Biden administration to loan Rivian $6.6B to construct US factory that automaker paused

ATLANTA — President Joe Biden’s administration announced Tuesday that the U.S. Department of vigor will make a $6.6 billion loan to Rivian Automotive to construct a factory in Georgia that had stalled as the enterprise automaker struggled to become profitable.

It’s ambiguous whether the administration can complete the loan before Donald Trump becomes president again in less than two months, or whether the Trump administration might try to claw the money back.

Trump previously vowed to complete federal electric vehicle responsibility credits, which are worth up to $7,500 for recent zero-emission vehicles and $4,000 for used ones. Trump later softened his stance as Tesla CEO Elon Musk became a supporter and adviser.

Rivian made a splash when it went community and began producing large electric R1 SUVs, pickup trucks and delivery vans at a former Mitsubishi factory in Normal, Illinois, in 2021. Months later, the California-based business announced it would construct a second, larger, $5 billion plant about 40 miles (64 kilometers) east of Atlanta, near the town of Social Circle.

The R1 vehicles expense $70,000 or more. The original schedule was to produce R2 vehicles, a smaller SUV, in Georgia with lower worth tags aimed at a mass trade. The first phase of Rivian’s Georgia factory was projected to make 200,000 vehicles a year, with a second phase capable of another 200,000 a year. Eventually, the plant was projected to employ 7,500 workers.

But Rivian was unable to meet production and sales targets and rapidly burned through liquid assets. In March, the business said it would pause construction of the Georgia plant. The business said it would commence assembling its R2 SUV in Illinois instead.

CEO RJ Scaringe said the shift would allow Rivian to get the R2 to trade more quickly, sometime in 2026, and save $2.25 billion in capital distribution spending. Since then, German automaker Volkswagen AG said in June it would invest $5 billion in Rivian in a joint enterprise in which Rivian would distribute software and electrical technology with Volkswagen. The money eased Rivian’s liquid assets crunch.

Tuesday’s announcement throws a lifeline to Rivian’s grander plans. The business says its plans to make the R2 and the smaller R3 in Georgia are back on.

The money would arrive from the Advanced Technology Vehicles Manufacturing loan Program, which has $17.7 billion to provide low-expense loans to make fuel-efficient vehicles and components. The program has concentrated mostly on loans to recent battery factories for electric vehicles in recent years but also helped finance the initial production of the Tesla Model S and Nissan Leaf, two electric vehicle pioneers in the U.S.

The program, created in 2007, requires a “reasonable prospect of payback” of the loan.

Democratic U.S. Sen. Jon Ossoff, who has been a vocal supporter of electric vehicle and solar manufacturing in Georgia, hailed Tuesday’s announcement as “yet another historic federal capital distribution in Georgia electric vehicle manufacturing.” Ossoff had asked vigor Secretary Jennifer Granholm to back the loan in July.

“Our federal manufacturing incentives are driving economic advancement across the state of Georgia,” Ossoff said in a statement.

Georgia Gov. Brian Kemp says his objective is to make Georgia a center of the electric vehicle industry. But the Republican has had a strained connection with the Biden administration over its industrial policy, even as some studies have found Georgia has netted more electric vehicle capital distribution than any other state.

Kemp has long claimed that manufacturers were picking Georgia before Biden’s signature climate law, the expense boost Reduction Act, was passed. Garrison Douglas, a spokesperson for Kemp, said earlier this month that the governor wants Trump to prioritize “a trade-based way to financial expansion.”

“As the e-mobility space was already growing in Georgia before the federal government’s intervention, the governor remains vocally opposed to the Biden administration’s selection to not only pick winners and losers but impose counterproductive mandates that drawback Georgia-based auto manufacturers and disincentivizes organic customer adoption of electric vehicles,” Douglas said.

The loan to Rivian could rescue one of the Kemp administration’s signature economic advancement projects even as Biden leaves office. That could put Rivian and Kemp in the position of defending the loan if Trump tries to quash it.

State and local governments offered Rivian an incentive package worth an estimated $1.5 billion in 2022. The deadline for the business to complete its capital distribution and hiring under that deal was extended to 2030. Neighbors opposed to advancement of the Georgia site mounted legal challenges.

State and local governments were projected to spend more than $125 million to buy the nearly 2,000-acre (810-hectare) site, obvious trees and grade land. That work has been finished. The state also has completed most of $50 million in roadwork that it pledged.

The pause at Rivian contrasts with rapid construction at Hyundai Motor throng’s $7.6 billion electric vehicle and battery complicated near Savannah. The plant in Ellabell, announced in 2022, could develop to 8,500 employees. The Korean automaker said in October that it has begun production there.