Volkswagen will invest up to $5bn into a partnership with American EV start-up Rivian as the German carmaker attempts to rapidly improve its software, sending the luxury electric truck maker’s share price up more than 35 per cent.

The tie-up with the maker of electric trucks and SUVs comes as Volkswagen looks to beef up its electric offering in the face of sophisticated competition from Tesla and Chinese rivals. VW’s in-house software developer Cariad has failed to deliver products on time, delaying its rollout of new models.

Upon agreement of a 50/50 joint venture, Volkswagen would receive “immediate access” to Rivian’s EV software for use in its own cars. The investment in Rivian and the joint venture amounts to $2bn in 2024 and up to $5bn by 2026.