this post was submitted on 25 Jun 2024
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I'd like to think that I have a reasonably decent understanding of economics for a laymen, but in this case I'm a bit stumped.
Seems to me that for 5 billion dollar (+however much VW spent on their own software) you should be able to develop a good operating system for your own cars. But I guess VW somehow failed and now would rather license Rivians through this joint venture?
Is a car OS really that expensive and complex to develop? Especially when android auto and Apple car play will do a lot of the heavy lifting for most people.
Nearly 40k loss per vehicle? That seems insane. How has that company been going on until now? They also say that they even before this deal they had enough reserves to last until their next models release and things were moving up, but still that is seems like an absurd rate to burn cash.
I get that it sometimes makes sense for companies to burn through heaps of cash to scaley capture market share or drive out competition, but is the car manufacturing market at this point in time one where this play still makes any sense?
This answer depends heavily on the internal structure and politics around software development at Volkswagen. It could very well be an impossible task for Volkswagen to undertake such a huge development process without buying it.
I don’t think that includes things like the Amazon delivery vans that Rivian produces. Since they aren’t really sold in the same way.
I think that has been a big part of their revenue/investment so far.
From mid 2023:
— https://www.investopedia.com/rivian-reduces-per-unit-losses-on-the-road-to-profitability-7574456
Thanks for digging this up.
It would make sense if at least the vans would make some profit, otherwise it looks like madness (kinda still does to me) to spend this much money on getting into an industry that is actually imo not that attractive.
Even with the switch from combustion to EV, car manufacturing is still a capital intensive and low margin business. And they don't seem to go for the potential jackpot that is autonomous driving
iTS for the car architecture/platform as well, i think. From my understanding, ist rivian Kind of a Truck company?
So ist would fit purchasing an eTruck architecture and Software Stack.
Otherwise.. i would be completely at loss too...
I mean, in Germany, CARIAD ist basically a joke among Software engineers AND Automotive engineers...
I think it's split between delivery vans and SUVs. Amazon has a stake in them aswell. I think at some point they owned like 20%? Not sure how much they currently hold.
Software has to be the main draw. I am not sure how interested they are in the delivery vans, and one has to think that they have enough SUVs themself.
Well, Volkswagen AG has always been strong in commercial vehicles. Think about the First Taxi car in China (forgot That Name..), huge company car fleets in Europe, so small Delivery Trucks could.make Sense as well.
However, its probably Software, you are right