Rivian, the electric vehicle upstart that announced more than two years ago plans to build a $5 billion vehicle and battery plant with 7,500 promised jobs east of Atlanta, is halting the mammoth project.
The California company, which promised in late 2021 to build what was then considered Georgia’s largest-ever economic development project, said Thursday at an event introducing new models that it will now start production of its anticipated R2 crossover at its sole factory in Illinois instead of in the Peach State.
Rivian’s factory was announced by Gov. Brian Kemp with huge fanfare in December 2021, in what would have been Georgia’s first pure EV factory with a start-up that quickly became a Wall Street darling and a company that could rival Tesla. But the Georgia project has faced delays as incentives for the project encountered legal challenges and the company posted losses as it battled supply chain issues and manufacturing challenges in Illinois.
On Thursday, as Rivian announced its plans to press pause on the Georgia plant, Kemp declined comment, referring a reporter to the state’s Department of Economic Development.
The company once said it would open its factory in southern Morgan and Walton counties this year, but the timeline continued to slip. As recently as February 21, in its fourth-quarter earnings call, Rivian said it would start vertical construction early this year with production beginning with the R2 model in 2026.
Rivian’s stock price surged 13% Thursday, closing at $12.51.
Grading of the 2,000-acre property has been underway for months and a formal start to vertical construction was expected to start early this year. In his comments introducing the R2 and its sister vehicle called the R3, Rivian CEO RJ Scaringe said Georgia remained important to the company’s future and did not say the project is fully dead, but he said the company would concentrate production in Illinois to get the R2 ready to launch in 2026.
Credit: TNS
Credit: TNS
“Rivian’s Georgia plant remains an extremely important part of its strategy to scale production of R2 and R3,” the company said in a statement. “The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois.”
A year ago when Scaringe visited the Georgia Capitol to meet with Kemp and other state leaders, he told The Atlanta Journal-Constitution that Rivian’s future profitability was staked in the Peach State.
“We’re committed to this state and this project,” he said in March 2023. “The future of our company in terms of scaling and growing really relies on the future of this project. There’s not another option. We’re not planning an alternative. This must work.”
Credit: TNS
Credit: TNS
But Rivian’s need to stop burning cash and try to turn a profit has prompted multiple layoffs and cost-cutting measures, with the Georgia factory listed as a big capital commitment.
The decision to pause the factory will save Rivian more than $2.2 billion in comparison to waiting to launch R2 production in Georgia, the company said in a news release. Rivian officials have said they will again lose money in 2024, but they aim to turn a profit in the fourth quarter of the year.
Lt. Gov. Burt Jones was quick to criticize Rivian’s decision.
“It is disappointing news to hear Rivian is wavering on its commitments to the local community and the entire state of Georgia,” he told the AJC. “Nonetheless, we now have a great mega site available to offer a willing, interested, and trusted future partner.”
Jolting Georgia’s auto industry
State leaders have tried to recruit automakers for decades, with little to show for that effort until recently.
Ford and General Motors both shuttered long-existing plants in the 2000s amid corporate restructurings, leaving the state briefly without a single car manufacturing factory. Kia opened its West Point plant in 2009 and has been the state’s sole automaker since. Georgia’s top economic brass has tried to woo several other car makers, including Daimler AG and Volvo in the mid-2010s, but those efforts all ended in stinging defeats to other Southeastern states.
Landing the Rivian project served as Georgia’s first major win since Kia and a statement that the Peach State wanted to be a leader in the expected electrification of auto travel.
Credit: Courtesy of Clayco
Credit: Courtesy of Clayco
Rivian, while a startup, was quickly establishing itself as a potential disrupter in the same vein as electric vehicle pioneer Tesla. Rivian debuted as a public company in 2021 with one of the biggest American initial public offerings ever, peaking at an evaluation of more than $100 billion.
However, the company’s stock later plummeted as it grappled with mastering mass manufacturing in addition to semiconductor shortages during the COVID-19 pandemic. It’s burned through billions of dollars in cash while it ramped up production. Rivian also faced recalls and cut corporate jobs to help curtail spending.
Rivian has deep-pocketed investors including Amazon, which agreed to buy 100,000 of the company’s electric vans. Cox Enterprises, owner of The Atlanta Journal-Constitution, owns about a 4% stake in Rivian.
Though Rivian was first in announcing a Georgia EV plant, it was joined six months later when Hyundai announced its own massive EV factory near Savannah. That project, well underway and set to open late this year or early next year, has become the state’s largest economic development project at $7.6 billion. Kia, which falls under Hyundai’s corporate umbrella, also announced a $200 million expansion to its West Point plant to incorporate EV production.
$1.5B in incentives
Auto plants are coveted for the jobs they create and the potential for thousands more at suppliers. And automakers often pit states against one another with incentive bidding wars including breaks, grants and other incentives.
Rivian was no exception, with state and local leaders offering $1.5 billion in tax breaks and other incentives to come to Georgia. In exchange, Rivian promised to invest $5 billion in its state operations and employ 7,500 workers at an average annual salary of $56,000.
The Georgia Department of Economic Development and Joint Development Authority of Jasper, Morgan, Newton, and Walton Counties (JDA) have helmed the Rivian project since its recruitment to Georgia, negotiating incentives and amassing the project site within the Stanton Springs industrial park.
They told the AJC in a joint statement that Rivian is keeping the state updated on its plans.
“Rivian has restated its commitment to Georgia, and the State and JDA are in steady communication with Rivian regarding its manufacturing plans at Stanton Springs North,” the statement said.
Last fall, Rivian took control of the project site and has to meet multiple criteria to receive its state and local incentives. Rivian’s economic development agreement requires the company to collectively meet 80% of its promised $5 billion investment and 7,500 jobs by the end of 2030 and maintain those metrics through 2049. Otherwise, they’d be subject to clawback measures.
— James Salzer contributed to this article.
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