Electric car competitors Volkswagen and Tesla are partnering with Rivian as VW raises the stakes in this strategic collaboration.
The two companies claim that the new deal is at $5.8bn, although originally VW promised $5bn.
Following the announcement of the news, shares for the US based electric vehicle maker surged over 9 percent in after trading hours.
The tie-up will see the firms share critical technology at a time that demand for electric vehicles around the world is weakening and more so due to stiff competition being offered by rivals from china.
For Rivian, a loss-making company, it is an essential source of funds as it plans to roll out next year a miniature SUV known as R2.
It also means that the technology will be incorporated in VW’s own line of vehicles once developed by Rivian.
The first series of VW vehicles that are to incorporate Rivian technology could be readily available to the market by 2027.
‘Ultimately, by integrating Hanson’s know-how and teams’ experience, the two companies aim to decrease development costs and bring innovations to market faster,’ the two companies added in the statement.
The plan is to have joint working teams of developers and Software engineers from both firms in California first with three more facilities in North America and Europe planned.
This comes as it has emerged that VW Europe’s largest car maker might soon undertake massive cost cutting measures.
The group has been facing issues like increasing costs, deteriorating sales, Chinese competitors in Electric Vehicles segment and a shift towards EVs and hybrids from traditional petrol and diesel engines than expected.
Similarly, Rivian has made efforts to bring down its expenses as the demand for Electric cars seems to be declining.
The startup which currently has no revenue has been signing new terms of deals with the suppliers and optimizing its production line.
In addition to SUVs, Rivian also produces electric delivery vans, which are primarily provided to Amazon.com, Inc. – the company’s largest investor.
A hundred thousand of the automobiles have been purchased by Amazon; all are expected to be delivered by the end of the decade.