On Tuesday, Volkswagen AG (VWAGY  ) revealed it will be providing Rivian Automotive Inc (RIVN  ) with a cash injection of $5 billion. Together, Rivian and Volkswagen are embarking on a joint venture to create vehicle software as they both fight for their place under the EV sun and look for ways to challenge the EV king, Tesla Inc (TSLA  ).

Volkswagen and Rivian announce a 50/50 win-win venture.

Volkswagen will be working with Rivian on creating the "next generation software-defined vehicle (SDV) architectures" that both will use to build their future EVs. With an immediate investment of $1 billion that is to be followed by $4 billion more through 2026, Volkswagen will be providing the struggling EV maker with the funds it needs to scale up its manufacturing as Rivian is to build a new factory in Georgia.

Volkswagen and Rivian plan to launch new vehicles utilizing the joint venture's technologies before the end of this decade. Rivian's fundamental vehicle software design is expected to provide the basis for the new company's software. Rivian will license its existing IP rights to the joint venture, allowing Volkswagen to boost its tech profile and increase its competitiveness on the EV front.

Rivian made history by bringing the world's first electric pickup to the road, doing it even before Tesla released the long-awaited Cybertruck. But, even the pickup king, Ford Motor (F  ) didn't solve its EV challenges with the Lightning, the electric version of America's best-selling pickup. The electric pickup concept continues to evolve, from the vehicle itself to advanced gadgets the bring the game to a whole new level, with Worksport Ltd (WKSP  ) launching an Alpha release of its solar-powered tonneau cover this summer.

Moreover, Worksport just revealed that SOLIS will not only be charging its power partner, the portable battery system COR but also most other portable power stations and power banks on the market. Along with potential OEM integrations, such as the anticipated collaboration with Hyundai, Worksport promises the SOLIS Cover to potentially add up to approximately 10 miles of range per day, which would ease the range anxiety of many EV owners. Worksport is set to produce the SOLIS from its state-of-the-art facility in West Seneca, New York, bringing a "Made in America" label of excellence to its value proposition.

Back to Rivian, Volkswagen's fresh infusion of capital will undoubtedly allay concerns of depleting cash reserves as Rivian needs to bridge to the release of its next-generation vehicles, the R2 and R3 mass-market SUVs. Even Tesla was forced by the slowdown and fierce competition to bring back its plans of making an affordable EV. Rivian also still needs to become profitable.

In a separate announcement, Rivian CEO Scaringe told Reuters yesterday that the EV maker is working to improve its cost structure and simplify production at its Normal Illinois plant by making upgrades to its factory equipment, among other efforts. The collaboration with Volkswagen will undoubtedly help in terms of lowering costs and boosting operational efficiency which should both ultimately result in higher gross margins.

Amid a challenging macroeconomic backdrop, even Tesla is struggling on its own, having reported a brutal first quarter, seeing its margins dented by the price war it ignited and expecting a tough year ahead. Meanwhile, a legacy automaker like Volkswagen was wise to admit it cannot make it in the EV era on its own and change its strategy.

This year, it entered into an agreement with XPeng (XPEV  ) in an effort to drive its e-offensive and China and now, it made another effort to catch up on the EV front through Rivian. Unlike Rivian whose shares soared upon the news, its shares slipped on cost concerns. But, the bigger picture is that even the biggest European automaker realized that partnerships are the way to solidify its EV positioning.

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