German Federal Cartel Office approves joint venture between VW and Rivian
The transaction was cleared under merger control as it was “not expected to significantly impede effective competition,” the German Federal Cartel Office announced. That applies “regardless of whether the relevant market is considered to consist of the E/E architecture as a whole or of various sub-systems and sub-services. There will still be a sufficient range of services available to car manufacturers to build E/E architectures,” the authority continues. A relevant impairment of the innovation competition for E/E architectures is unlikely.
At the end of June, Volkswagen CEO Oliver Blume and Rivian founder RJ Scaringe concluded a far-reaching software alliance. In this joint venture, the new partners want to create a new E/E architecture – based on Rivian’s existing software and electrical architecture – as a technology platform for software-defined vehicles. The new development will be used in the upcoming SSP electric platform, which will launch at the end of the decade (expected in 2028). For VW, it is a new attempt to catch up on its software backlog – the problems with the current Cariad software unit are well known. However, access to Rivian technology comes at a (potentially) high price: According to the German carmaker, it will invest up to $3 billion in Rivian and up to $2 billion in the joint venture by 2026 – in each case, depending on the achievement of certain milestones.
The German competition authorities have now given this the green light. They also see “no reason for concern that competition in innovation in the field of E/E architecture will be impeded to a significant extent.”
“At its core the cooperation project is about the way in which a large number of complex functions and components are best organised in cars and how they interact with each other,” says Andreas Mundt, President of the Bundeskartellamt. “As cars become increasingly digital and connected, the question of the right system architecture is nothing less than a key competition parameter. When it comes to cooperation projects set up to develop new products and technologies in key cutting-edge sectors, particularly those involving large companies, we take a close look at competition in innovation. The project does not raise any concerns in this respect, nor does it raise any other serious competition concerns.”
The approval by the Federal Cartel Office in the third quarter fits in well with VW’s announced timetable. As announced in June, the establishment of the joint venture is expected to be formally finalised in the fourth quarter of 2024. By then, it will also be clear who will lead the joint venture: Each side will appoint a co-CEO. In the case of Rivian, this will also be the Chief Technology Officer (CTO), while in the case of Volkswagen, the Co-CEO will also be in charge of operations (COO position).
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