Volkswagen and Rivian have entered into a $5 billion partnership to develop software-defined vehicles. The collaboration will focus on Rivian’s zonal architecture, which significantly reduces the complexity of wiring and electronics in electric vehicles. This partnership will allow the companies to use their joint capabilities to produce new cars, while each company will continue to produce its own models.

The amount of cooperation is divided into several components. Volkswagen is investing $1 billion in Rivian, with further investments of the same amount in 2025 and 2026. Volkswagen also plans to invest $2 billion in the joint venture, partly at launch and partly in the form of a loan in 2026.

This work will allow Volkswagen to adapt Rivian’s signature zonal architecture for future vehicles. Rivian, which has faced financial difficulties, including abandoning plans for a Georgia plant and cutting 10% of its workforce, could be stabilized with this major deal with the leading automaker.