A Deeper Dive Into 2 Huge Rivian Victories

Core Viewpoint - Rivian has secured significant funding through a joint venture with Volkswagen valued at up to $5.8 billion and a conditional commitment for a$6.6 billion loan from the Department of Energy (DOE) [1][17]. Volkswagen Joint Venture - Volkswagen has already invested $1 billion into Rivian and plans to invest an additional$1 billion upon the completion of a financial milestone, which requires Rivian to achieve two nonconsecutive quarters of $50 million gross profit or two consecutive quarters of gross profit [3][9]. - Rivian has the option to draw a$1 billion loan from Volkswagen in October 2026, with favorable terms compared to what Rivian could secure independently [4]. - The next $1 billion from Volkswagen is contingent upon Rivian successfully testing the joint venture's technology in winter testing [10]. - Volkswagen will fund 75$6.6 billion, which will support the construction of its Georgia factory [17][18]. - The DOE loan can be provided at U.S. Treasury rates, offering significant financial relief to Rivian as a young startup [18]. - The approval process for the DOE loan requires a reasonable prospect of repayment, indicating confidence in Rivian's financial viability [13]. Future Outlook - Rivian's 2025 may be relatively quiet with no major launches, but the end of 2024 is critical as the company navigates potential tariffs and the risk of losing the $7,500 federal tax credit for electric vehicles [8]. - Rivian is currently working on providing financing documents to close the DOE loan deal, which is essential for fund distribution [12]. - The company expects to utilize approximately$275 million in regulatory credits in the fourth quarter, which could help meet half of the $50 million gross profit milestone [15]. - Rivian has up to five years to complete the financial milestone for the Volkswagen deal, and closing the DOE loan sooner would position the company favorably for its upcoming vehicle launches [19].