By Abhirup Roy
SAN FRANCISCO (Reuters) – Rivian said on Monday it has received conditional approval for a loan of up to $6.6 billion from the U.S. Department of Energy to build the electric vehicle maker’s production facility in Georgia.
Operation of the Georgia plant, where Rivian plans to build future vehicles such as its smaller, less expensive R2 SUVs and R3 crossovers, will begin in 2028, the California-based startup said in a statement. Rivian shares are down about 50% this year as the young company has struggled to produce its roomy electric SUVs and pickup trucks while grappling with a part shortage, and has pushed to slash costs.
To conserve cash and hasten the production of R2 – seen critical to Rivian’s success amid a slowdown in EV growth – Rivian paused construction of the Georgia plant earlier this year.
It instead decided to start building R2 in 2026 at its Normal, Illinois plant where it makes its flagship R1S SUVs and R1T pickup trucks.
“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,” Rivian CEO RJ Scaringe said in the statement.
The loan comes from the government’s Advanced Technology Vehicles Manufacturing loan program that has previously provided low-cost loans to other automakers, including Tesla, Ford and General Motors.
The company had earlier forecast the cost of the Georgia plant at $5 billion.
Rivian said it expects the Georgia plant to employ about 7,500 operations staff through 2030.
Rivian must satisfy certain technical, legal, environmental, and financial conditions before the energy department grants the loan, said the company.
“Financially supporting the Project will help Rivian bring 400,000 electric vehicles (EVs) to market and into greater use,” the Department of Energy said in an October assessment as it considered the loan.
The loan includes $6 billion of principal and $600 million of capitalized interest.
The announcement of the loan comes less than two weeks after Rivian closed its $5.8 billion investment from German automaker Volkswagen as part of their technology joint venture.
The joint venture helps alleviate “a significant chunk of the capital concern” and likely establish the Rivian and Volkswagen venture as the platform of choice in the Western world apart from Tesla, said Canaccord Genuity analysts in a note at the time.
Rivian still faces daunting challenges including a lack of scale, increasing competition, high capital costs and President-elect Donald Trump’s plans to end tax credits to buyers of electric vehicles.
In 2022, the EV maker had secured a $1.5 billion in state and local incentives for the Georgia facility. In May, it said it had received $827 million in an incentive package from the State of Illinois to expand operations at its Normal facility, where it also makes electric delivery vans for Amazon.com.
Rivian earlier this month posted its first drop in quarterly revenue since going public three years ago, citing the significant shortage of a metal part used in the drive unit of its vehicles.
Still, the company stuck to its forecast of turning its first gross profit in the current quarter, reflecting cost cuts as Rivian renegotiated supplier contracts and revamped its manufacturing processes, and a sharp increase in green car credits.
(Reporting by Abhirup Roy in San Francisco; Editing by Lincoln Feast and Peter Henderson)
Source: finance.yahoo.com