Electric Vehicle manufacturer Rivian is one company that is currently abuzz with new developments. The company went public in November 2021, and since then, it has had difficulty surviving the pangs of the market, taking a toll on its share, which went down by almost 71 percent on April 1, 2022.
However, Rivian, touted as one of the most promising electric truck manufacturers in the USA, is witnessing a change in its fortune. On Monday, the electric vehicle manufacturer entered into a deal with the state of Georgia and local governments procuring an incentive of $1.5 billion for its upcoming $5 billion EV manufacturing plant east of Atlanta.
Since then, the company is also witnessing a surge in its share price. Ford and Amazon are the company’s largest shareholders, and the market correction has come as good news for both these companies.
The plant is supposed to create around 7,500 jobs for the local community. Georgia’s Department of Economic Development has stated that the workers will be paid $56,000 as an average annual salary.
Defending the subsidy, Georgia’s economic development commissioner, Pat Wilson, said that the plant, which also includes a battery cell production site, was a historic win, putting Georgia “at the forefront of the electric vehicle revolution.”
The Georgia plant, located east of Atlanta, would be Rivian’s second US assembly plant after its plant in Normal, Illinois.
It is still a bumpy ride ahead for Rivian
Rivian, in a statement, has said that the company is planning to operate the plant by late 2024 after all the permits and approvals are acquired. According to the agreement, Rivian ought to provide 7,5000 jobs and complete a $5 billion investment by the end of 2028 to avail of the incentives and the tax savings.
The construction plan of the plant, over 2,000 acres of the area, met with vehement local opposition. The residents voiced their concern over the loss of rural habitat and adverse environmental impact in the area due to the upcoming project. These concerns were averted after the local government stepped in to take over the planning and zoning of the area.
Good Jobs First, a group opposed to large subsidies being doled out to private companies, has claimed that this is by far the largest subsidy provided to any company by Georgia. Meanwhile, it is the 15th largest incentive package any state has offered to a private entity.
However, Pat Wilson said that all the concerns are being addressed. The documents submitted on Monday show that Rivian is responding to the issues raised by the locals and moving their plant’s footprint away from the wetlands to minimize its impact on the environment.
Factors working in favor of the EV manufacturer
The subsidy is not the only reason for providing leverage to the Rivian stocks. The EV manufacturer has been continuously reeling under pressure due to battery manufacturing issues ailing the sector. The situation got worst with the war breaking out between Ukraine and Russia. To mitigate the losses arising from price fluctuation related to EV battery manufacturing, the company has raised the price of its EVs more than once.
However, the announcement made by the current Biden administration regarding battery manufacturing has come as a breather for most EV manufacturing companies in the US. The administration plans to invest $3.1 billion under its $1 trillion bipartisan infrastructure law on battery manufacturing capacity.
On Monday, a press release by the Department of Energy said that a $3.1 billion push would be provided to make more batteries and EV machineries in America, including building sustainable domestic sources of a critical materials used in lithium-ion batteries like lithium, nickel, cobalt, and graphite.