Biden administration to lend $6.6 billion to electric car maker Rivian to build a Georgia plant that the automaker stalled

ATLANTA (AP) – President Joe Biden’s administration announced Tuesday that the U.S. Department of Energy will provide a $6.6 billion loan to Rivian Automotive to build a factory in Georgia that had come to a standstill as the startup maker of electric cars struggled to become profitable.

It is unclear 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 get the money back.

Trump has previously promised to end federal tax credits for electric vehicleswhich is worth up to $7,500 for new zero-emission vehicles and $4,000 for used. Trump later softened his stance when Tesla CEO Elon Musk became a supporter and adviser.

Rivian made a splash when it went public and began producing large electric R1 SUVs, pickup trucks and vans at a former Mitsubishi plant in Normal, Illinois, in 2021. Months later, the California company announced it would build another, larger, $5 billion facility about 40 miles (64 kilometers) east of Atlanta, near the town of Social Circle.

The R1 cars cost $70,000 or more. The original plan was to produce R2 vehicles, a smaller SUV, in Georgia with lower price tags aimed at a mass market. The first phase of Rivian’s Georgia plant was expected to produce 200,000 vehicles per year, with a second phase capable of another 200,000 per year. Eventually, the plant was expected to employ 7,500 workers.

But Rivian was unable to meet production and sales targets and quickly burned through cash. In March, the company said it would halt construction of the Georgia plant. The company said it would begin assembling its R2 SUV in Illinois instead.

CEO RJ Scaringe said the move would allow Rivian to bring the R2 to market sooner, sometime in 2026, and save $2.25 billion in capital expenditures. Since then, German automaker Volkswagen AG said in June it would invest $5 billion in Rivian in a joint venture in which Rivian would share software and electrical technology with Volkswagen. The money eased Rivian’s cash crunch.

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

The money would come from Manufacturing advanced technology Loan Program, which has $17.7 billion to provide low-cost loans for the manufacture of fuel-efficient vehicles and components. The program has focused mainly on loans to new electric vehicle battery factories in recent years, but has also helped finance the initial production of Tesla Model S and Nissan Leaf, two electric car pioneers in the US

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

Democratic US Senator Jon Ossoffwhich has been a vocal supporter of electric vehicle and solar production in Georgia, hailed Tuesday’s announcement as “another historic federal investment in electric vehicle production in Georgia.” Ossoff had asked Energy Minister Jennifer Granholm to support the loan in July.

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

Georgia Governor Brian Kemp says his target is to make Georgia a center for the electric car industry. But the Republican has had a strained relationship with the Biden administration over its industrial policy, even though some studies have found that Georgia has achieved more investment in electric vehicles than any other state.

Kemp has long argued that manufacturers chose Georgia before Biden’s signature climate bill, the Inflation Reduction Act, was passed. Garrison Douglas, a spokesman for Kemp, said earlier this month that the governor wants Trump to prioritize “a market-based approach to economic growth.”

“As the e-mobility space was already growing in Georgia prior to the federal government’s intervention, the governor remains vocally opposed to the Biden administration’s decision not only to pick winners and losers, but to impose counterproductive mandates that disadvantage Georgia-based automakers and deter green consumers. adoption of electric vehicles,” Douglas said.

The loan to Rivian could save one of the Kemp administration’s signature economic development projects, even if Biden leaves office. That could enable Rivian and Kemp to defend the loan if Trump tries to cancel it.

State and local governments offered Rivian an incentive package to a value of an estimated 1.5 billion in 2022. The deadline for the company to complete its investment and hiring under that agreement was extended to 2030. Neighbors against development of the Georgia site raised legal challenges.

State and local governments were expected to spend more than $125 million to buy the nearly 2,000-hectare (810-acre) site, clear trees and clear land. That work has been completed. The state has also completed most of the $50 million in road work it promised.

The pause at Rivian contrasts with rapid construction at Hyundai Motor Group $7.6 billion electric vehicle and battery complex near Savannah. The factory in Ellabell, which was announced in 2022, can grow to 8,500 employees. The Korean automaker said in October that it has started production there.