Rivian doubles down with a new $5 billion EV factory in Georgia, even as losses pile up
Barely weeks after floating on the Nasdaq stock exchange, and with just a few hundred of its electric trucks on the road, EV newcomer Rivian is already thinking big—$5 billion big, to be precise.
That’s how much the California-based manufacturer of the award-winning R1T pickup will invest in a second manufacturing plant, just east of Atlanta. Construction is expected to begin in the summer, with Rivian’s next-generation vehicles slated to roll off assembly lines there in 2024.
“This project represents the largest economic development deal in Georgia’s history,” founder and chief executive Robert “RJ” Scaringe told analysts in a call on Thursday after posting losses that ballooned during the third quarter.
The factory will eventually employ over 7,500 people and be capable of assembling up to 400,000 vehicles annually, more than twice as many as its existing site in Normal, Ill.
Gov. Brian Kemp hailed the company’s investment as a pivotal moment that marks a “new chapter” for the state. Within the past five years, 78 companies, including South Korea’s Kia, have located or expanded automotive operations in Georgia.
“We are so proud that Georgia will now be home to Rivian’s largest manufacturing facility,” the governor said in a statement.
Shares in the Tesla rival are expected to open sharply lower, however, as the company revealed on Thursday evening that losses piled up, and that it would fall short of this year’s production target due to the global supply-chain crunch and battery constraints.
The company, which counts online retail behemoth Amazon as both its largest customer and a major shareholder, reaped a bumper $13.7 billion from its November initial public offering, the largest this year.
Part of the proceeds from its IPO will be invested in the new Atlanta plant, with further capital earmarked to expand the factory in Normal to a maximum output of 200,000 vehicles in 2023 from its current 150,000 installed capacity.
Rivian said production began this week of the R1S electric SUV, with the first two units shipped to customers. As of Wednesday, the company also built 650 R1Ts, and delivered 384 of them to owners.
Preorders for both models from U.S. and Canadian customers currently amount to 71,000 units, according to the company, up from 48,000 at the end of September. Rivian cited greater media coverage and favorable reviews, including winning MotorTrend’s coveted Truck of the Year, for the surge in interest.
“The heat map of demand is getting more and more intense,” chief growth officer Jiten Behl told analysts.
Rivian warned, however, it would nonetheless be a “few hundred vehicles short” of reaching the 1,200 vehicles it had hoped to churn out this year.
Fenced in by Bezos
Before the year is out, Amazon is set to receive the first units of its zero-emission Rivian commercial vans. Rivian’s chief financial backer, which owns nearly a fifth of the company’s stock, had ordered 100,000 EVs for “last-mile” delivery.
Asked by analysts whether Rivian was seeing any electric van orders from other customers, Behl said management was limited in its maneuvering room by an exclusivity arrangement with Jeff Bezos’s company.
“Amazon being the biggest player in the last-mile delivery space, and having them as an anchor customer, was a strategic decision we made to allow us to learn fast, scale, and deploy a large fleet,” he said. “But there is a huge market outside the last-mile delivery space, and we are seeing a lot of inbound interest.”
Given the company started series-production of the R1T in the fourth quarter, Rivian reported revenue of only $1 million from the sale of 11 trucks for the three-month period through September.
Due to ramp-up costs connected to the pickup’s launch, Rivian racked up an adjusted Q3 net loss of $776 million that excludes a $458 million noncash charge. This one-off accounting effect stems from the valuation changes related to the $2.5 billion issue of promissory notes in July, which were fully converted into shares as part of its November IPO.
Shares traded nearly 9% lower in the premarket session.
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