Volkswagen's $1 billion stake in Rivian propels the company's stock to a 30% increase.

• Rivian, an electric vehicle startup, has received a $1 billion investment from Volkswagen to help it reduce expenses and increase funding as the adoption of EVs has been slower than anticipated.

The electric vehicle startup is receiving a $1 billion investment from a company, as it tries to reduce expenses and increase funding due to slower-than-anticipated adoption of EVs.

Additionally, the companies plan to form a joint venture, potentially increasing investment up to $5 billion by 2026.

Rivian, which has been under pressure from Wall Street due to its cash burn and significant losses, announced a deal with the companies two days ahead of an investor event, on Tuesday after markets closed.

Volkswagen has become the second legacy automaker to invest in Rivian, a California-based electric vehicle company. The Detroit automaker previously held a 12% stake in Rivian, alongside General Motors, when the company went public in 2021. However, Volkswagen sold a majority of its Rivian shares by 2023, after abandoning a plan to collaborate with the company on developing electric vehicles.

In the first quarter of this year, Rivian incurred a loss of $1.45 billion while revamping its Illinois plant to produce updated R1T pickup and R1S SUV EV models, in preparation for its next-generation vehicles in 2026.

For months, the company has been focused on reducing expenses. This includes reducing staff, optimizing its Illinois plant for greater efficiency, and halting construction of a new factory in Georgia. The latter decision is projected to save over $2.25 billion in capital expenditures, including the cost of starting production of Rivian's next-generation R2 vehicle at its Illinois plant.

Rivian had more than $9 billion in total liquidity at the end of March, with $7.86 billion in cash, cash equivalents and short-term investments.

This is a developing story. Please check back for additional updates.