The Rivian Volkswagen partnership started out with high hopes as VW looked to fix its software problems, but Rivian might not have been the right partner.
Volkswagen poured $5.8 billion into Rivian, hoping to fix its software mess, but the partnership’s running into exactly the problems you’d expect when a century-old car company tries to bolt startup tech onto its lineup. Internal reports say Audi’s Q8 e-tron and electric A4 just slipped to 2028, while Porsche’s big K1 SUV got shelved indefinitely.
Volkswagen models are pushed back due to software delays
The kicker? Rivian’s software was built for pure EVs, not the combustion engines Volkswagen suddenly wants to keep around longer. Meanwhile, Rivian’s team is prioritizing its own R2 launch for 2026, leaving VW engineers on the sidelines. This joint venture was supposed to save Volkswagen from its failed CARIAD software unit, but now there’s talk about bringing CARIAD back from the dead.
Is the Rivian Volkswagen partnership good for RIVN stock?
For Rivian investors hoping this partnership would boost valuations, the turbulence means waiting even longer to see if this cash infusion actually translates into market expansion or just keeps the lights on while both companies figure out what they really want. Unfortunately, the focus on EV software development for the Rivian lineup means the Audi Q8 e-tron is on hold, and other VW EVs face lengthy delay times if the two companies can’t figure out how to function together.
Why does VW need the Rivian Volkswagen partnership?
Volkswagen has been great at making internal combustion vehicles, but the EVs coming out of the group are less than ideal. When the Volkswagen ID.3 hit the market, it had tons of software glitches that meant trouble. In fact, many models were stored in outdoor lots throughout Germany waiting for the software updates that would make them drivable. This was easily a situation where the cart was put before the horse. Without proper testing of every aspect of battery-powered vehicles, Volkswagen faced serious challenges with the ID.3.
Cars have become computers on wheels
The incredible speed at which car tech has grown and improved means consumers expect their cars to do everything except drive. In some cases, drivers can allow the vehicle to do most of the driving as well. This has created a scenario in which vehicles have become “computers on wheels” (thanks a lot, Tesla), and that expectation isn’t limited to electric vehicles. Every new vehicle has a large touchscreen, the most advanced infotainment system, and a full package of safety and driver-assist features to keep drivers out of trouble. Glitchy software doesn’t bode well for any automaker and could be the reason shoppers turn away from VW.
CARIAD came first
Before the Rivian Volkswagen partnership, VW attempted to solve its software problems by creating CARIAD. This was supposed to be a software division that would bring the latest technological advancements to the brand, but it was not successful in solving the problems facing the automaker. These issues led to many senior executives losing their jobs, but that didn’t solve the problems at all. Instead of allowing continued failure internally, VW looked for a partner that might lead it down the right path.
High hopes for the Rivian Volkswagen partnership
VW initially invested $5 billion into Rivian and has tossed in an additional $800,000 since that first investment. This was the investment that should solve the software problems that VW is having, but two issues arose, changing hopes and dreams into problems and frustration.
The first problem is the software focus. At the same time, the Rivian software can be used in VW’s EV lineup, it’s not directly transferable to internal combustion engines. VW is likely to keep ICE vehicles on the road for much longer, thanks to the changing focus on America, which means the software needs to function with gas-powered vehicles.
The second problem is Rivian’s focus. It makes perfect sense for Rivian to focus on its upcoming R2 and R3 launches, but VW has invested a significant amount of money to have software developed for its vehicles, and that investment is going to waste.
These issues have caused serious troubles between the two companies, including the possibility that Volkswagen will bring CARIAD back to life, but that might be an empty threat since the division couldn’t solve the software problems.
Changing EV focus for VW
Because of the software issues, and the less than enthusiastic market for EVs in the United States, the Rivian Volkswagen partnership might be in big trouble. It appears VW is pulling back on EVs for the time being and rethinking its electrification strategy.
Could this mean Rivian loses an investor because it wasn’t capable of delivering the desired software VW required? Will CARIAD actually fix the company’s software problems? We’ll have to wait and find out.
