Volkswagen announced Tuesday it raised an investment in Rivian from $5 billion to $5.8 billion, multiple media sites are reporting. 

The New York Times reports the funding includes a 50 percent stake in the venture.

“While short of an acquisition, the new company broadens the alliance with Rivian and could foreshadow similar partnerships between other established carmakers and new companies struggling to become profitable,” says the New York Times.  

Rivian announced the joint venture in June. The OEM said the focus of the venture is to create next-generation software-defined vehicle (SDV) platforms for both companies’ future electric vehicles (EVs). 

The California EV maker’s shares rose nearly 9% in trading Tuesday, Reuters said. It says the company is valued at $11 billion. 

Reuters says that Volkswagen plans to invest all the funds by 2027, with an initial $1 billion convertible note. It also will invest $1.3 billion in intellectual property licenses and up to $3.5 billion in future equity, notes, and debt. It says the investment is tied to specific milestones. 

“This partnership and this deal secures the capital for us to ensure that we can’t only take Rivian through the launch of R2 at Normal, but secures the launch of and growth of R2 in our Georgia facility and through (to being) cash flow positive for us as a business,” Reuters says Rivian CEO RJ Scaringe told reporters.

According to the New York Times, Rivian’s relationship with Volkswagen has helped “allay fears that Rivian will run out of money before the company is able to become profitable. It says Rivian reported a $1.1 billion loss in the third quarter, better than the $1.4 billion loss reported last year. 

Deliveries during the third quarter fell to 10,000 vehicles from 15,600 a year earlier, the paper says. It says a parts shortage is the cause for the decrease. 

Oliver Blume, the chief executive of Volkswagen, told reporters during a conference call that the partnership will expand to include battery modules and other technology, according to the New York Times. He said Volkswagen will use the technology in vehicles including subcompacts and cars made by its Audi and Porsche divisions. 

“Though the world’s second-largest carmaker after Toyota, Volkswagen has struggled to make inroads in the United States,” the New York Times says. “Sales of its electric cars here have lagged behind General Motors and Hyundai-Kia. Volkswagen’s share of the electric car market in the United States was just 3.4 percent in the third quarter, including the company’s Audi and Porsche brands, according to Kelley Blue Book.”

According to the New York Times, Rivian’s pickups and sport utility vehicles have received positive reviews in the automotive press. It adds that Volkswagen does not sell a pickup in the United States. However, the company is building a factory in South Carolina where it plans to revive the Scout off-road brand with a line of electric SUVs and pickups. 

Scout will use technology developed by the VW-Rivian venture, the article says.

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Features Photo of Rivian R2/Rivian