Locator: 48041EVS.
Today, one day after the deal was announced: the Rivian deal starts to make more sense; speaks volumes about what's going on in Germany; spoiler alert: not much -
- the deal likely saved Rivian; The WSJ calls the cash infusion a "lifeline."
- Rivian is burning through $1 billion / month
- had $9 billion in cash before deal announced
- VW cash infusion: simply buys five more months at current cash burn
- production absolutely flat
- but the big story -- VW needs an American EV company; can't make EVs profitably in Germany; energy costs too high; US now exporting more “energy” than it consumes — EIA.
- VW shareholders not happy: Volkswagen down 2%;
Barron's: link here. Be sure to read comments at the article.
From yesterday, June 25, 2024, the day the deal was announced:
Later, 3:18 p.m. CDT: Volkswagen thinks different. Just announced. VW takes a $1 billion stake in Rivian. For the moment, the cash infusion likely saves Rivian from an alternative outcome. I have no idea what VW gains from this deal. It's not as if Rivian is doing something VW can't do, and it's not as if Rivian has a global dealer network selling EVs. My hunch: VW needs Rivian to meet California EV standards due to go into effect in 2035 or thereabouts. Sort of like buying forest land to pay for carbon credits. Rivian is nowhere near making a profit, according to Phil Lebeau, June 25, 2024.
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