German multinational vehicle manufacturer Volkswagen Group will invest an initial $1 billion in American electric carmaker Rivian, the two companies announced Tuesday in a joint statement.
An additional investment of $4 billion is planned, while the total size of the deal is expected to be $5 billion, they said.
The joint venture aims create the next generation software-defined vehicle (SDV) architectures to be used in both companies' future electric vehicles, according to the statement.
It is also expected to build on Rivian's software and electrical architecture to create an SDV technology platform, it added. The partnership will allow both companies to lower per-vehicle costs by increasing scale and speeding up innovation.
Both firms aim to launch vehicles benefitting from the technology created under the agreement in the second half of this decade, said the statement.
