Volkswagen will invest up to $5bn (£3.9bn) in US electric car maker Rivian as manufacturers rethink their strategies amid uncertain demand. 

The German car manufacturer said it will initially invest $1bn in the electric truck maker as part of a joint venture that will give it access to the start-up’s technology.

It will put another $4bn into the Tesla rival by 2026. Rivian’s shares have jumped 50pc in premarket trading in the US.

It is the second surprise lifeline for the US carmaker in a little over a month after the Biden administration imposed tariffs on China’s electric vehicles, which the White House said were gaining unfair advantage from state subsidies.

It comes as the electric car sector faces challenges from weakening demand and a trade war which has also been the European Union say it will impose tariffs on Chinese vehicles.

The German automotive industry has been opposed to the EU plan amid fears China could impose counter-tariffs to hurt manufacturers such as BMW and Daimler. 

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