Rivian to build new $7.4b electric truck plant

Thursday, 16 December 2021

United States electric vehicle maker Rivian Automotive will announce this week that it's building a US$5 billion (NZ$7.4 billion) battery and assembly plant east of Atlanta, Georgia, that is projected to employ 7500 workers, sources briefed on the decision told The Associated Press.

Rivian, based in Irvine, California, is a startup manufacturer of electric trucks and commercial delivery vans, challenging established car makers such as Ford and General Motors as well as electric vehicle leader Tesla.

The plant could grow to as many as 10,000 workers, sources said, which would make it among the largest vehicle assembly complexes in the United States, rivalled by behemoths such as the 11,000-worker BMW complex in Spartanburg, South Carolina, and Ford Motor Company's 8600-worker plant in Louisville, Kentucky.

The city of Fort Worth, Texas, offered Rivian a US$440 million incentive package to lure the plant during the summer, while published reports indicate Rivian also considered sites in Arizona and Michigan.

Founder and chief executive Robert Scaringe told Bloomberg Television in November that the ability to recruit good workers was the most important factor in the decision. Rivian's existing plant in Normal, Illinois, like most vehicle plants that have opened in recent decades, is not unionised.

Rivian’s recent stock offering saw its value soar past GM and Ford, putting it second only to Tesla in market value.

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Amazon, a major investor in Rivian, has ordered 100,000 electric vans from the company.

Georgia officials are unlikely to detail the full incentive package offered to Rivian, but the company could max out what Georgia calls its “mega project tax credit” for companies that hire at least 1800 people or invest at least US$450m. That could be worth US$118m in state income tax credits. Local governments are likely to abate property taxes.

Rivian, like Tesla, deals with its customers directly instead of through dealers. Its arrival in Georgia could prompt the state to loosen a law that mostly prohibits manufacturers from selling directly.

Rivian currently plans two models for consumers: the R1T pickup, with a base price of US$67,500; and the R1S SUV, with a base price of US$70,000. The truck was recently named Motor Trend’s 2022 truck of the year.

Check out the Rivian R1T as it is put through its paces in real-world testing.

Amazon, which owns a slice of the company, has ordered 100,000 delivery vans, launching Rivian into the commercial vehicle business.

Rivian is flush with cash following a US$11.9b stock offering on November 10 that took the company public, allowing it to finance the new plant. Its market value is nearly US$95b, more than either General Motors or Ford.

The company argues that electric vehicle adoption is at the “tipping point” and it is well positioned for success because trucks and SUVs have long been the most profitable vehicles sold.

But some analysts question whether it needs another plant besides the former Mitsubishi plant in Illinois that Rivian bought for US$16m in 2017. Rivian says it has a yearly capacity of 150,000 vehicles, but is looking to expand there as well.

“It seems like it might be a little premature to invest that much in another large plant just yet,” said Sam Abuelsamid, principal mobility analyst for Guidehouse Insights, who said Rivian also may be looking for a manufacturing site in Europe.

Given the size of the Georgia plant, Abuelsamid expects it to make other parts for the vehicles, similar to Tesla making seats at its factory in Fremont, California.

Rivian has cash in the bank but will burn through that quickly unless it starts delivering vehicles and generating cash, jeopardising its market darling status, Abuelsamid said. The company needs more retail customers and commercial vehicle buyers other than Amazon, he said.

“If actual deliveries don’t start picking up, the markets could turn against them as they have with some other EV startups not called Tesla,” Abuelsamid said.

“Unlike Tesla, Rivian will be facing serious competition in a much shorter time frame than the near-decade head start that Tesla had.”

Ford and GM plan to start selling their own electric pickup trucks in the next year or two, while Tesla also plans a new pickup. That's part of a wave of electric vehicle investment, with SK's US$5b battery plant northeast of Atlanta just one example. Ford announced in September it would spend US$11.4b to build three battery factories and an assembly plant in Kentucky and Tennessee.

The LMC Automotive consulting firm expects US sales of new fully electric vehicles to hit nearly 400,000 this year, nearly double last year’s figures. But they still make up only about 2.6 per cent of sales. The firm expects sales to grow to more than 730,000 next year and more than 2 million by 2025. Even at 2 million, EV sales still would be only about 12 per cent of US new vehicle sales.