The Biden administration announced on Tuesday that the U.S. Department of Energy will offer a $6.6 billion loan to Rivian Automotive, aimed at restarting construction of the company’s stalled Georgia factory. The loan comes after Rivian, an electric vehicle startup, faced financial struggles as it worked to become profitable.
There is uncertainty surrounding whether the administration can finalize the loan before Donald Trump potentially returns to the White House in less than two months. Trump has previously expressed intentions to end federal electric vehicle tax credits, which offer up to $7,500 for new zero-emission vehicles and $4,000 for used ones.
Rivian generated significant attention when it went public and started manufacturing electric R1 SUVs, pickup trucks, and delivery vans in 2021 at a former Mitsubishi plant in Normal, Illinois. Shortly after, the company announced plans for a second, larger $5 billion factory near Social Circle, Georgia, about 40 miles east of Atlanta. The factory was expected to produce R1 vehicles, which are priced at $70,000 and above. Rivian also planned to build a smaller, more affordable SUV, the R2, in Georgia for a broader market. The first phase of production was projected to produce 200,000 vehicles annually, with a second phase expected to add another 200,000. Ultimately, the factory was expected to employ 7,500 people.
However, Rivian struggled to meet production and sales targets, depleting its cash reserves. In March, the company paused construction on the Georgia facility and decided to shift production of the R2 SUV to Illinois, aiming to save $2.25 billion in capital spending. Rivian’s financial outlook improved when German automaker Volkswagen AG announced in June it would invest $5 billion in a joint venture with Rivian, providing crucial financial support.
Tuesday’s loan announcement marks a pivotal moment for Rivian’s expansion plans. The company confirmed that production of the R2 and the smaller R3 vehicles in Georgia would proceed, with manufacturing set to begin in 2028. CEO RJ Scaringe emphasized that the loan would help Rivian accelerate the production of competitively priced vehicles, which focus on both affordability and capability.
The Department of Energy views the loan as a significant step in advancing electric vehicle production in the U.S. and supporting President Biden’s goal of having zero-emission vehicles account for half of all new car sales by 2030. The loan is also seen as a move to increase the competitiveness of U.S.-made electric vehicles and to expand access to global markets.
The loan package includes $6 billion in principal, plus $600 million in interest, rolled into the loan amount. It will come from the Advanced Technology Vehicles Manufacturing Loan Program, which has helped finance electric vehicle production in the past, including Tesla’s Model S and the Nissan Leaf. The program was established in 2007 to promote fuel-efficient vehicle manufacturing. Under Biden, the program has supported $33.3 billion in loans, including significant investments in battery plants for electric vehicles.
Senator Jon Ossoff, a Democrat from Georgia, praised the loan as a major federal investment in the state’s electric vehicle manufacturing sector. Ossoff had lobbied Energy Secretary Jennifer Granholm to approve the loan. “Our federal manufacturing incentives are driving economic development across the state of Georgia,” Ossoff said in a statement.
Georgia Governor Brian Kemp, who has aimed to make the state a hub for the electric vehicle industry, has had a complex relationship with the Biden administration, especially regarding industrial policy. Despite this, Kemp has argued that manufacturers chose Georgia even before the passage of Biden’s Inflation Reduction Act. His spokesperson emphasized that the state’s commitment to bringing opportunity to Georgia would continue regardless of who holds the White House.
The loan to Rivian is vital for one of Kemp’s signature economic development projects, and it may be a point of contention if Trump’s administration attempts to reverse it. Local and state governments provided Rivian with an estimated $1.5 billion in incentives in 2022, though the project faced legal challenges from neighbors opposed to its development.
State and local governments have already spent approximately $125 million to acquire and prepare the 2,000-acre site for the factory, and $50 million in roadwork has been completed. Meanwhile, construction at Hyundai’s $7.6 billion electric vehicle complex near Savannah is progressing rapidly, with production already underway. Hyundai’s plant, which will eventually employ 8,500 people, stands in contrast to the delayed progress at Rivian’s Georgia site.
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