Legacy companies in disrupted industries such as oil and gas or automotive are being lapped. They have to “transition” to new, green technologies. Yet these are miles away from what they know; technology-native companies have been quicker off the blocks. Given how hard it will be for incumbents to beat their baggage-free competitors, one option is to buy them instead.

That, at least, is what Volkswagen seems to have concluded. The European automaker has announced a $1bn initial investment into Rivian’s equity, with $4bn more to come before 2026 assuming financial and operational milestones are met. Of this, $2bn will be further equity injections into the US electric-vehicle manufacturer itself and $2bn will go into a software-focused joint venture. In return, Rivian will contribute its proven technology as a base for the JV’s products, which will be rolled out across both companies’ electric vehicle portfolios.

Strategically, the deal enables Volkswagen to reverse out of a tight spot. As the world transitions to EVs, software — to assist drivers, optimise the vehicle’s performance, and link the car to one’s phone, maps and apps — will be the reason why customers plump for one car over another.