- Electric-vehicle startup Rivian unlocked another $1 billion from the Volkswagen Group.
- It achieved its second quarter in a row of positive gross profits in Q1.
- Rivian and Volkswagen announced a partnership last year that trades the startup’s software and electrical expertise for over $5 billion in capital.
The mega-deal Rivian struck with the Volkswagen Group last year brings the electric-vehicle startup that much closer to reaching the kind of escape velocity that only Tesla has reached so far. Volkswagen agreed to inject $5.8 billion into the California-based automaker, with the money arriving in chunks over time.
On Tuesday, Rivian announced that it had unlocked $1 billion of that by notching another quarter of gross profits in Q1. The automaker reported a gross profit of $206 million from vehicle sales as well as from software and services. That represents its second quarter in a row (and its second quarter ever) of positive gross profits, which was a stipulation of the Volkswagen deal.
Rivian CEO R.J. Scaringe said on Tuesday that the company expects to receive the $1 billion at the end of June. That’s part of $3.5 billion that Rivian is still owed through the partnership. Through the deal, Volkswagen will use Rivian’s underlying electrical architecture and vehicle software for EV across its portfolio, starting with a low-cost VW hatchback.
Rivian still isn’t profitable overall, though, reporting a net loss of $541 million for the quarter. Gross profit is a narrow way of illustrating whether a business’s products are profitable, and only takes into account the variable costs directly associated with producing a good. It doesn’t include fixed costs like rent or research and development.
So basically, thanks to cost improvements, Rivian can now sell vehicles for less than it costs to build them. But it hasn’t hit the scale it needs to be a sustainable business yet.
The VW deal is key for getting Rivian over the hump. The startup plans to launch its mass-market crossover, the R2, in early 2026, followed by a smaller, more affordable hatchback called the R3. Both vehicles should drive way more scale than Rivian’s current, pricy portfolio of the R1S SUV, R1T pickup and a commercial van.
Rivian says the upcoming VW funding, plus the cash it already has in the bank, should give it the runway it needs to ramp up the R2 and R3. The R2 will start production at Rivian’s plant in Normal, Illinois. Later on, Rivian plans to build the R2 and R3 at a new plant in Georgia.
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