Rivian and Volkswagen Group have finalized a multi-billion-dollar joint venture to develop software for electric vehicles, marking a significant milestone in the partnership. The German auto giant will invest up to $5.8 billion by 2027, a 16% increase from the initial announcement in June. Volkswagen has already made an initial investment of $1 billion in the form of a convertible note.

The new joint venture, Rivian and Volkswagen Group Technologies, will officially kick off on November 13 as an independent company. The 50-50 partnership will be led by co-CEOs, with Rivian's head of software Wassym Bensaid and Volkswagen Group's chief technical engineer Carsten Helbing at the helm. The joint venture aims to reduce development costs and accelerate the scaling of new technologies.

The partnership is seen as a win-win for both companies. Rivian gains a much-needed injection of capital and the opportunity to diversify its business, while Volkswagen Group gains access to next-generation electrical architecture and software for EVs, helping it better compete in the market. The joint venture will also enable Volkswagen Group to deliver "software-defined vehicles" that can be updated over time, a key strategy for automakers seeking to compete with Tesla.