Volkswagen AG will fold its ultra-luxury Bugatti brand into a joint venture with Croatian electric supercar maker Rimac Automobili, extending a lifeline to the boutique French manufacturer known for hulking 16-cylinder engines.
Rimac will hold a 55% stake in the joint venture with VW’s Porsche sports-car unit owning the remaining 45%, the companies said in a statement Monday. Porsche earlier this year lifted its stake in Rimac to 24%.
VW Chief Executive Officer Herbert Diess has stepped up efforts to focus funds on the German group’s namesake, Audi and Porsche brands as Europe’s biggest automaker embarked on the industry’s largest push into electric vehicles to challenge Tesla Inc. While Rimac is closely held, it’s been fielding interest from special purpose acquisition companies.
VW started to review options for niche brands and non-core businesses five years ago, but results have been modest so far. Bugatti’s shift to the joint venture with Rimac follows the sale of industrial gearbox maker Renk AGand the downsized initial public offering of a minority stake in truck unit Traton SE in 2019. Efforts to separate the Italian brands Ducati and Lamborghini gained little traction and were called off late last year.
Bugatti has consistently generated positive results in recent years, Porsche CEO Oliver Blume told reporters in a webcast. The joint venture with Rimac is set up for yielding “very good profitability” that’s appropriate a hypercar manufacturer, he said.
The Bugatti-Rimac venture is expected to be established in the fourth quarter, pending antitrust approvals. The brands will initially produce the Bugatti Chiron and the all-electric Rimac Nevera.