Volkswagen spent $5 billion to invest in new American forces, blowing up Jia Yueting

In Musk's eyes, the company's cash flow will not last for 18 months.

"They have to drastically reduce costs, and management has to live in the factory," Musk said. "Otherwise they're dead."

The company Musk is referring to is Rivian. In February this year, this new American car company announced its Q4 revenue last year – a net loss of US$1.52 billion, which attracted Musk to write a mocking post.

For a long time in the past, although Rivian has received high praise from car owners, it has continued to struggle with production capacity and delivery has not been large-scale, which has also plunged them into financial crisis.

"Maybe that trajectory will change, but so far it hasn't," Musk said at the time.

As a result, only 4 months have passed and Rivian has reached their "turning point."

On the evening of June 25, local time, Volkswagen Group and Rivian jointly announced that the two parties will establish a joint venture to jointly develop the electronic and electrical architecture of the next generation of electric vehicles.

It is understood that the new joint venture will be held 50% by Volkswagen and Rivian each and will enjoy equal control. The relevant delivery is expected to be completed in the fourth quarter of 2024. Once the joint venture is successfully implemented, Volkswagen will gain access to Rivian's current electronic and electrical architecture and use it in Volkswagen's electric vehicles.

On the basis of the strategic partnership, Volkswagen will invest US$1 billion in Rivian and plans to invest an additional US$4 billion. The total transaction size is expected to reach US$5 billion.

As soon as the news came out, Rivian's stock price soared by more than 55%. Although it fell later, as of the close of trading on the 27th, the increase still reached 36.57%.

Back then, Yiping failed to get money from her father despite all her efforts, so Rivian immediately came up with 50 small goals, still in US dollars.

What is the origin of Rivian that the public is interested in?

Rivian, the full name of this company is "Rivian Automotive". Its founder, Robert J. Scaringe, graduated from MIT and is the company's CEO and chairman of the board of directors.

Scaringe once stated in an open letter that Rivian's original goal was to build a high-performance sports car, but Scaringe and his team found in 2012 that building a sports car from the get-go was a bit too difficult. It’s expensive and you can’t make much money. "So we changed direction," Scaringe said.

▲Rivian R1T

Scaringe then reworked the company's strategy and targeted the pickup, SUV and crossover segments. But Rivian's first vehicle, the R1T pickup, has been delayed until 2021. Even now, Rivian can only produce two models-the R1T and the SUV model R1S launched in 2022.

▲Rivain R1S

How slow are they at building cars?

In 2021, Rivian produced a total of 1,015 vehicles throughout the year, 24,337 vehicles in 2022, and 57,232 vehicles in 2023. Although production has been increasing, it is not enough. Rivain shares continue to trade lower after reporting delivery and production figures for 2023.

Although it is slow to build cars, Rivian has always been called the "Tesla killer", and even Musk himself has praised their products.

Their product design wasn't bad, their problem was their inability to achieve mass production and positive cash flow.

To put it bluntly, Rivian lacks nothing but money. From 2009 to now, Rivian has been losing money for as long as it has been established. Although their annual revenue reached US$4.434 billion last year, a record high and a year-on-year increase of 167.4%, they were actually still in the red, losing US$5.432 billion in one year.

In fact, Rivian has had its moments.

In November 2021, Rivian was officially listed on Nasdaq. On the day of listing, although its stock price experienced high openings and lows, the closing price was still as high as US$100.73 per share, and the market value reached US$85.908 billion, becoming the world's largest initial public offering in history. Ford and Amazon are both major shareholders of Rivian.

What is unpredictable is that this is just the beginning. In the following days, Rivian's market value has surpassed established car companies such as Ford, BMW, and Mercedes-Benz. A week later, Rivian, which had not delivered a single car, had a market value of US$140 billion, surpassing Volkswagen Group and becoming the world's third largest car company after Tesla and Toyota. On the same day, it sold US$152 billion. Market cap closes.

Scaringe: Average, third in the world.

Unlike Weimar, which has raised a total of 41 billion yuan but has accomplished nothing, Rivian has done a lot of things after receiving the money.

On the first model R1T, Rivian achieved four-wheel independent drive. Each wheel has a 147kW motor, which can use the differential speed of the tires on both sides to achieve "tank turning".

The storage design of R1T is also very innovative. There is more than 1.86 cubic meters of storage space in the middle of the body. Users can choose different expansion accessories to meet different needs. In addition, the Amazon voice assistant Alexa and Echo Bluetooth interactive smart speaker it was equipped with were also quite leading configurations at the time.

In addition, Rivian is also quite accomplished in platforming. It launched a skateboard chassis in 2021. Both R1T and R1S are models based on this platform.

Rivian's skateboard chassis is the first to realize the decoupling of the upper and lower bodies, which can be adapted to different models, greatly shortening the research and development cycle and development costs, and enabling external supply. Amazon became Rivian's largest shareholder back then just to use this chassis in their commercial vehicles.

Functionally, thanks to the extremely high level of integration, models built on this platform can easily achieve larger cabin space; the independently developed four-electric system also has strong off-road performance, and it even has industry-leading Wire control system.

On Rivian's second-generation self-developed architecture, they have reduced the number of ECUs by 60% and shortened the wiring harness by 25%. With its self-developed and produced Enduro motor, it can achieve 1025 horsepower and 1624 Nm of torque, making the product Easily enter the 2-second camp.

In terms of intelligence, Rivian also has a self-developed L2 autonomous driving Driver+ and an OTA solution based on Rivian Cloud…

Therefore, it is reasonable for Rivian to be favored by the public.

People hold hands again

Obviously, just like its investment in Xpeng Motors a year ago, Volkswagen is also pursuing technology this time.

After the U.S. stock market opened on July 26, 2023, Xpeng Motors' stock price skyrocketed, rising by more than 42% to $21.83, which was Xpeng Motors' highest stock price in the past year.

Behind the soaring stock price is the "big hand holding small hand" between Xpeng and Volkswagen.

Earlier in the day, Volkswagen and Xpeng reached a technical framework agreement. In the initial stage of cooperation, the two parties will jointly develop two electric models of the Volkswagen brand for China's mid-size car market. The two new cars will be based on the platform used by Xpeng G9 built and expected to be available in 2026.

In order to maintain close long-term strategic cooperation, Volkswagen Group will increase its investment in Xpeng Motors by approximately US$700 million (approximately RMB 5 billion) and acquire Xpeng Motors at a price of US$15 per ADS (American Depositary Shares). Approximately 4.99% of the shares.

After the official announcement, Xiaopeng Motors Chairman and CEO He Xiaopeng posted a photo of himself and Volkswagen Group (China) Chairman and CEO Bei Ruide on WeChat Moments, with the caption:

I look forward to working together, big and small, to bring the best technology, the best products, and the best brands to the world.

At the beginning of this year, Xpeng Motors signed a strategic technical cooperation and joint development agreement with the Volkswagen Group and entered into a joint procurement plan. Bai Ruide said that the cooperation between Volkswagen and Xpeng Motors has entered the "fast lane."

Baird also released a poster of the first SUV jointly developed by the two parties. Judging from the outline, this medium and large SUV does have a "G9 flavor". He also said that cooperation between Volkswagen and Xpeng in model research and development and parts procurement can shorten the product development cycle by 30% and continue to create cost advantages.

Judging from the results of the cooperation between the two parties, the cooperation between Volkswagen and Xpeng is more like the former using Xpeng's own platform to create mid-to-low-end products with more cost advantages, and to empower its models with intelligence and improve its competitiveness in the Chinese market.

Volkswagen's investment in Rivian is centered on the latter's architecture and software to explore the field of hardcore off-roading and gain a foothold in the US market. According to the plan, Volkswagen's new off-road brand Scout will be equipped with Rivian's software.

And Volkswagen is very smart. The US$5 billion injected into Rivian is not a one-time injection, but divided into two parts.

The first is to invest US$1 billion in the form of convertible bonds and directly participate in Rivian. After the transaction is completed, the bonds will be converted into company stocks on December 1. For the later planned US$4 billion, Volkswagen will purchase Rivian's common shares in batches in 2025 and 2026 respectively.

Even Jia Yueting came out to praise this operation of the public.

This is a very smart investment product design, and the pricing model and payment cadence work very well in Volkswagen's favor.

After saying that, I didn’t forget to praise myself:

Another huge investment by a traditional auto giant in a new AI EV company has made me more determined about FF's strategy and value. I think FF's more "top-of-the-top" aiHyper 6*4 Architecture 2.0 smart electric vehicle platform, as well as its unique AI platform and advanced software technology.

I won’t go into too much detail here, it’s just nonsense and nonsense.

Anyone with wheels is interested and welcome to communicate. Email: [email protected]

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