Tesla CEO Elon Musk has raised doubts about the financial viability of Rivian’s recent joint venture with Volkswagen. Musk, known for his outspoken nature, took to X (formerly Twitter) to question where Rivian would find the necessary funding for the partnership. His comments came in response to a Tesla enthusiast who mocked Rivian’s reliance on Volkswagen, a company currently facing significant challenges, including potential factory closures in Germany.
The German automaker is considering closing factories for the first time in its 87-year history, a move driven by cost-cutting measures in the face of intense competition. This decision has sparked opposition from the IG Metall union, which represents automotive workers in Germany and holds half the seats on Volkswagen’s supervisory board.
Musk’s skepticism about Rivian’s funding stems from the recent reports regarding Volkswagen’s financial difficulties and the potential impact on its investment in the EV startup. In June, Rivian and Volkswagen announced an equally owned joint venture, with Volkswagen committing an initial $1 billion investment and the possibility of an additional $4 billion, totaling a potential $5 billion investment. This partnership aims to develop next-generation software-defined vehicle platforms for both companies’ future electric vehicles.
Rivian’s CFO, Claire McDonough, had stated that the $5 billion investment was intended to benefit the company, specifically mentioning its plans to ramp up production of the R2 SUV at its Normal, Illinois facility. The funding was also seen as a key factor in achieving positive cash flow for the company.
However, Musk’s comments and the ongoing discussions regarding Volkswagen’s factory closures raise questions about the sustainability of the joint venture and its impact on Rivian’s financial future. While Rivian ended the second quarter of 2024 with $7.87 billion in cash, the potential disruption to Volkswagen’s investment strategy could significantly impact the company’s plans for expansion.
Neither Volkswagen nor Rivian have officially commented on the potential impact of the proposed factory closures on their joint venture. As the situation unfolds, it will be interesting to see how this development impacts the future of both companies and the electric vehicle market.
