Volkswagen throng (VW) and Tesla rival Rivian have launched a joint assignment, with the German car giant increasing its property in the collaboration.

The two companies declare the deal is now worth $5.8bn (£4.55bn) – up from an initial pledge from VW of $5bn.

Shares in the US electric vehicle (EV) maker jumped more than 9% in after-hours market activity following the announcement.

The tie-up will view the firms sharing critical technology at a period of slowing global demand for electric cars and increased competition from Chinese rivals.

The joint assignment provides deficit-making Rivian with a crucial source of financing as it prepares for the launch next year of its R2 model – a sports utility vehicle (SUV) that is smaller and more affordable than its current offerings.

It also means VW will be able to use Rivian’s technology in its own range of vehicles.

The first VW models equipped with Rivian technology are expected to be available to customers as early as 2027.

“By combining their complementary expertise, the two companies schedule to reduce advancement costs and scale recent technologies more quickly,” the two companies said in a statement.

Under the schedule, developers and software engineers from both firms will initially work side by side in California, while three other facilities in North America and Europe will be set up.

It comes as expectations have grown that VW, Europe’s biggest car maker, is planning to announce major expense-cutting measures.

The throng, which also includes brands such as Audi, Lamborghini and Porsche, has been struggling with higher costs, weakening sales, competition from Chinese EV makers and a slower-than-expected shift away from petrol and diesel vehicles.

Separately, Rivian has taken steps to cut costs amid softening demand for EVs.

The enterprise, which has yet to turn a returns, has been renegotiating contracts with suppliers and making its manufacturing processes more efficient.

As well as SUVs, Rivian also makes electric delivery vans, which it supplies mainly to online retail giant Amazon – its largest shareholder.

Amazon has ordered 100,000 of the vehicles, which are all due to be delivered by the complete of the decade.