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Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk on Monday raised doubts about California-based EV startup Rivian Automotive (NASDAQ:RIVN) getting money from German automaker Volkswagen as part of a recently announced joint venture.
What Happened: “Where will they get the money?,” Musk wrote on X in response to a Tesla enthusiast who mocked Rivian for banking on Volkswagen for funding when the German automaker itself is shutting down factories in Germany.
The Tesla enthusiast also predicted “major drama” going forward for Volkswagen as unions might resist the company giving money to an American startup while there are job cuts at home.
Musk’s comments come on the heels of reports that the German automaker is considering closing factories in Germany for the first time in its 87-year history.
The company is now considering closing vehicle production and component factories in a bid to cut costs amid fierce competition, reported the New York Times. IG Metall union, which represents automotive workers, has said that they will resist job cuts.
Union leaders and workers’ representatives hold half the seats on Volkswagen’s supervisory board.
Why It Matters: Rivian announced its intent to form an equally owned JV with German automaker Volkswagen in June. As part of the deal, Volkswagen has made a $1 billion initial investment in Rivian and will make additional investments of up to $4 billion subject to certain conditions for a total deal size of $5 billion. The JV is aimed at the creation of next-generation software-defined vehicle platforms to be used in both companies' future EVs.
"Assuming all criteria are met, we expect that the full $5 billion is intended to flow to the benefit of Rivian," company CFO Claire McDonough said last month at the company’s second-quarter earnings call. "In addition to the $5 billion of capital to Rivian, we anticipate incremental benefits through cost savings on materials, operating expense efficiencies, and future revenue opportunities associated with the joint venture."
The additional liquidity provided by the deal, the CFO said, will allow the company to ramp production of its R2 SUV at its facility in Normal, Illinois, and enable a path to positive cash flow. Rivian intends to launch the R2 in the first half of 2026.
Rivian ended the second quarter of 2024 with $7.87 billion in cash, cash equivalents, and short-term investments.
Volkswagen did not immediately respond to Benzinga’s request for comment on the impact of the proposed shutdowns on its planned investment into Rivian. A Rivian spokesperson refused to comment.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
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