After progress on its Georgia plant stalled earlier this year, Rivian may soon get a substantial $6.6 billion loan to get construction back on track — a critical step toward securing the company’s future. The total loan includes $6 billion in principal as well as $600 million in capitalized interest.
On Monday, the U.S. Department of Energy announced a conditional commitment to Rivian, which would support the company’s effort to complete a facility which the company says will produce up to 400,000 vehicles annually (in two phases, each cranking out 200,000 vehicles per year) and create 7,500 jobs through the end of the decade. Rivian originally planned to complete the factory and begin R2 production in 2026, but has since pushed its estimate out by two years, and will build its smaller SUV at its Illinois plant initially.
“This loan would enable Rivian to more aggressively scale our U.S. manufacturing footprint for our competitively priced R2 and R3,” CEO RJ Scaringe said in the company’s statement. “A robust ecosystem of U.S. companies developing and manufacturing EVs is critical for the U.s. to maintain its long-term leadership in transporation.”
For the moment, it’s unclear whether the DoE would be able to finalize the loan within the last few months of the Biden administration, or how the terms of such an agreement would look under the incoming Trump administration. To date, President-elect Trump has vowed to rescind the existing federal electric car tax credits of $7,500 for new vehicles or $4,000 for used ones, created under the 2022 Inflation Reduction Act. The funding mechanism for Rivian’s loan, if disbursed, would be the department’s Advanced Technology Vehicles Manufacturing Program (ATVM), which has loaned out $8 billion for projects supporting the production of more than 4 million vehicles since 2007, according to the Loan Programs Office. The ATVM earlier helped fund early production runs of the Tesla Model S and Nissan Leaf.
This funding comes separately from Volkswagen’s investment
News of the DoE’s preliminary approval for Rivian’s loan comes on the heels of another multi-billion infusion into the company. Earlier this month, Volkswagen formalized its $5.8 billion joint venture agreement, in which the two automakers would develop software and electrical technology for its upcoming models.
So far, Rivian has produced R1S SUVs, R1T pickups and Amazon’s ADV delivery vans at its Normal, Illinois production plant. The R1 series vehicles don’t sell in major volumes, however, with the $70,000-plus vehicles racking up just 10,018 vehicles in the third quarter of 2024. It revised its annual production guidance downward to between 47,000 and 49,000 vehicles, citing a “production disruption due to a shortage of a shared component [the “Enduro” motor system] on the R1 and RCV (van) platforms” and a “challenging consumer backdrop”.
The company acknowledges to its shareholders that its future success will be determined by its ability to generate cash flow — something which it can’t effectively do without the Social Circle, Georgia plant. These investments may help to ease Rivian’s cash crunch, which resulted in the automaker pausing construction on the plant back in March to focus on starting R2 production earlier. That move, Scaringe said, would ultimately save Rivian $2.25 billion in capital spending in the longer term.
The 2,000-acre site isn’t the only major electric vehicle facility in progress within the state of Georgia, either. As Scaringe touts the need for a robust EV manufacturing apparatus in America, Hyundai is building its own $7.6 billion battery and electric vehicle complex in Ellabell, near Savannah. The company broke ground on that facility back in 2022, and it will supposedly employ as many as 8,500 people when fully operational. Hyundai aims to open its “Megaplant” in early 2025, and will build the Ioniq 5 crossover as well as the three-row Ioniq 9 in the coming months.
