German automotive giant Volkswagen Group has ploughed an extra $800 million into its joint venture with US EV start-up Rivian Automotive.

Rivian will provide its electrical architecture and software technology stack, launching its R2 model in the first half of 2026. The first Volkswagen models using Rivian’s technology are projected to hit the market as early as 2027.

The total deal size for the 50-50 JV, finalised after being first announced in June, is now up to $5.8 billion. The extra $800m includes $320m as part of this month’s payment and $560m in incremental cash after 2028, including $100m to reduce Rivian’s shared JV cost.

Volkswagen has already made a $1 billion investment in Rivian through a convertible note and will inject an extra $1.3 billion as consideration for background IP licences and a 50% equity stake in the JV.

The remaining investment of up to $3.5 billion will be paid in the form of equity, convertible notes, and debt based on milestones, Kallanish notes. 

For example, Rivian has five years to achieve a profit-related milestone to receive a $1 billion payment. It needs to record a gross profit of over $1m for two consecutive quarters, or a gross profit of over $50m for two quarters, not consecutive.

Each milestone is separate and standalone, meaning that failing one milestone does not prevent receiving payments from the subsequent one, if successful.

“All in all, the deal terms announced by Rivian sound far better than some had feared,” says RBC Capital Markets analyst Tom Narayan. “It appears that Rivian will achieve its Q4 gross profit position (due in large part to regulatory credits), and as such, we could see it achieving its financial milestone in mid-2025. Should it miss this, it could always achieve it at a subsequent point in time."

“If Rivian is unable to meet this milestone in five years, then it likely has larger problems anyway,” Narayan adds.

Shares in Rivian rose by 10% in premarket trading on Wednesday.