DETROIT — Volkswagen Group increased its planned investment in a joint venture with electric vehicle startup Rivian Automotive to $5.8 billion as the two companies aim to work together more broadly than initially announced.

The details of the deal impressed investors, pushing Rivian shares up 13% in Wednesday trading.

The joint venture will provide VW with the next-generation electrical architecture and software for its electric vehicles across its brands, while providing Rivian with a needed infusion of capital and new opportunities for future revenue and earnings growth.

The funding is expected to help Rivian expand production of its small R2 SUV at its plant in Normal, Illinois, starting in 2026, as well as production of its midsize electric vehicle platform at its plant in Georgia, where Rivian paused construction earlier this year.

The companies said the joint venture is expected to have about 1,000 employees.

But VW’s investment in Rivian is not certain, and neither is the success of the deal. The electric car maker must achieve some goals first.

The auto industry has seen many large mergers and joint ventures that have not led to long-term success. Many mergers and joint ventures fail before they bear significant fruit.

Both Volkswagen and Rivian have experienced similar failures with Ford Motor in recent years. Two years after Ford acquired a 12% stake in the startup in 2019, Rivian and the Detroit automaker canceled plans to jointly develop electric vehicles. Around the same time, Volkswagen also announced a $2.6 billion autonomous vehicle deal with Ford that fell through.

Volkswagen is also in the midst of a restructuring that could affect the automaker’s future plans, including large layoffs amid declining sales and profits.

Both Volkswagen and Rivian have high hopes for the joint venture, which will be named Rivian and Volkswagen Group Technologies LLC.

Volkswagen’s investment will be allocated to Rivian in a variety of forms, including convertible bonds, equity and debt. Rivian will receive $2.3 billion this year and up to $3.5 billion by the end of 2027 or early 2028, depending on negotiated milestones, as detailed below.

2024: $2.3 billion

Rivian received $1 billion in funding after the deal was announced in June. The money came in the form of convertible notes that are expected to convert into Rivian equity on December 1.

Of the $1 billion, $500 million will convert at $10.84 per share. The other $500 million will convert based on the stock’s 45-day volume-weighted average price (VWAP) before conversion.

Once the deal is completed and the joint venture is established, Rivian will receive $1.3 billion in cash this week, including “consideration for background [intellectual property] licenses and 50% equity in the joint venture.”

2025: $1 billion

If Rivian achieves two non-consecutive quarters of $50 million in gross profit or two consecutive quarters of gross profit, the company will receive $1 billion in investment in the form of equity, a premium of 33% over the 30-day volume-weighted average price at the time of issuance. That won’t happen earlier than June, according to the companies.

Rivian has five years to reach the milestone, which will be measured on its GAAP versus profit basis and excludes any impact of the joint venture on Rivian’s financials.

Rivian CFO Claire McDonough said the company will update the expected financial impact of the joint venture when it releases fourth-quarter results next year.

2026: $2 billion, including loan

Rivian will receive $1 billion in equity if it successfully tests the joint venture’s technology on one or more vehicles during winter testing. The equity investment will be based on the 30-day VWAP prior to the investment.

Rivian also has the option of taking out a $1 billion loan in October 2026, which would be collateralized by its equity in the joint venture.

The loan would need to be prepaid over 10 years, but the principal would not need to be repaid until 2029. The loan rate will be equal to Volkswagen’s seven-year cost of debt plus 25 basis points.

2027/early 2028: $460 million

Rivian will receive $460 million in equity for the production of the first saleable Volkswagen vehicle using the joint venture’s technology.

The equity investment will be priced at an 84% premium to the 30-day volume-weighted average price (VWAP) until milestones are reached.

Volkswagen Group CEO Oliver Blume said at a press conference on Tuesday that the German automaker expects to use Rivian’s technology across a range of price points, international markets and brands.

Other details

VW said it will finance 75% of the costs of shared platforms within the joint venture through 2028, while Rivian will provide 25%.

Starting in 2029, VW will add $100 million per year to the joint venture’s shared costs, which will reduce Rivian’s shared costs.

In addition, Rivian expects to save on material costs by purchasing shared parts such as electronic control units from suppliers.