It seems these days every single vehicle rolling off the production line is more advanced than the previous one. The exciting thing about that for investors is that as more and more technology is packed into these vehicles, it's opening the door to new revenue paths.

Rivian Automotive (RIVN 1.27%) is giving us a near perfect example of how a young start-up can take advantage of its tech to generate a new revenue stream.

Rally mode

Rivian is about to unlock extra power and performance for some of its consumers. It will enable owners of second-generation R1S and R1T to unlock its performance upgrade with its upcoming 2025.06 software update.

The performance upgrade increases horsepower from 533 to 665 while increasing max torque from 610 to 829 lb-ft. For context, at least for some of us, that increase in power would take the vehicle's 0 to 60 mph time from 4.5 seconds down to 3.4 seconds. It even comes with a Sport and Sand mode for better performance in different terrains.

But the important part for investors is that this upgrade doesn't come for free. To unlock this upgrade, consumers will have to fork over an extra $5,000. That's a meaningful chunk when you consider that a second-generation R1S starts at just under $76,000.

But just as important as the $5,000 package could be the value in what it represents. Rivian owns its own vertically integrated technology platform, which is a fancy way of saying it builds all of its tech in-house. The great part about that is, if it's really good tech, you can sell it to other automakers that struggle with theirs.

That's almost exactly what we saw with Rivian's new joint venture (JV) with Volkswagen Group, which is worth up to $5.8 billion. The JV combines strengths of the two companies to create a cutting-edge software and electronic architecture. The JV will use the existing Rivian electrical architecture and software technology stack.

Does this make Rivian a buy?

Let's be clear; this one thing doesn't solely make Rivian a buy. But let's also be fair; this is absolutely part of the core investment thesis for Rivian. Owning its own technology stack enabled the joint venture with Volkswagen that will inject cash into the young EV maker as well as give it scale while building a vehicle with global automotive powerhouse Volkswagen.

Rivian is making progress on multiple fronts, including turning a positive gross profit during the fourth quarter and currently building an R2 production line at its Illinois facility. The company also has the R3 and R3X to follow up the R2, and with the R2 planning to expand overseas, the upside of Rivian is intriguing.

Owning its own tech also enables smaller, more consumer-focused strategies such as Rally mode. Investors shouldn't discount these developments because even at a small take rate, $5,000 on a $76,000 vehicle is a nice chunk to add on, and at high margin.

Despite all of these things, Rivian is still a highly speculative investment and should always remain a small position of any portfolio. But Rivian remains one of the more intriguing and stable EV start-up stocks.