ATLANTA (AP) — President Joe Biden’s administration announced Tuesday that the U.S. Department of Energy will provide a $6.6 billion loan to Rivian Automotive to build a factory in Georgia that has been stalled because the startup car manufacturer struggled to become profitable.
It is unclear whether the government can pay off the loan before Donald Trump becomes president again in less than two months, or whether the Trump administration could try to recover the money.
Trump previously promised to end federal tax credits for electric vehicles, which are worth up to $7,500 for new zero-emission vehicles and $4,000 for used vehicles. Trump later softened his stance when Tesla CEO Elon Musk became a supporter and advisor.
Rivian made waves when it went public and began producing large electric R1 SUVs, pickup trucks and vans in 2021 at a former Mitsubishi factory in Normal, Illinois. Months later, the California-based company announced it would build a second, larger one. , a $5 billion factory about 40 miles east of Atlanta, near the town of Social Circle.
The R1 vehicles cost $70,000 or more. The original plan was to produce R2 vehicles, a smaller SUV, in Georgia with lower price tags, targeting a mass market. The first phase of Rivian’s Georgia plant is expected to produce 200,000 vehicles per year, while a second phase could produce another 200,000 per year. Ultimately, the factory is expected to employ 7,500 workers.
But Rivian was unable to meet production and sales targets and quickly burned through its cash. In March, the company said it would halt construction of the Georgia plant. The company said it would instead begin assembly of its R2 SUV in Illinois.
CEO RJ Scaringe said the move would allow Rivian to bring the R2 to market faster, sometime in 2026, and save $2.25 billion in capital expenditures. Since then, German automaker Volkswagen AG said in June it would invest $5 billion in Rivian in a joint venture in which Rivian would share software and electric technology with Volkswagen. The money eased Rivian’s cash crisis.
Tuesday’s announcement throws a lifeline to Rivian’s grand plans. The company says its plans to make the R2 and the smaller R3 in Georgia have restarted.
The money would come from the Advanced Technology Vehicles Manufacturing Loan Program, which has $17.7 billion to provide low-cost loans to make fuel-efficient vehicles and parts. The program has focused in recent years on lending to new battery factories for electric vehicles, but has also helped finance the initial production of the Tesla Model S and Nissan Leaf, two electric vehicle pioneers in the US.
The program, which was established in 2007, requires a “reasonable prospect of repayment” of the loan.
Democratic U.S. Senator Jon Ossoff, an outspoken supporter of electric vehicle and solar energy manufacturing in Georgia, praised Tuesday’s announcement as “another historic federal investment in electric vehicle manufacturing in Georgia.” Ossoff had asked Energy Secretary Jennifer Granholm in July to support the loan.
“Our federal manufacturing incentives are fueling economic development across the state of Georgia,” Ossoff said in a statement.
Georgia Governor Brian Kemp says his goal is to make Georgia a center of the electric car industry. But the Republican has had a tense relationship with the Biden administration over its industrial policies, even as some studies have shown that Georgia has generated more investment in electric vehicles than any other state.
Kemp has long argued that manufacturers chose Georgia before Biden’s signature climate law, the Inflation Reduction Act, was passed. Garrison Douglas, a spokesman for Kemp, said earlier this month that the governor wants Trump to prioritize “a market-based approach to economic growth.”
“As the e-mobility space in Georgia was already growing before the federal government’s intervention, the Governor remains outspoken against the Biden Administration’s decision to not only pick winners and losers, but also impose counterproductive mandates that penalizing Georgia-based automakers and discouraging organic consumers. adoption of electric vehicles,” said Douglas.
The loan to Rivian could save one of the Kemp administration’s signature economic development projects, even as Biden leaves office. That could put Rivian and Kemp in a position to defend the loan if Trump tries to destroy it.
State and local governments offered Rivian a stimulus package worth an estimated $1.5 billion in 2022. The deadline for the company to complete its investments and hiring under that deal was extended to 2030. Neighbors who feel opposing development of the Georgia site ran into legal trouble.
State and local governments are expected to spend more than $125 million on purchasing the nearly 810-acre site, clearing trees and suitable land. That work is done. The state has also completed most of the $50 million in roadwork it committed to.
The pause at Rivian contrasts with the rapid construction of Hyundai Motor Group’s $7.6 billion electric car and battery complex near Savannah. The Ellabell factory, announced in 2022, could grow to 8,500 employees. The Korean automaker said in October it had started production there.
