SAN FRANCISCO, Reuters German automaker Volkswagen Group will invest up to 5 billion in U.S. electricvehicle maker Rivian as part of a new, equally controlled joint venture to share EV architecture and software, the companies said on Tuesday.

Shares of Rivian surged about 50 in extended trade after the announcement, potentially supercharging the company39;s market value by nearly 6 billion, if gains hold on Wednesday.

The auto industry faces a crucial time as EV startups grapple with a slowdown in demand amid high interest rates and dwindling cash, while traditional automakers struggle to build batterypowered vehicles and advanced software.

The investment will provide Rivian the funding necessary to develop its less expensive and smaller R2 SUVs that are set to roll out in early 2026 and its planned R3 crossovers, CEO RJ Scaringe told Reuters. Moreover, the partnership will enable Rivian to cut operating costs by leveraging volumes of supplies including chips and components, he said.

It will also help Rivian, known for its flagship R1S SUVs and R1T pickups, turn cashflow positive. The company will license its existing intellectual property to the JV, and the R2 will be the first vehicle using software from the JV. Volkswagen vehicles, including its Audi, Porsche, Lamborghini and Bentley brands, will follow.

Any cash infusion like that is huge. Getting the support of Volkswagen Group certainly really strengthens their story toward Europe and toward Asia eventually,…