Volkswagen Group will invest up to $5 billion in Irvine-based electric-vehicle manufacturer Rivian under a new joint venture, the two companies announced. The JV, which entails an initial $1-billion investment from Volkswagen and up to $4 billion more over time, will enable the German car maker to partner with Rivian on developing “next generation” battery-powered vehicles and software.

Both companies intend to launch vehicles benefiting from the technology created within the JV in the second half of the decade. In the short term, the JV is expected to enable Volkswagen Group to utilize Rivian’s existing electrical architecture and software platform.

“Since the earliest days of Rivian, we have been focused on developing highly differentiated technology, and it’s exciting that one of the world’s largest and most respected automotive companies has recognized this,” said Rivian founder and CEO RJ Scaringe.

The announcement of the JV occurs amid turbulence in the EV market. Earlier this month, another California-based manufacturer, Fisker, filed for bankruptcy, and Apple recently scrapped a self-driving EV program after sinking a reported $10 billion into the initiative over the past decade.

Rivian in March said it would postpone the development of a $5-billion manufacturing plant in Georgia, although the company was awarded $827 million in Illinois tax incentives last month to expand operations at its Normal, IL factory.

Shares of Rivian stock were up sharply on Wednesday following the JV announcement.

Pictured, from left: Volkswagen Group CEO and Oliver Blume and Rivian CEO RJ Scaringe.