Volkswagen suggested Wednesday that technology developed through its $5.8 billion partnership with Rivian could eventually be used in internal combustion engine vehicles, marking a notable shift in messaging just six weeks after the federal EV tax credit expired and triggered a historic market collapse.

The acknowledgment from Carsten Helbing, co-CEO of the joint venture RV Tech, comes as automakers across the industry slash EV production and lay off thousands of workers following the September 30 expiration of the $7,500 federal incentive. Volkswagen announced the Rivian partnership last November as a crucial element of its electrification strategy after years of expensive failures at its in-house Cariad software division.

RV Tech Platform Designed For Flexibility

“For sure, it is an extremely capable architecture and we could allow for future use to also use it for ICE, but as we already outlined our clear focus is on BEV implementation and whatever comes after that is to be decided at a later stage,” Helbing told Reuters on Wednesday.

The statement represents the first public acknowledgment that the Rivian-developed electrical architecture and software platform—originally marketed as purpose-built for electric vehicles—could be adapted to power conventional gas engines. Helbing emphasized that such adaptation would require “additional work on the component side and on the platform side,” but insisted the joint venture sees “no huge issue there.”

The two companies announced that winter testing will begin by the end of 2025, evaluating the system’s performance in harsh conditions using the Volkswagen ID.Every1 compact car plus one model each from Audi and Scout. The ID.Every1, targeting a €20,000 ($21,500) starting price, will be the first production vehicle to feature the RV Tech software and electrical architecture when it launches in 2027.

Partnership Aimed To Fix Cariad Catastrophe

Integration of software and electronics across platforms has become critical for Volkswagen, which struggled for years to unify its technology architecture after repeated delays and massive cost overruns at Cariad. The German automaker poured nearly €12 billion ($13 billion) into its in-house software division, only to watch it post a €2.4 billion ($2.6 billion) loss in 2023 while delaying crucial new models from Audi and Porsche by nearly two years.

The Rivian partnership was widely seen as VW’s admission that it couldn’t develop competitive EV software internally and needed to license expertise from a startup with proven technology. VW’s $5.8 billion investment in Rivian last year included an initial $1 billion loan, $1.3 billion in equity, and up to $3.5 billion in milestone-based funding through 2026.

The joint venture demonstrated rapid progress by retrofitting a Volkswagen test vehicle with Rivian’s zonal hardware and integrated software platform in just twelve weeks—a speed that stood in stark contrast to Cariad’s years of delays.

Post-Tax Credit Reality Reshapes Industry

The timing of Helbing’s ICE compatibility comments is notable. U.S. electric vehicle demand has collapsed following the September 30 expiration of the $7,500 federal tax credit, which Congress eliminated through President Trump’s “One Big Beautiful Bill” signed into law on July 4, 2025.

October EV sales plummeted 24% compared to September as the policy change removed up to $7,500 in effective purchase price reductions for consumers. The market correction has been swift and brutal: General Motors laid off more than 3,300 EV workers and idled multiple battery plants, while Ford halted F-150 Lightning production with no restart timeline announced.

Rivian itself cut approximately 600 jobs in late October—roughly 4.5% of its workforce—marking the company’s third workforce reduction in four months as it races to launch the $45,000 R2 SUV in 2026.

In Europe, Volkswagen and other legacy automakers face mounting pressure from low-cost Chinese manufacturers expanding their footprint in the region. The German giant is considering closing factories in Germany for the first time in its 87-year history while grappling with labor disputes and collapsing sales in China, where VW once dominated but now trails domestic EV makers.

EVXL’s Take

Let’s be direct about what’s happening here. Six weeks ago, when federal EV subsidies still existed and automakers were banking on government money to bridge the gap between what EVs cost and what consumers would pay, this Rivian partnership was Volkswagen’s electrification savior. Now that the $7,500 tax credit has evaporated and EV sales have cratered exactly as we predicted, suddenly this same technology platform could theoretically power gas engines too.

The corporate messaging pivot is transparently opportunistic. When we first covered VW’s $5 billion Rivian investment back in June 2024, the partnership was framed as an all-in commitment to electrification—a way for VW to leapfrog Tesla and Chinese competitors by licensing Rivian’s proven software instead of continuing to burn billions at the dysfunctional Cariad unit. There was zero mention of ICE compatibility because the political and market winds still favored EVs.

Fast forward through the September 30 tax credit expiration, the October sales collapse, and mass layoffs across the industry, and now Volkswagen is carefully floating the idea that this “EV-focused” platform could actually work just fine in combustion vehicles. The subtext is unmistakable: if the EV market doesn’t recover, VW has an expensive technology investment that won’t go to waste.

This reveals something we’ve documented repeatedly—legacy automakers’ EV commitments were always more dependent on government subsidies than they wanted to admit. GM’s $13 billion in EV losses and immediate production cuts post-tax credit, Ford’s indefinite Lightning halt citing a supplier fire they could easily fix if the business case existed, and now Volkswagen hedging a $5.8 billion “EV partnership” with ICE compatibility talk—the pattern is clear.

The broader industry context matters here. While American and European automakers retreat from EVs the moment subsidies disappear, Chinese manufacturers continue aggressively expanding with robust government support and dramatically lower production costs. Volkswagen just unveiled the ID. Unyx 08 in China—a vehicle that looks nothing like a traditional VW because it’s basically a rebadged Xpeng built on Chinese technology. VW couldn’t beat Chinese competitors at software, so they licensed from Rivian for Western markets and Xpeng for China. That’s not innovation—that’s survival.

The ID.Every1 won’t arrive until 2027, giving VW two more years to assess whether the post-subsidy EV market stabilizes or continues deteriorating. If demand remains weak, don’t be surprised when more RV Tech-powered vehicles launch with gas engines alongside electric options. Helbing’s comment Wednesday wasn’t a hypothetical musing—it was strategic contingency planning spoken aloud.

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