Volkswagen Group (VW) and Tesla rival Rivian have launched a joint venture, with the German auto giant increasing its investment in the partnership.
The two companies say the deal is now worth $5.8 billion (£4.55 billion), up from VW's initial $5 billion commitment.
Shares of the American electric vehicle (EV) maker jumped more than 9% in after-hours trading following the announcement.
The tie-up will see the companies share key technology at a time of slowing global demand for electric cars and increased competition from Chinese rivals.
The joint venture provides loss-making Rivian with a crucial source of financing as it prepares for next year's launch of its R2 model – a sport utility vehicle (SUV) that is smaller and more affordable than its current offerings.
This also means that VW will be able to use Rivian's technology in its own range of vehicles.
The first VW models equipped with Rivian technology should be available to customers from 2027.
“By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly,” the two companies said in a statement.
Under the plan, software developers and engineers from both companies will initially work side by side in California, while three more facilities will be established in North America and Europe.
