Tesla rival Rivian saw its shares skyrocket on Wednesday thanks to a massive investment from Volkswagen.

The company announced on Tuesday that it would invest $5 billion in Rivian to form a partnership to create “Next-generation software-defined vehicle (SDV) platforms to be used in future electric vehicles from both companies.”

Connected: Rivian announces R2, R3 mid-size electric cars at a lower price

The new funds will help develop software to lower vehicle costs and increase production rates. Rivian also plans to license its electric vehicle design IP to Volkswagen to seamlessly implement the software in new vehicles.

“Since Rivian's earliest days, we have been focused on developing highly differentiated technology and it is exciting that one of the largest and most respected automotive companies in the world has recognized this,” said RJ Scaringe, Founder and CEO of Rivian. in a company STATEMENT. “Not only is this partnership expected to bring our software and connected zonal architecture to an even wider market through the global reach of the Volkswagen Group, but this partnership is also expected to help secure our capital needs for significant growth.”

for ReutersRivian shares jumped 50% immediately after the announcement.

Scaringe also told the newspaper that the investment will help finance the smaller R2 SUVs that will hit the market in 2026.

The investment comes as rival electric vehicle maker Tesla faces one financial crisis after another Q1 2024 which saw its adjusted profit fall 48% and quarterly revenue fall 9%.

Rivian reported total revenue of $1.2 million and 13,588 vehicles sold Q1 2024.

However, gross profit decreased due to what the company cited as “increased vehicle production and deliveries, reductions in material costs and higher average selling price.”

Rivian it was upstairs 21% in a 24-hour period on Wednesday afternoon and over 7% year-over-year.