Biden Throws Struggling Rivian $6 Billion Lifeline For EV Factory
The Biden-Harris administration is rushing to spend taxpayer funds before President-elect Trump takes office. To start the week, the administration directed nearly $8 billion to Intel and now billions more to save struggling electric vehicle manufacturer Rivian Automotive.
On Tuesday, the US Department of Energy announced it would offer a direct loan of up to $6.57 billion (including $5.975 billion of principal and $592 million of capitalized interest) to finance Rivian's EV factory in Stanton Springs North, near the City of Social Circle, Georgia. The project was shelved in early March over the urgent need to reduce costs.
"Today's announcement reinforces the Biden-Harris Administration's commitment to strengthen the nation's manufacturing competitiveness, helping ensure American businesses remain global leaders in the rapidly expanding EV industry," the DoE wrote in a statement.
Democrats in the White House are spending taxpayer funds like a drunken sailor ahead of Trump entering the White House in less than two months. The Trump administration may claw back the money the Biden team is dishing out as lifelines to struggling companies.
We view the DoE loan as a lifeline for Rivian, considering it has been unable to meet production and sales targets and has burned through $19 billion since going public in 2021. The cash crunch forced the startup to pause construction of the Georgia plant in March.
The new Georgia plant could help Rivian boost the production capacity of more affordable models. The R1 vehicle costs $70,000 or more, which is unaffordable for the typical consumer because of high interest rates and elevated inflation.
"This loan would enable Rivian to more aggressively scale our US manufacturing footprint for our competitively priced R2 and R3 vehicles that emphasize both capability and affordability. A robust ecosystem of US companies developing and manufacturing EVs is critical for the US to maintain its long-term leadership in transportation," Rivian CEO RJ Scaringe wrote in a statement.
Rivian noted:
Rivian intends to build the facility in two phases, each resulting in 200,000 units of annual production capacity, for a total of 400,000 units of annual capacity–supporting the sale of American EVs in international markets. Phase 1 of the project is expected to start production in 2028. Rivian is expected to create approximately 7,500 operations jobs through 2030 at the company's future manufacturing facility in Georgia. This is in addition to 2,000 expected full-time construction jobs that will utilize the region's significant talent and workforce to further strengthen the domestic EV ecosystem. These jobs complement the thousands Rivian has already created and plans to maintain at its current plant in Normal, Illinois, which have bolstered the local and regional economy.
In June, German automaker Volkswagen provided Rivian with a $5 billion investment lifeline in the form of a joint venture, which helped to stem its cash hemorrhaging.
Multiple lifelines have been thrown at Rivian ahead of Trump's expected elimination of the EV tax credit, worth up to $7,500 for new EVs and $4,000 for used ones. Tesla CEO Elon Musk has applauded Trump's move to roll back EV tax credits because it will bankrupt his competitors.
In markets, Rivian shares are up 8% in premarket trading at around $12.56. As of Monday's close, shares were down 50% year-to-date, with about 18% of the float short, equal to about 135 million shares.
The Biden-Harris team continues to spend taxpayer funds like drunken sailors. This creates terrible optics, as voters have made it very clear that the era of reckless spending should be over.