfavorable gross margins and money move have been its largest points, however the firm has made aggressive steps to scale back the price of its autos and enhance its manufacturing course of.The event of its zonal structure, in the meantime, has not solely significantly improved the associated fee construction of its autos, however has additionally confirmed to be a extremely priceless know-how that Volkswagen was prepared to pay some huge cash to get entry to to be used in its autos.The deal now provides Rivian two very massive highly effective traders and companions in Volkswagen and Amazon, for whom it has a deal in place to make Amazon’s electrical van fleet.Rivian stays a high-risk/high-reward inventory given its early-stage nature and nonetheless destructive gross margin. Nevertheless, the cope with Volkswagen helped take away plenty of the liquidity danger related to the corporate. As such, the inventory seems to be extra enticing from a risk-reward foundation after its latest run-up than earlier than the deal.Must you make investments $1,000 in Rivian Automotive proper now?Before you purchase inventory in Rivian Automotive, contemplate this:The Motley Idiot Inventory Advisor analyst workforce simply recognized what they imagine are the 10 greatest shares for traders to purchase now… and Rivian Automotive wasn’t certainly one of them. The ten shares that made the minimize may produce monster returns within the coming years.Take into account when Nvidia made this listing on April 15, 2005… for those who invested $1,000 on the time of our advice, you’d have $757,001!*Inventory Advisor offers traders with an easy-to-follow blueprint for fulfillment, together with steerage on constructing a portfolio, common updates from analysts, and two new inventory picks every month. The Inventory Advisor service has greater than quadrupled the return of S&P 500 since 2002*.See the ten shares »*Inventory Advisor returns as of June 24, 2024John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Geoffrey Seiler has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Amazon and Volkswagen Ag. The Motley Idiot has a disclosure coverage.Rivian Soars After Volkswagen Funding. Is It Too Late to Purchase the Inventory? was initially printed by The Motley Idiot