- [Nolan] You probably know a lot about Bugatti,
maybe that it was founded in 1909 by Etorre Bugatti
or that these days they're known for
building ultra high-end Supercars.
You probably don't know a lot about Rimac.
Like that it's a twelve year old
electric car maker.
or that it even exists.
But in early July of 2021, these two incredibly,
incredibly different companies announced that they were
merging?
Today on wheelhouse, a Croatian company,
a German company, and a French company
walk into a business meeting and
Bugatti Rimac is born.
How the heck did one of the oldest names in car making
get bought by a young company
better known for making components rather than cars?
And does this mean we're about to see Bugatti,
the company known for building massive
sixteen cylinder quad turbo charged engines,
ditch gas, powered vehicles?
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So many memories
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You know, it's moments like these,
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- Look out!
- Time to go Dave!
Faster!
Faster Dave!
- If you missed the news originally,
or you need a refresher,
let me borrow a phrase from my good friend, James Pumphrey,
to catch you up to date.
Wait, that's...
up to?
up to snuff?
up to,
ehh, I forget.
On July 5th, Rimac and Porsche announced that in
the fourth quarter of 2021,
Bugatti will become jointly owned between the two companies.
Volkswagen, which currently owns both Porsche and Bugatti,
will transfer 45% of Bugatti shares
into Porsche's control.
Rimac will control the other 55% of the new company
called Bugatti Rimac.
So basically Volkswagen sold half of Bugatti
to Rimac and reshuffled the other half
under its own corporate umbrella,
except that's not really a sale
because no money changed hands.
Wait, what?
How? Why?
To understand these corporate shenanigans,
first, we need to learn a little bit of history.
Bugatti is simultaneously a legendary badge
and one that has never really been
a huge commercial success.
They first became known for winning on the racetrack
way back in the 1930s.
Meanwhile, our generation knows Bugatti
as a super modern hypercar brand that breaks
speed records.
The history of Bugatti can basically be broken
into three chapters.
In the early days of a Ettore Bugatti,
his company became famous for building the Type 35;
one of the most successful race cars in history.
The Type 35 won over 2000 races
and basically put Bugatti on the map.
Wow, that's a lot.
Over the next few decades,
the company also built huge luxury cars like the Royale.
And I do mean huge!
One special edition was called the Royale Kellner.
But a Ettore Bugatti died in 1947
and the company crumbled.
Eventually stopped making cars all together
and was sold off as an airplane parts business in 1963.
Chapter two began in 1987 when Bugatti was reborn;
the car company, not the, not the dead guy.
Businessman Romano Artioli bought the trademark and revived
the company as an Italian builder of high-end sports cars.
And in 1991, Artioli's version of the company released
the EB 110, which broke the Shelby Cobra's
twenty-six year old record to become
the world's most powerful production car at 553 horsepower.
The EB110 was one of the coolest
supercars of the nineties.
It was obviously very fast with a top speed of over 200
miles per hour.
But it was also innovative.
Incorporating uncommon features for the time
like the carbon fiber Monica chassis
and all wheel drive.
Unfortunately though Bugatti's new owner overextended
himself by also trying to acquire Lotus cars in 1993,
which led to him declare bankruptcy in 1995.
And as a result,
only 139 EB110s were ever produced.
After several years in bankruptcy court,
Volkswagen swooped into buy Bugatti in 1998
and thus began the company's third and
most recent chapter.
At the time, VW is run by Ferdinand Piech,
who started as the leader of Audi,
then became the dictator like head of the Volkswagen
group for several decades.
He was also the grandson of Ferdinand Porsche,
which made him automotive royalty.
After saving VW from near ruin,
Piech could do pretty much whatever he wanted.
And since he loved high-end cars, he brought companies
like Rolls Royce, Lamborghini, and eventually
even Porsche itself under the VW umbrella.
But when he bought Bugatti, Piech hoped to put the company,
quote, on top of the automotive world.
Volkswagen's purchase totally transformed Bugatti
Piech restored the company to his former home
in Molsheim, France and also built
sixty miles of test track in the German forest
to try to break speed records,
which is exactly what happened.
First came the Veyron,
which set the world record for fastest production car
in 2010 at 267.9 miles per hour.
Then in 2019, the Chiron Super Sport 300 Plus
prototype broke that record.
It became the first production vehicle to break
the 300 mile per hour barrier.
However, it doesn't have the production car record.
Uh, If you want to know which car does check out this video.
So why is a car maker known for massive record breaking gas
engines now in the hands of an electric vehicle company?
Well, the first step came when Ferdinand Piech
stepped down in 2015 after losing
an internal political battle to his successor as CEO,
Martin Winterkorn.
And I know what you're thinking.
Winterkorn sounds like a Korn Christmas album.
And I just want to say, I agree with you.
And I think that should happen.
Anyway, without Piech actively running the show,
his favorite hobby brands started to fall out of favor.
But he remained in large shareholder in Volkswagen until his
death in 2019.
That was the next step towards VW moving on from Bugatti.
Without the ex chairman looking over their shoulder,
Volkswagen's new leadership finally decided to turn the
company completely towards the future.
I'm sure the whole emission scandal helped a little bit too.
And even though Bugatti signature sixteen cylinder
engines are still setting speed records.
Eventually gas engines will be technologically outclassed
by electrification.
And this is where Rimac enters the story.
Mate Rimac was only 20 years old when he founded his
company in 2009, exactly 100 years
after a Ettore Bugatti did the same.
Rimac, the company, started as a one man operation
in Rimac, the person's, garage
after the engine in his 1984 BMW three series blew up
and he bolted an electric forklift motor in its place.
That's pretty sick.
This car eventually became the Rimac e-M 3,
AKA the green monster.
And in 2012, it put Rimac on the technological map
when it achieved zero to a hundred kilometers an hour
in just 3.3 seconds,
zero to 60, that's pretty damn quick.
And it made it the world's fastest
accelerating electric vehicle.
But despite the old Beamer's success on the track,
Mate was frustrated by the number of changes that took to
fully transform car.
So he decided that it'd be simpler to just design his own
all electric Supercars from then on.
This led to the Concept_One,
which looks kind of like a Porsche from a cooler dimension.
Hidden beneath the sleek exterior are four
liquid cooled, perma-mag, electric motors,
one at each wheel, adding up to over 1200 horsepower.
Top Gear's Jeremy Clarkson said the Concept_One
was, quote, faster than anything else he's ever driven
by big, big margin.
And it was also too much car for his co-host Richard Hammond
who crashed one of the eight Concept_Ones in existence down
the side of a mountain while filming.
I mean, they still make fun of him for that.
That woulda been scary. That's crazy. Poor Richard.
After the extremely limited release of Concept_One,
Rimac debuted the Nevera,
which sports a 1,914 horsepower electric engine.
My goodness.
A top speed of 258 miles per hour and the zero to 60,
less than two seconds.
Good God!
The Navera was initially announced at the
2018 Geneva motor show,
but it took until this year for production to finally start.
When it actually hits roads,
the Navera is expected to break the Chiron's record as the
fastest production car ever made.
So you can start to understand why this company
fits alongside Bugatti.
Today, the number of Rimacs and customer garages
can still be counted on one or two hands.
However, the company has grown to 850 employees,
is about to open a huge new headquarters in Croatia.
And that's because Rimac has become one of the fastest
growing vehicle component companies in the industry,
thanks to its highly respected E V technology.
So much so that in 2018, Porsche acquired 10% ownership
of Rimac in order to form a development partnership,
which leads us back to the Bugatti deal.
In June of 2021, Volkswagen announced they would completely
halt sales of combustion engine powered vehicles in Europe
by 2035.
Bugatti, meanwhile is still selling the Chrion Pur Sport,
which gets eight miles per gallon.
So pretty clearly without Ferdinand Piech around,
the two companies, aren't really a great fit anymore.
But even though he's out of the picture,
VW leadership still hasn't been able to cut bait on Bugatti
because the surviving Piech members
still own 50% of the company.
Meaning that if they try to dump Ferdinand Piech's,
record breaking pet project, his family can tank the deal.
This is where the pieces of the Bugatti Rimac deal come
together like a very expensive and
gas guzzling jigsaw puzzle.
Volkswagen decided to essentially get rid of their
problem child, Bugatti, by letting Mate Rimac
take control of it in exchange for a larger stake
in his high performance electric technology.
And to make it acceptable to the surviving Piechs,
the deal is designed to specifically benefit their family's,
ancestral company, Porsche.
Deals like this are obviously complex,
but this one kind of shakes out as a win-win-win.
Porsche now owns a big chunk of the Navera
and all future Rimac supercars.
And that means VW and Porsche can both
incorporate Rimac's tech as they transition
away from gas engines.
Rimac gets the famed Bugatti badge, plus access
to Porsche's vastly more experienced engineering team.
And all of them stand to make a lot more money
if VW becomes a market leader in electric vehicles and,
or Rimac becomes a household name, which I think they will.
There's a huge opportunity here because American EVs
aside from the Tesla are still way behind
the technological curve.
And even Tesla is still a mostly luxury brand.
Someone is eventually going to make a super affordable,
reliable, long range, EV for the masses.
And now Volkswagen is in prime position
to be the ones who do.
very smart.
But, the biggest winner in all of this might be
thirty-three-year-old Mate Rimac,
who will become CEO of Bugatti Rimac.
His company, the Rimac Group, will own 55%
of Bugatti Rimac as well as a hundred percent
of a new, separate business, called Rimac Technology,
which will continue to develop high performance EV
powertrains for other car makers.
It is reportedly already working with at least ten major
manufacturers, including Ferrari, Mercedes,
and Aston Martin.
Mate has also hinted at taking the Rimac Group
public in 2022,
which could make him personally around $2 billion as the
company's largest shareholder.
So if you're trying to predict who the next Elon Musk is,
this guy has to be in pole position.
He already announced the Bugatti Rimac merger dressed in
shorts and running shoes,
which seems somewhat Musk-y to me.
I'm guessing he starts a space company in like
two years, three years, tops...
definitely some sort of exploratory group.
If you're wondering what all this financial dealing means in
terms of actual cars, you're a patient person.
And I will tell you.
Bugatti and Rimac will continue to
develop and badge cards separately.
Rimac branded cars will be built in Croatia,
while Bugattis will still be assembled in Molsheim.
But both brands will use the powertrains developed and
manufactured by Rimac technology in Croatia.
Unfortunately, for fans of Bugatti's current speed machines,
the days of the 16 cylinder engine are numbered.
But a 2000 horsepower hybrid hypercar and a full EV
Bugatti are both due for release by 2030.
Mate Rimac says he's also considering future Bugattis with
more than two doors and potentially even some more
affordable, less powerful cars built at
higher production volumes,
but in Bugatti terms, that means like still
hundreds of thousands of dollars.
If any of that actually comes to pass,
it would be a pretty huge change for a brand that has spent
over a hundred years selling some of the fastest
and most expensive cars ever built.
But in the words of Mate Rimac, quote,
Bugatti's fourth chapter starts now
and with Porsche at our backs,
I believe we can do incredible things.
You see what I did that chapter thing earlier?
the craziest thing about this deal isn't even where it
leaves these companies.
I'm definitely excited to see what Bugatti Rimac
eventually cranks out.
But even more than that, this merger foreshadows
the future of the entire automotive industry.
Rimac's rise to prominence demonstrates how
electric vehicles are beginning to take over the
luxury and sports car market.
The company is now valued at multiple billions of dollars,
despite having produced an insanely small number of cars.
Like I think I personally have
built more cars than Rimac has.
I'm not saying they're any better.
[Upbeat Music]
But what they have done is pre singular
when it comes to electric vehicles.
So clearly Volkswagen is betting that having the most
advanced technology in the coming decades will be much more
valuable than having the most famous badges.
This deal also may be the death now for the combustion
engine super car.
It's not even really about what's best for the environment,
though that's obviously a plus.
it's simply about speed.
Someday soon when the Navera finally
rolls off the production line,
the fastest car in the world will be powered by electricity.
And now it will be made by Bugatti Rimac.
- Breathe in and out.
Good.
Mindfulness and controlled breathing are
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but you know what else is?
- Going off Road.
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Namaste my dudes.
- Namaste, James.
- What?
Who said that?
- Thank you for watching Wheelhouse.
Thank you, Nick behind the camera.
Thank you, Joe. Thank you, Harlan.
If you wanna know more about electric vehicles,
We did a great video on whether or not they're
actually better for the environment.
The answer may surprise you put that over here somewhere.
That's one of my favorite episodes.
Check that out for sure.
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Be Kind. I'll see ya next time