Why VW is giving US EV maker Rivian $5 Billion dollars

Volkswagen have been on a spending spree they are about to invest well they already have invested $5 billion into rivan to get their EV technology and software now they've invested also a huge sum of money into the Chinese car company xong and also into acquiring a software company in China which has fixed most of it software problems it seems that the Volkswagen group at the same time uh letting go or you could say firing of a lot of their staff in Europe and in Germany and Outsourcing it to other companies hello my friends welcome to the channel I'm Sam Evans you're watching the electric Viking rivan they have tested the apparently their electrical architecture and software on existing Volkswagen group Vehicles this is very Advanced Volkswagen and rivian have kept this secret apparently the two have been working together and clearly the Volkswagen is very impressed by rivian's Tech now also rivian have said that they've been able to reduce the cost of their parts somehow by 34% so they're saying that rather than losing money on their cars they could potentially within months begin making a profit on their cars that would be an incredible turnaround for the company now to be fair guys rivan they're in a terrible position the reality is their sales are way too small to support their company they are way too small they're a fraction of what they need to be so in ense here the Volkswagen group has bailed out rivan sounds crazy but actually it's true Volkswagen will invest $5 billion and form a joint venture with the US vehicle startup to develop Next Generation electric architecture and software technologies that future models from the two Brands will use through this joint venture rivan's existing integrated technology platform will be the foundation for future soft where defined vehicle platforms or stdv in addition the EV maker will contribute its expertise in electrical architectures and licensed intellectual property rights to the joint venture this will allow Volkswagen to use rivan's existing sdv platforms for future EVS which they will particularly do in the United States now the Volkswagen group will initially commit $1 billion to R through an unsecured convertible note converting into common stock in December the German company will then allocate an additional $2 billion in two1 billion tranches in 2025 in 2026 it will directly contribute another $2 billion into the joint venture I should point out though guys the Volkswagen group do have $186 billion of debt that's well that makes them about even with Toyota they're the two most indebted car companies in the world so Volkswagen spending spree means that I believe they might be over $190 billion in debt by well after this transaction has been made the formation of the joint venture comes after repeated delays for a Next Generation software platform being developed by the Vox worken groups in-house carad software division the company was formed while Volkswagon was still headed up by the CEO Herbert de who was fired because he was focusing too much on EVS apparently it was created to de velop software platforms for all Volkswagen brands including Porsche Audi Bentley and Volkswagen but delays forche Volkswagen to push back the launches of the Audi q6 the rron and the Porsche maccan electric vehicle on a number of occasions we're very excited to be partnering with vxw group said rivian's chief executive RJ scaring since the earliest days of rivian we have been focused on developing highly differentiated technology it's exciting that one of the world's largest and most respected Automotive companies has recognized this i' got to say that's true I mean if I was rivan I'd be saying oh this is pretty cool they think we're good not only is this partnership expected to bring our software and Associated zonal architecture to an even broader Market through volog working groups Global reach but this partnership will help secure our Capital needs for substantial growth so yes rivan needs this money rivan was created to help the world to transition away from fossil fuels through compell ing products and services and this partnership is beautifully aligned with that mission said RJ Volkswagen has not said Which models will be the first to launch with rivian's software in recent months the car makers have worked to ensure rivian's electric architecture and software work with existing Volkswagen group Vehicles now I should point out guys the Volkswagen id4 has been a disaster in the United States in terms of software and that is number one reason why the id4 sales this year have pretty well collapsed too many customers have reported back on the software being terrible so Volkswagen sees this as the solution to that problem which it well it created itself the joint venture is expected to be completed in the fourth quarter of 2024 speaking with Reuters rivan chief executive RJ scaring said the investment from Volkswagen will turn the i1s and i1t cash flow positive while also providing it with the fun needed to develop and produce the new R2 and R3 Volkswagen group they have responded to this here's what they said our customers benefit from the targeted partnership with rivan to create a leading technology architecture through our cooperation we will be bringing the best solutions to our vehicles faster and at lower cost we are also acting in the best interest of our strong Brands which will inspire with their iconic products not sure what they mean by iconic which of Volkswagen Volkswagen brands vehicles are iconic or maybe other brands like Audi and Bentley and you know Lamborghini yeah they would be the partnership fits seamlessly with our existing software strategy our products and Partnerships we are strengthening our technology profile and our competitiveness by Outsourcing this work to rivan now they didn't say that last part but that's pretty much what they're saying now I've got to say to rivan this is great news for rivan the car company I have hoped and I've said many times I really do hope they succeed I like their CEO I think he's a good guy and honestly rivan are they're doing their best they're trying hard they're not big nating themselves the CEO is not trying to massively enrich himself like the CEO of lucid the truth is this is a car company I think we should respect and gun for let's not try and you know kick these guys when they're down which is kind of what rivan is to be honest look at their sales it's not that good profits none but let's you know bring support them and rivan does make some impressive Vehicles clearly the Volkswagen group they've seen that that is good news for rivan what are your thoughts do you agree with me do you disagree let me know in the comments bye-bye