The state of Illinois is negotiating an incentive deal with Rivian Automotive Inc. in connection with the electric vehicle maker’s decision to launch production of a new model in Illinois.
Rivian made a surprise announcement Thursday that its new SUV, the R2, would be manufactured at its Normal, Ill., plant and it was pausing construction of a new factory near Atlanta.
“The elements of an economic development package are still being finalized,” the Illinois Department of Commerce & Economic Opportunity said. “Once they are finalized, we will update the public on the details of the incentive package.”
Rivian’s decision to build the new vehicle in Illinois reflects both the reality that the Georgia plant is far behind the original schedule as well as the company’s need to get a lower-priced product to market quickly while conserving as much cash as possible.
Illinois has the chance to double down on Rivian, which already has created more than 8,000 jobs at a former Mitsubishi plant about 125 miles south of Chicago. The state is competing with others like Georgia to grab as many jobs and investments as possible as the auto industry transitions to electric power.
“Once again, Rivian has reaffirmed the message that Illinois is one of the best places to do business in the country,” DCEO said in a statement. “We stand by Rivian and stand ready to support them as they increase capacity at their Bloomington-Normal facility to rollout the R2.”
It’s not clear whether Rivian will further expand the Normal plant or reconfigure it to produce more vehicles and whether it will add more jobs at the factory. The company declined to comment.
An expansion also could allow the company to grab incentives that weren’t available when it bought the empty plant in Normal in 2017. Since then, the state has created incentives directly aimed at the electric-vehicle industry that could help Rivian, which needs to conserve cash as it races to get to break-even.
Rivian CEO R.J. Scaringe said the Georgia plant remains part of Rivian’s plans, but it’s unclear when the company will resume construction on a $5 billion plant that’s being built by Chicago-based Clayco.
Georgia offered $1.5 billion in incentives for the plant, which has been delayed by litigation.
“We will care for the site in the run-up to construction with the goal of minimizing inconveniences this delay may cause,” Scaringe wrote in a March 8 opinion piece in the Atlanta Journal-Constitution. “To be clear, we are absolutely dedicated to bringing our Georgia plant to life with good jobs, economic development and a product to be proud of. Georgia will be critical to taking R2 and R3 international, and it will be incredibly satisfying to see ‘assembled in Georgia’ on our future vehicles.”
Rivian posted an operating loss of $5.7 billion last year and had $9.4 billion in cash on hand at year-end. Scaringe said that launching production of the R2 in Normal could save the company nearly $2.3 billion.
“Just as we were faced with incredibly daunting challenges during the launch of our flagship R1 product line — ramping production in the throes of a global pandemic amid an unprecedented supply chain crisis — we are applying those same lessons today,” Scaringe wrote. “Historically high interest rates and geopolitical uncertainty are affecting everyone, and we must adjust and stay ahead of those situations.”