Rivian gets $827m incentives to expand Normal, Illinois factory for R2

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Rivian has secured $827 million worth of incentives from the state of Illinois to expand its main factory in Normal.

Rivian’s Normal, Illinois plant is where it builds the R1S and R1T. The plant was purchased from Mitsubishi in 2017.

But the plant is also set to produce the R2 SUV, a smaller upcoming EV which is set to release in the first half of 2026.

Rivian had originally planned to build the R2 in a new plant in Georgia, but it delayed its plans for its Georgia location in order to bring forward production of the R2, saving $2.25 billion in the short term due to using an existing plant instead of having to build a whole new one.

In response, Georgia wondered if Rivian was pulling out of the state, but Rivian recently reaffirmed its commitment to Georgia, just that it’s focusing on Illinois in the short term.

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

The incentives will go towards plant expansion, public infrastructure, and job training programs. Rivian has agreed to assist in city improvement projects to show its commitment to the community.

These incentives are important for Rivian at the moment, which is losing money each quarter as it scales production. Losses have generally reduced over time, but the company is racing to become cash flow positive before its ~$9 billion in cash reserves drains out.

The company just completed a factory upgrade which saw production shut down for most of the month of April. Production restarted yesterday.

Rivian says that this upgrade will allow huge margin improvements on its vehicles, and that the company thinks it will be able to turn a small profit the end of the year. It has enough cash to make it that far (and perhaps a little farther) at current burn rates, so as long as the company’s trajectory keeps moving positively, it should be okay – mainly thanks to the huge cash reserve it got during its IPO in 2021.

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

Rivian says that it has invested $2 billion in Normal and has generated $3.9 billion of “value add” for the local economy. The plant has built 100,000 vehicles so far since production started in 2021.

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