03:09 PM EDT, 06/26/2024 (MT Newswires) -- Volkswagen Group's plan to invest up to $5 billion in Rivian Automotive ( RIVN ) derisks the US electric-vehicle maker's capital needs as it prepares for the R2 launch in 2026, UBS said in a note.

"With the VW...investment, cash concerns to launch the R2 (2026) and through the midsize program launch in Georgia are lowered, removing a lot of downside risk," UBS analysts, including Joseph Spak, said.

Late Tuesday, the companies said they would form a joint venture to create new software-defined vehicle platforms to be used in their future EVs. Volkswagen initially intends to invest $1 billion in Rivian, with up to $4 billion in planned additional investment.

While auto joint ventures have a mixed record, Volkswagen could help provide scale and accelerate cost reductions, UBS said.

"Execution is still paramount," the analysts said.

UBS said it is reviewing its Neutral rating and price target of $10 on Rivian stock.

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