ATLANTA (AP) — On Tuesday, the Biden administration revealed that the U.S. Department of Energy will provide a loan of $6.6 billion to Rivian Automotive for the construction of a factory in Georgia. This plant had previously hit a snag as the electric vehicle startup faced challenges in achieving profitability.
The future of this loan remains uncertain, particularly with Donald Trump potentially reclaiming the presidency in less than two months. Questions arise about whether the Trump administration might attempt to retract the funding.
During his previous term, Trump pledged to eliminate federal electric vehicle tax credits, which currently offer up to $7,500 for new zero-emission vehicles and $4,000 for used ones. This move has raised concerns among electric vehicle manufacturers like Rivian.
Rivian generated significant buzz when it went public and commenced production of its large R1 electric SUVs, pickup trucks, and delivery vans in 2021 at a former Mitsubishi factory in Normal, Illinois. Shortly after, the company announced plans for a second, larger facility, a $5 billion plant located about 40 miles (64 kilometers) east of Atlanta, near Social Circle.
The R1 vehicles are priced at around $70,000 and above. However, the company intends to produce an affordable R2 model, a smaller SUV aimed at the mass market, at the Georgia site. Initial plans for the factory suggest it will have the capacity to manufacture 200,000 vehicles annually, with a second phase adding another 200,000. Over time, the plant expects to create approximately 7,500 jobs.
Despite ambitious plans, Rivian struggled to meet its production and sales goals and rapidly exhausted its cash reserves. In March, the company announced a halt in construction for the Georgia facility and indicated that it would instead assemble the R2 SUV in Illinois.
CEO RJ Scaringe stated that this strategic shift would allow Rivian to accelerate the R2’s market availability while saving $2.25 billion in capital expenditures. In June, German carmaker Volkswagen AG stepped in with a $5 billion investment in a joint venture, which provided Rivian with much-needed financial support by allowing the sharing of software and electrical technology.
The recent loan announcement revitalizes Rivian’s broader ambitions, allowing plans for the R2 and an even smaller R3 to move forward in Georgia, with production expected to begin in 2028. Scaringe expressed optimism, stating, “This loan would enable Rivian to more aggressively scale our U.S. manufacturing footprint for our competitively priced R2 and R3 vehicles that emphasize both capability and affordability.”
The Department of Energy has noted that this funding will significantly enhance electric vehicle manufacturing within the U.S., aligning with the Biden administration’s target of having zero-emission vehicles comprise half of all new U.S. automotive sales by 2030.
As stated by the Department, “As one of a few American EV startups with light-duty vehicles already on the road, Rivian’s Georgia facility will allow the company to reach production volumes that make its products more cost-competitive and accelerate access to international markets.”
The loan consists of $6 billion plus $600 million in interest, which will be added to the principal amount. This funding will be drawn from the Advanced Technology Vehicles Manufacturing Loan Program. This program is designed to provide low-interest loans for fuel-efficient vehicles and their components. Although recent loans have primarily targeted battery production, the program previously assisted in the initial manufacturing of now-iconic electric vehicles like the Tesla Model S and Nissan Leaf.
Established in 2007, this program stipulates that loan applications must demonstrate a “reasonable prospect of repayment.”
Democratic U.S. Senator Jon Ossoff, a staunch advocate for electric vehicle and solar manufacturing in Georgia, praised the loan announcement as “yet another historic federal investment in Georgia electric vehicle manufacturing.” His push for Energy Secretary Jennifer Granholm’s support for the loan began back in July.
Ossoff noted, “Our federal manufacturing incentives are driving economic development across the state of Georgia.” Similarly, Georgia Governor Brian Kemp aims to establish the state as a hub for electric vehicle production, despite a complicated relationship with the Biden administration regarding industrial policies. Studies have indicated that Georgia has attracted more electric vehicle investments than any other state.
While Kemp has asserted that manufacturers were choosing Georgia prior to the enactment of the Biden administration’s climate policy, the push to bring Rivian to the state actually started well before Biden took office. “Our shared vision to bring opportunity to Georgia will remain no matter who resides in the White House or what party controls Congress,” stated Kemp spokesperson Garrison Douglas on Tuesday.
Should the loan go through, it could rescue one of the hallmark economic development initiatives of the Kemp administration, even amid the possibility of a Biden departure from the presidency. This places both Rivian and Kemp in a position to defend the loan’s validity should Trump opt to challenge it.
The state’s incentive package for Rivian was estimated to be worth about $1.5 billion back in 2022. However, not everyone is on board; residents opposed to the project have mounted legal challenges against the development.
Notably, state and local governments have already invested around $125 million to acquire and prepare the nearly 2,000-acre (810-hectare) site for Rivian. Moreover, they have nearly completed the pledged $50 million in road construction work.
Rivian’s construction pause stands in stark contrast to the rapid development of Hyundai Motor Group’s $7.6 billion electric vehicle and battery facility located near Savannah. The Korean automaker announced in October that production has already begun in Ellabell, with plans to eventually employ around 8,500 workers at that site.
