Atlanta (AP) The administration of President Joe Biden declared on Tuesday that the U.S. Department of Energy will lend Rivian Automotive $6.6 billion to construct a factory in Georgia that had hampered the fledgling automaker’s efforts to turn a profit.
It’s uncertain if the administration can finish the loan before Donald Trump takes office again in less than two months or if they will attempt to recoup the funds.
In the past, Trump has pledged to eliminate federal electric vehicle tax credits, which may total up to $4,000 for used cars and $7,500 for new zero-emission cars. Elon Musk, the CEO of Tesla, then became a supporter and advisor to Trump, softening his position.
In 2021, Rivian made a big impression when it went public and started building delivery vans, pickup trucks, and massive electric R1 SUVs at a former Mitsubishi factory in Normal, Illinois. A few months later, the California-based business declared that it would construct a second, bigger, $5 billion factory close to the town of Social Circle, some 40 miles (64 kilometers) east of Atlanta.
The R1 cars cost at least $70,000. The initial idea was to manufacture R2 cars, a more affordable SUV, for the mass market in Georgia. It was anticipated that the first phase of Rivian’s Georgia factory would produce 200,000 automobiles annually, with a second phase capable of producing an additional 200,000. It was anticipated that the plant will eventually employ 7,500 people.
FILE – A truck leaves the site of a planned Rivian electric truck plant March 7, 2024, in Rutledge, Ga. (AP Photo/John Bazemore, File)
Image: John Bazemore/Associated Press
However, Rivian quickly depleted its capital and failed to reach sales and manufacturing goals. The business said in March that it would put the Georgia plant’s construction on hold. Instead, the business announced that it would start building its R2 SUV in Illinois.
According to CEO RJ Scaringe, the decision would save $2.25 billion in capital expenditures and enable Rivian to bring the R2 to market sooner, possibly in 2026. In June, the German automaker Volkswagen AG announced that it will invest $5 billion in Rivian through a joint venture, whereby Rivian would share electrical and software expertise with Volkswagen. The funds alleviated Rivian’s financial hardship.
Rivian’s larger objectives are given a lifeline by Tuesday’s news. The business claims that it has resumed its preparations to manufacture the R2 and the smaller R3 in Georgia.
The funds would come from the $17.7 billion Advanced Technology Vehicles Manufacturing Loan Program, which offers affordable financing for the production of fuel-efficient automobiles and parts. In recent years, the program has primarily concentrated on loans to new electric vehicle battery facilities, although it also assisted in funding the beginning manufacturing of two U.S. electric vehicle pioneers, the Nissan Leaf and the Tesla Model S.
Established in 2007, the program demands a realistic expectation of loan repayment.
Sen. Jon Ossoff, a Democrat and ardent advocate for Georgia’s solar and electric car industries, praised Tuesday’s announcement as another significant federal investment in Georgia’s electric vehicle industry.In July, Ossoff had requested support for the loan from Energy Secretary Jennifer Granholm.
In a statement, Ossoff stated, “Our federal manufacturing incentives are driving economic development across the state of Georgia.”
According to Georgia Governor Brian Kempsay, his objective is to establish Georgia as a hub for the electric vehicle sector. Despite the fact that some surveys indicate Georgia has attracted more investment in electric vehicles than any other state, the Republican has had a tense relationship with the Biden administration due to its industrial strategy.
Prior to the passage of Biden’s centerpiece climate law, the Inflation Reduction Act, Kemp has long maintained that firms were choosing Georgia. Kemp’s spokesperson, Garrison Douglas, stated earlier this month that the governor wants Trump to give market-based economic growth top priority.
Since Georgia’s e-mobility market was already expanding prior to the federal government’s intervention, Douglas stated that the governor is still adamantly opposed to the Biden administration’s decision to not only choose winners and losers but also to impose unhelpful regulations that hurt Georgia-based automakers and discourage natural consumer adoption of EVs.
Even though Biden is leaving office, the financing to Rivian has the potential to save one of the Kemp administration’s most recognizable economic development initiatives. If Trump attempts to revoke the loan, Rivian and Kemp might then be forced to justify it.
In 2022, Rivian received an incentive package from state and local governments valued at an estimated $1.5 billion. Under that agreement, the corporation was given until 2030 to finish its recruiting and investment.Legal challenges were filed by neighbors who challenged the development of the Georgia site.
In order to purchase the almost 2,000-acre (810-hectare) site, clear trees, and grade land, state and municipal agencies were expected to invest over $125 million. That work is done. Additionally, the state has finished the majority of the $50 million in promised road improvements.
The Hyundai Motor Group’s $7.6 billion electric vehicle and battery complex in Savannah is being built at a quick pace, in contrast to Rivian’s stop. The Ellabell facility, which was announced in 2022, has the potential to employ 8,500 people. In October, the Korean manufacturer announced that it had started production there.
The Associated Press, 2024. All rights reserved. All rights reserved. It is prohibited to publish, broadcast, rewrite, or redistribute this content without authorization.
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