Rivian CEO Defends $5.8B Volkswagen Licensing Deal

Rivian (RIVN) CEO RJ Scaringe defended the EV company’s $5.8 billion software licensing deal with automaker Volkswagen Group (VWAGY) during an interview with Kara Swisher, following reports that the partnership may be facing delays. Scaringe said that the agreement, first announced in November 2024, is designed to bring Rivian’s electronics and software to Volkswagen’s global brands. He described the deal as being in line with Rivian’s mission and a way to grow the number of compelling EV choices available to consumers.

While a German report suggested that there are integration challenges, Scaringe did not directly address those concerns in the interview. However, to explain why legacy automakers often struggle with modern software, Scaringe pointed to decades-old design decisions. Indeed, early vehicles had no computers, and later added electronics that were outsourced to suppliers with their own software. Over time, this led to cars containing more than 100 separate control units, with each operating independently.

According to Scaringe, this fragmented approach makes it extremely difficult to deliver seamless and modern vehicle software experiences today. By contrast, Rivian was built from scratch with a centralized software architecture similar to Tesla’s (TSLA). He also made clear that Rivian does not plan to abandon vehicle manufacturing to become a pure software company. Instead, he sees growing opportunity in combining strong vehicle brands with advanced technology like AI and self-driving.

Is RIVN Stock a Buy or Sell?

Turning to Wall Street, analysts have a Hold consensus rating on RIVN stock based on eight Buys, seven Holds, and five Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average RIVN price target of $17.55 per share implies 19% upside potential.

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