Rivian announced on Monday that it has secured conditional authorization for a loan of up to $6.6 billion from the U.S. Department of Energy to establish the electric vehicle manufacturer’s production facility in Georgia.
This news arrives just before the inauguration of President-elect Donald Trump, who is anticipated to reverse many of the Biden administration’s policies and incentives that favor electric vehicles. The California-based startup stated that operations at the Georgia plant, where it intends to manufacture future vehicles like its smaller, more affordable R2 SUVs and R3 crossovers, are set to commence in 2028.
Rivian’s shares have dropped nearly 50% this year as the fledgling company has faced challenges in producing its spacious electric SUVs and pickup trucks while dealing with a parts shortage and has been working to reduce costs. To save cash and accelerate the production of the R2—considered crucial for Rivian’s success amidst a slowdown in EV adoption—the company paused construction on the Georgia plant earlier this year, opting instead to begin R2 production in 2026 at its Normal, Illinois facility that currently produces its flagship R1S SUVs and R1T pickup trucks.
“This loan would allow Rivian to expand our U.S. manufacturing capabilities for our competitively priced R2 and R3 vehicles, which focus on both performance and affordability,” said Rivian CEO RJ Scaringe in the statement. The company mentioned that Rivian must meet certain technical, legal, environmental, and financial requirements before the Energy Department finalizes the loan. As part of the loan conditions, Rivian is expected not to resist union organizing activities at the Georgia plant, according to a source familiar with the issue, noting that loan approval does not guarantee unionization at the site.
Rivian will collaborate with the Energy Department to finalize the loan prior to the Trump administration taking office, the source added. Rivian has not yet provided a comment. The loan is drawn from the government’s Advanced Technology Vehicles Manufacturing loan program, which has previously granted low-interest loans to other automakers such as Tesla, Ford, and General Motors.
Initially, the company had estimated the cost of the Georgia facility to be $5 billion. Rivian anticipates that the Georgia plant will create approximately 7,500 operational positions by 2030.
“Providing financial support for this project will assist Rivian in bringing 400,000 electric vehicles (EVs) to market and increasing their utilization,” stated the Department of Energy in an October evaluation as it assessed the loan. According to Rivian, the loan comprises $6 billion in principal and $600 million in capitalized interest.
The announcement regarding the loan follows closely on the heels of Rivian’s completion of a $5.8 billion investment from German automaker Volkswagen as part of their technology joint venture.
This partnership helps to resolve “a significant portion of the capital issue” and is likely to position the Rivian and Volkswagen collaboration as the leading platform in the Western market, aside from Tesla, as noted by analysts from Canaccord Genuity at that time.
Rivian continues to encounter formidable challenges, including limited scale, rising competition, high capital expenses, and Trump’s intentions to eliminate tax credits for electric vehicle buyers.
In 2022, the EV manufacturer obtained $1.5 billion in state and local incentives to support the Georgia facility. In May, it announced that it had received an $827 million incentive package from the State of Illinois to enhance operations at its Normal facility.
Earlier this month, Rivian reported its first decline in quarterly revenue since going public three years ago, attributing it to a significant shortage of a component used in the drive units of its vehicles.
Nonetheless, the company maintained its projection to achieve its first gross profit in the current quarter, demonstrating cost-cutting measures as Rivian renegotiated supplier agreements and improved its manufacturing practices, along with a notable increase in green car credits.
About Rivian
Rivian (NASDAQ: RIVN) is a U.S.-based automotive maker that develops and produces pioneering electric vehicles and accessories. The company engineers innovative, technologically advanced offerings that are crafted to perform exceptionally in both work and recreational scenarios, aiming to facilitate the global shift toward zero-emission transportation and energy. Rivian vehicles are manufactured in the United States and sold directly to both individual consumers and commercial clients. The company offers a comprehensive range of services that encompass the complete lifecycle of the vehicle, staying aligned with its mission to ensure ongoing adventures in the world. Whether it’s taking families on exciting journeys or electrifying fleets at scale, every Rivian vehicle aims to safeguard the natural environment for future generations.
The American all-electric car manufacturer Rivian Automotive (NASDAQ: RIVN) recently announced that it has secured a conditional commitment from the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing (ATVM) Loan Program for a loan up to $6.6 billion (which includes $6 billion in principal and roughly $600 million in capitalized interest) to boost its growth and lead in electric vehicle design, development, and production in the United States.
If the loan is finalized, it will aid in the establishment of Rivian’s upcoming facility in Stanton Springs North, close to Social Circle, Georgia, greatly increasing the company’s domestic production capacity to meet demand from both the U.S. and global markets. This Department of Energy loan would significantly fund the manufacturing of the company’s midsize platform, which serves as the foundation for the R2, a midsize SUV, and the R3/R3X, a midsize crossover. Designed, engineered, and produced in the U.S. to offer an outstanding mix of capability, function, performance, and pricing, Rivian believes that its R2 and R3 vehicle lines will be vital in driving the company’s long-term growth and profitability.
The DOE loan would provide a crucial boost to the U.S. automotive industrial sector, resulting in substantial job creation and investment needed for the United States to retain its leadership in the increasingly important electric vehicle market.
Rivian plans to carry out the construction of the facility in two stages, each leading to an annual production capacity of 200,000 units, totaling 400,000 units of capacity per year—facilitating the sales of American EVs in global markets. Production for Phase 1 of the project is anticipated to commence in 2028. Rivian is projected to generate around 7,500 operational jobs by 2030 at its future manufacturing facility in Georgia. This is in addition to the 2,000 full-time construction jobs expected, which will leverage the region’s abundant talent and workforce to further enhance the domestic EV ecosystem. These jobs will complement the thousands already created by Rivian and the positions planned at its existing plant in Normal, Illinois, which have supported the local and regional economies.
“This loan will facilitate the creation of thousands of new jobs in America and further bolster U.S. leadership in EV manufacturing and technology,” stated Rivian Founder and CEO RJ Scaringe. “This funding would enable Rivian to expand our U.S. manufacturing presence more aggressively for our competitively priced R2 and R3 vehicle lines, which prioritize both capability and affordability. A strong ecosystem of American companies engaged in EV development and manufacturing is essential for the U.S. to preserve its long-term leadership in transportation.”
Rivian intends to construct a fully modern manufacturing facility at the Stanton Springs Site, located less than an hour’s drive from downtown Atlanta, utilizing contemporary construction methods and advanced environmental management practices while conserving natural areas and actively investing in the surrounding communities.
Throughout the history of this loan program, the DOE has revitalized American EV manufacturing through billions in financing for this strategically critical industry, including loans to General Motors and Tesla.
While this conditional commitment demonstrates the DOE’s intention to back the project, both the DOE and the company must meet specific technical, legal, environmental, and financial conditions before the Department of Energy formalizes financing documents and disburses the loan. If it goes ahead, the loan will be secured by all project assets and the fixed assets and guarantees of the parent entity, Rivian Automotive, Inc. and some of its subsidiaries.
The stock of Rivian Automotive Inc. rose approximately 13 percent during Monday’s regular trading session following news that the all-electric vehicle manufacturer has come to a conditional agreement with Tesla Inc., a major player in the EV sector, concerning a lawsuit that has been ongoing for four years.
In pre-market trading on the Nasdaq, the shares increased an additional 7%, despite experiencing a minor decline in the after-hours trading of the previous day, after Rivian disclosed a conditional commitment for a loan of up to $6.6 billion from the U.S. Department of Energy to aid in building its upcoming electric vehicle facility in Georgia.
Tesla initiated the lawsuit in 2020, claiming that Rivian had stolen trade secrets related to electric vehicles, particularly concerning battery technology, by hiring former Tesla staff members.
According to recent reports, Tesla has notified a judge in California that it intends to dismiss the lawsuit by December 24, provided the terms of the settlement are met. Meanwhile, the specifics of the agreement have not yet been disclosed.
Tesla, which was established by billionaire Elon Musk, accused Rivian of actively recruiting former Tesla workers while asking them to bring proprietary technological documents with them.
In the lawsuit, Tesla cited two former recruiters, one managing Environmental Health and Safety and the other overseeing charging networks. At that time, Tesla alleged that these employees took crucial sensitive information and proprietary materials when they transitioned to Rivian.
In 2021, the lawsuit was broadened to include accusations that Rivian had targeted essential technology related to its forthcoming next-generation batteries.
Rivian, however, has refuted these allegations.
Concerning its pledged loan, Rivian announced that the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing or ATVM Loan Program is offering a loan up to $6.6 billion.
This loan is intended to facilitate the establishment of Rivian’s next manufacturing facility in Stanton Springs North, located near Social Circle, Georgia.
The committed loan, which comprises $6 billion in principal and about $600 million in capitalized interest, is designed to accelerate the company’s growth and its leadership in the design, development, and manufacturing of electric vehicles in the United States.
If completed, this loan would significantly enhance the company’s domestic production capabilities to meet demand from both U.S. and international markets.
The funding from the DOE would provide essential financial resources for producing the company’s midsize platform, which serves as the foundation for the R2, a midsize SUV, and the R3/R3X, a midsize crossover.
Rivian plans to construct the facility in two phases, each resulting in an annual production capacity of 200,000 units, summing up to a total annual capacity of 400,000 units to support the sale of American-made EVs in global markets.
Production for Phase 1 of the project is anticipated to commence in 2028. Rivian is also expected to generate approximately 7,500 operations jobs by 2030 at the new manufacturing site in Georgia.
RJ Scaringe, Founder and CEO of Rivian, stated, “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. A robust ecosystem of U.S. companies developing and manufacturing EVs is critical for the U.S. to maintain its long-term leadership in transportation.”
On the Nasdaq, Rivian’s shares concluded Monday’s regular trading session at $11.60, reflecting a 13.28 percent increase. In pre-market trading, the shares further rose by 6.6 percent to reach $12.36.
Rivian and Volkswagen Group Announce Plans for Joint Venture
Rivian Automotive (NASDAQ: RIVN) and Volkswagen Group (XETRA: VOW / VWO3) have announced today their plan to establish a joint venture (JV) that will be equally controlled and owned by both parties to develop advanced electrical architecture and top-tier software technology.
This collaboration is expected to expedite software development for both Rivian and Volkswagen Group. Moreover, it should facilitate the merging of their complementary strengths, lowering the cost per vehicle by enhancing scale and accelerating innovation on a global level. Rivian’s established zonal hardware design and integrated technology platform are anticipated to form the basis for future Software-Defined Vehicle (SDV) development within the JV, which will be utilized in the vehicles of both companies. Rivian intends to bring its expertise in electrical architecture and is anticipated to license its existing intellectual property rights to the joint venture.
Both companies plan to introduce vehicles benefiting from the technology developed within the joint venture during the latter part of the decade. In the interim, the joint venture is expected to allow Volkswagen Group to leverage Rivian’s existing electrical architecture and software platform. The vision of the partnership is to facilitate Volkswagen Group’s SDV objectives and transition to a completely zonal architecture. Each company will maintain independent operations for their respective vehicle divisions.
Oliver Blume, CEO of Volkswagen Group remarked: “Our customers will gain from this focused partnership with Rivian to develop a leading technology architecture. Through our collaboration, we will deliver superior solutions to our vehicles more quickly and cost-effectively. We are also acting in the best interest of our esteemed brands, which are known for their iconic products. This partnership aligns seamlessly with our current software strategy, offerings, and collaborations. We are enhancing our technological profile and competitiveness.”
RJ Scaringe, Founder and CEO of Rivian expressed: “We’re thrilled to team up with Volkswagen Group. Since Rivian’s inception, our focus has been on creating highly unique technology, and it’s exciting to see that one of the largest and most respected automotive firms recognizes this. Not only is this collaboration expected to extend the reach of our software and zonal architecture to a broader market through Volkswagen Group’s global presence, but it is also likely to aid in addressing our capital requirements for substantial expansion. Rivian was founded to facilitate the global transition away from fossil fuels through innovative products and services, and this partnership is perfectly aligned with that mission.”
With the strategic partnership vision in mind, Volkswagen Group intends to invest $5 billion in Rivian. Initially, Volkswagen Group will contribute $1 billion via an unsecured convertible note that will convert into Rivian’s common stock, contingent upon certain conditions and following the receipt of regulatory approvals by December 1, 20241. Volkswagen Group is also projected to invest an additional $4 billion as part of this transaction.
In recent months, substantial work has been conducted to confirm the compatibility of Rivian’s electrical architecture and software with Volkswagen Group’s vehicles. The parties currently anticipate finalizing the JV formation by the fourth quarter of 2024. All transactions mentioned in this announcement are contingent upon the finalization of definitive agreements, the conditions encompassed within those agreements, and the acquisition of necessary regulatory approvals. Lazard is acting as the lead financial advisor, while BDT & MSD Partners serves as a financial advisor to Rivian.
Notes to editors:
1 The conversion price for half of the outstanding amount under the note will be determined based on a specific daily volume-weighted average price (VWAP) prior to this announcement, while the conversion price for the other half will be based on a specific daily VWAP before the conversion date.
2 The additional investment of up to $2 billion in Rivian’s common stock is expected to occur in two tranches of $1 billion each in 2025 and 2026, with pricing based on a particular daily VWAP of Rivian’s common shares before each respective purchase. The $2 billion investment related to the JV is anticipated to be divided between an upfront payment at the JV’s inception and a loan available in 2026.
