Rimac and Bugatti merge to create next-gen hypercars

Croatian EV start-up Rimac has taken control of the famous French marque Bugatti in a deal that will see it hold a majority 55 per cent stake in the newly-formed Bugatti-Rimac.

Announcing the deal overnight, Volkswagen Group's Porsche confirmed it would take a 45 per cent stake in the new joint-venture operation that will be created within the next three months.

Despite the merger, as part of the deal the two brands will continue to be developed and badged separately, although Bugatti is expected to switch from its quad-turbo W16 engine to a pure-electric powertrain developed by Rimac.

A new separate company called Rimac Technologies will also be formed to continue developing and selling EV powertrains and autonomous driving tech to other car-makers.

In the past, Rimac's clients have included Hyundai, Ferrari, Mercedes-Benz and Aston Martin.

Mate Rimac has been confirmed as CEO of all three companies, with the 33-year-old Rimac founder owning the largest 37 per cent stake in the new subsidiary Rimac Group.

Porsche is the second largest shareholder (24 per cent), with Hyundai third with a 12 per cent slice of the business.

Thanks to its 45 per cent holding in Bugatti-Rimac, plus its 25 per cent share of the Rimac Group, Porsche indirectly has the majority stake of the new merged entity, although it will not have operational control.

Following the formation of all three companies, Rimac Group will move to its new $US240 million ($A320m) HQ in Zagreb in 2023, but Bugatti will remain based at the car-maker's factory (and chateau) in Molsheim in eastern France.

Before the joint venture with Rimac surfaced, there were rumours that factions within the Volkswagen Group were ready and willing to shutter the 112-year-old car-maker over the astronomical costs involved with developing a replacement for the Bugatti Chiron.

Commenting on the deal, Porsche chairman Oliver Blume said: "We are combining Bugatti's strong expertise in the hypercar business with Rimac's tremendous innovative strength in the highly promising field of electromobility.

"Bugatti is contributing a tradition-rich brand, iconic products, a loyal customer base and a global dealer network to the joint venture. In addition to technology, Rimac is contributing new development and organisational approaches."

Mate Rimac added: "We have gone through so much in such a short space of time. But this new venture takes things to a completely new level."