Rivian Automotive (NASDAQ:RIVN) caused confusion in the electric vehicle sector by announcing that the company would form a joint venture with Volkswagen (OTCPK:VLKAF) (OTCPK:VWAGY).

Volkswagen (OTCPK:VLKAF) $5 billion in initial and planned investments, in addition to Rivian (RIVN) investment) the current cash position is expected to provide capital to fund the electric vehicle maker’s operations through its R2 ramp in Normal, Ill. and its mid-sized platform in Georgia, which is seen as a path to positive free cash flow and significant scale.

“This partnership brings Rivian’s zone software and electronics platform to a broader market thanks to the global reach and scale of the Volkswagen Group,” noted Rivian (RIVN) CEO RJ Scaringe.

Early reaction from analysts is that investing in Volkswagen (OTCPK:VLKAF) will give Rivian (RIVN) more flexibility as it grows toward profitability. While the joint venture does not involve collaboration between the companies on electrical equipment, motors, batteries and vehicle platforms, the development of next-generation software-defined vehicle platforms could be shared with other companies. “While this announcement is a vote of confidence in Rivian, we believe it does little to change the company’s operating problems and troubling cash burn rates, which are approximately $1 billion per quarter,” warned CFRA’s Garrett Nelson. “The key question is why VW would make such an investment in a struggling electric vehicle manufacturer that could face going concern risk in the future, but VW clearly sees value in gaining access to RIVN’s vehicle architecture and software,” he added.

Shares of Rivian Automotive (RIVN) skyrocketed 49.9% in post-market trading, after rising 8.6% in the regular session. The electric vehicle stock is still trading well below its 2021 IPO price level of $78 and its all-time closing high of $172.01.

Sector watch: The pullback of major automakers from aggressive electric vehicle strategies has increased speculation that partnerships could become more common. Morgan Stanley postulated that the option for legacy automakers is to pull the lever of cooperation. General Motors (GM), Ford Motor (F), and Stellantis (STLA) could partner with China, partner with electric vehicle startups, work closely together, or even partner with Tesla (TSLA) on a licensing or supply deal . This strategy would mean turning away from Tesla’s previous copycat plan (TSLA) with massive upfront investment in its supply chain, unique manufacturing capabilities, greenfield software development, internal battery sourcing and downstream infrastructure. Notably, Tesla (TSLA) CEO Elon Musk said last year that the company was in talks with another major automaker about licensing software that would enable full autonomous driving. Some analysts believe that NIO’s (NIO) aggressive moves in Europe may herald a major partnership in this country with a local player.