Rivian investment a ‘catch-up move’ for Volkswagen that could take years to pay off, advisory firm says

In this article RIVN VOW3-DE Follow your favorite stocks CREATE FREE ACCOUNT Rivian electric vehicles sit in a lot at a Rivian facility in February 22, 2024 in Chicago, Illinois. Scott Olson | Getty Images News | Getty Images Volkswagen's $5 billion investment in electrical vehicle startup Rivian is a "catch-up move" for the German automaker, but could take years to pay off, according to Cyrus Mewawalla, head of thematic intelligence at GlobalData. Volkswagen and Rivian on Tuesday announced that the German auto maker would invest as much as $5 billion in Rivian in the coming years following an initial $1 billion investment.

Rivian shares were up 42% in premarket trading on Wednesday. Meanwhile, Europe-traded shares in Volkswagen were last down 2.6% as of 12:47 a.

m. London time. "Volkswagen has fallen behind in two areas, on electric vehicles themselves, but also on autonomous driving and other software within the car.

And Rivian is strong on both," Mewawalla told CNBC's "Street Signs Europe" on Wednesday. The investment will therefore help Volkswagen in these areas, but the firm is notably behind in the electric vehicle space, he added. watch now VIDEO 2:47 02:47 Rewards of Volkswagen's deal with Rivian won't be felt for years, analyst says Street Signs Europe Globaldata expects Volkswagen's share of battery powered EVs to be just 8% this year, compared to an estimate of 15% for BYD and up to 16% for Tesla , Mewawalla explained.

Volkswagen said deliveries of all-electric vehi.