Rivian will receive $827 million in incentives to expand its Normal, Illinois, plant for R2

Rivian has received $827 million in incentives from the state of Illinois to expand its main plant in Normal.

The R1S and R1T are built at Rivian’s factory in Normal, Illinois. The factory was purchased from Mitsubishi in 2017.

But the factory will also produce the R2 SUV, a smaller electric car that will go on sale in the first half of 2026.

Rivian originally planned to build the R2 at a new facility in Georgia, but postponed its plans for the Georgia site to advance production of the R2, saving $2.25 billion in the short term by using of an existing factory rather than building an entirely new one.

In response, Georgia questioned whether Rivian was pulling out of the state, but Rivian recently confirmed its commitment to Georgia, only that it is focusing on Illinois in the short term.

To achieve that goal, the company just secured a development package from the State of Illinois Department of Commerce & Economic Opportunity that would be worth $827 million to the company. This is not a direct cash injection, but rather a development package including tax incentives and in-kind development efforts by the city, which will have the effect of reducing costs for the company.

The incentives will go towards expanding factories, public infrastructure and vocational training programs. Rivian has agreed to assist with city improvement projects to demonstrate its commitment to the community.

These incentives are important right now for Rivian, which is losing money every quarter as production scales up. Losses have generally declined over time, but the company is rushing to achieve positive cash flow before its ~$9 billion in cash reserves run out.

The company just completed a factory upgrade, which shut down production for most of April. Production resumed yesterday.

Rivian says this upgrade will enable huge margin improvements on its vehicles, and the company believes it will be able to turn a small profit by the end of the year. It has enough cash to get this far (and maybe a little further) at current burn rates, so as long as the company’s trajectory continues to trend positively, it should be fine – especially thanks to the huge cash reserve it got during its 2021 IPO.

We expect to hear an update on Rivian’s financials, and more results from the factory upgrade, in the earnings call next Tuesday.

Rivian says it has invested $2 billion in Normal and generated $3.9 billion in “value addition” to the local economy. The factory has built 100,000 vehicles to date since production started in 2021.

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