Volkswagen's stock dropped on Wednesday as investors expressed concern about the costs and unknowns associated with a joint venture with American EV manufacturer Rivian, which was intended to strengthen the European automaker's lead in EV sales.
In an effort to share EV systems and software, the German firm said on Tuesday that it will invest up to $5 billion in Rivian.
The transaction, according to analysts, raised more concerns about Cariad, Volkswagen's own software unit, which has been dealing with losses and delays for years.
"The tie-up with Rivian is a further nail in the coffin of VW’s ambition to develop its own in-house standalone software stacks with its problem-prone and heavily loss-making CARIAD subsidiary," Bernstein wrote in a note.
Over the last three years, Volkswagen's stock price has more than halved due to worries that the large company may find it difficult to compete with agile electric vehicle rivals in Asia and the US and to build the software expertise needed to support the new technology.
Volkswagen's shares saw the largest loss on Germany's blue-chip DAX index at 08:40 GMT, down 1.4%.
A few analysts expressed apprehension over the magnitude of the investment, given that Volkswagen's research and development expenses and capital expenditures have been persistently elevated at 13% of vehicle sales since 2018, as per Bernstein.
In a note, Stifel Research stated, "We believe investors would prefer VW to sell assets, not buy them, even though the transaction could make sense strategically."
After the announcement, the stock rose by around 50% over the course of several hours.
The former CEO of Volkswagen, Herbert Diess, is reorganising Cariad as he works to get the company back on track with a new management team headed by former Bentley manufacturing boss Peter Bosch.
In October, sources in the media warned of significant job losses in 2024 and more delays to the company's new software architecture, known as 2.0.
The CEO of Cariad, Bosch, stated late on Tuesday on LinkedIn that the Rivian partnership will expedite Volkswagen's software development endeavours and save expenses.
VW claimed that Cariad would continue to develop automated driving software independently, but that responsibility and resources for the development of a software-defined vehicle will be centrally located in the joint venture.
Concerns over the compatibility of Volkswagen and Rivian were also voiced by Roger Atkins of the consultancy Electric Vehicles Outlook Ltd.
"There's the culture issue - trying to combine Rivian's full-stack vertically integrated and flexible, nimble software approach with Volkswagen's more traditional approach of working with multiple suppliers and middle management is like shoving a square peg in a round hole," he said.
(Source:www.investing.com)
In an effort to share EV systems and software, the German firm said on Tuesday that it will invest up to $5 billion in Rivian.
The transaction, according to analysts, raised more concerns about Cariad, Volkswagen's own software unit, which has been dealing with losses and delays for years.
"The tie-up with Rivian is a further nail in the coffin of VW’s ambition to develop its own in-house standalone software stacks with its problem-prone and heavily loss-making CARIAD subsidiary," Bernstein wrote in a note.
Over the last three years, Volkswagen's stock price has more than halved due to worries that the large company may find it difficult to compete with agile electric vehicle rivals in Asia and the US and to build the software expertise needed to support the new technology.
Volkswagen's shares saw the largest loss on Germany's blue-chip DAX index at 08:40 GMT, down 1.4%.
A few analysts expressed apprehension over the magnitude of the investment, given that Volkswagen's research and development expenses and capital expenditures have been persistently elevated at 13% of vehicle sales since 2018, as per Bernstein.
In a note, Stifel Research stated, "We believe investors would prefer VW to sell assets, not buy them, even though the transaction could make sense strategically."
After the announcement, the stock rose by around 50% over the course of several hours.
The former CEO of Volkswagen, Herbert Diess, is reorganising Cariad as he works to get the company back on track with a new management team headed by former Bentley manufacturing boss Peter Bosch.
In October, sources in the media warned of significant job losses in 2024 and more delays to the company's new software architecture, known as 2.0.
The CEO of Cariad, Bosch, stated late on Tuesday on LinkedIn that the Rivian partnership will expedite Volkswagen's software development endeavours and save expenses.
VW claimed that Cariad would continue to develop automated driving software independently, but that responsibility and resources for the development of a software-defined vehicle will be centrally located in the joint venture.
Concerns over the compatibility of Volkswagen and Rivian were also voiced by Roger Atkins of the consultancy Electric Vehicles Outlook Ltd.
"There's the culture issue - trying to combine Rivian's full-stack vertically integrated and flexible, nimble software approach with Volkswagen's more traditional approach of working with multiple suppliers and middle management is like shoving a square peg in a round hole," he said.
(Source:www.investing.com)
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