Biden administration approves $6.6B loan to Rivian, which has billions in debt

Nov 26, 2024

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Jack Aylmer Energy Correspondent

By Jack Aylmer (Energy Correspondent), Jake Larsen (Video Editor), Heath Cary (Graphics)

The Biden administration has preliminarily approved a $6.6 billion loan to Rivian Automotive, an electric vehicle (EV) manufacturer that currently has billions of dollars in debt. These government funds are intended to aid the company in constructing a new production facility in Georgia, which could bring up to 400,000 vehicles to market and create an estimated 7,500 jobs.

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The new plant is expected to serve as the production hub for Rivian’s latest EV offerings, which aim to provide a more affordable option for consumers.

The upcoming models are projected to start at around $45,000, more than $3,000 less than the average price of a new car, according to Kelley Blue Book.

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However, news of this loan comes at a time when Rivian is experiencing some significant financial challenges.

As of September, the company’s long-term debt totaled $5.46 billion, an over 100% increase from the previous year. Despite these financial pressures, Rivian’s CEO, RJ Scaringe, has expressed optimism, expecting the company to achieve profitability by the end of the year.

“Our core focus is on driving towards profitability,” Scaringe said. “We’re seeing significant progress, and what we’re going to see as we go forward is a very clear staircase or set of steps that get us to profitability.”

Rivian has undertaken several cost-cutting measures, including renegotiating supplier contracts, laying off 10% of its workforce, and redesigning components to reduce production expenses.

The introduction of lower-cost models is also a crucial part of Rivian’s strategy to improve its financial outlook, meaning the federal government’s loan to build the facility that will make those vehicles could be key for stabilizing the automaker’s finances.

Tags: Electric vehicles, EV, Georgia, Joe Biden

THE BIDEN ADMINISTRATION JUST GAVE BILLIONS OF DOLLARS TO AN ELECTRIC VEHICLE COMPANY THAT IS CURRENTLY BILLIONS IN DEBT.

THE WHITE HOUSE HAS PRELIMINARILY APPROVED A 6.6 BILLION DOLLAR LOAN TO RIVIAN-

SO THAT THE EV MAKER CAN BUILD A NEW PLANT IN GEORGIA.

ACCORDING TO THE FEDERAL GOVERNMENT, THIS NEW FACILITY WILL ENABLE RIVIAN TO BRING UP TO 400,000 ELECTRIC VEHICLES TO MARKET-

SUPPORTING SEVEN AND A HALF THOUSAND NEW JOBS.

THIS NEW PLANT IS ALSO THE ANTICIPATED SITE OF WHERE RIVIAN’S LATEST EV OFFERINGS WILL BE BUILT.

THE UPCOMING MODELS ARE BILLED AS A CHEAPER ELECTRIC OPTION-

WITH A PRICE TAG OF AROUND 45,000 DOLLARS, MORE THAN THREE THOUSAND DOLLARS CHEAPER THAN THE AVERAGE KELLEY BLUE BOOK VALUE OF A NEW CAR.

HOWEVER, THIS LOAN COMES AT A TIME WHEN RIVIAN IS DEALING WITH SOME SIGNIFICANT FINANCIAL CHALLENGES.

AS OF SEPTEMBER OF THIS YEAR, THE COMPANY’S LONG TERM DEBT AMOUNTS TO ALMOST 5 AND A HALF BILLION DOLLARS-

A MORE THAN 100 PERCENT INCREASE FROM LAST YEAR.

DESPITE BEING SO DEEP IN THE RED, RIVIAN’S CEO STILL EXPECTS THE COMPANY TO TURN A PROFIT THIS YEAR.

RENEGOTIATING SUPPLIER CONTRACTS THAT HAD BEEN A FISCAL BURDEN-

LAYING OFF 10 PERCENT OF ITS WORKFORCE-

AND REDESIGNING SEVERAL VEHICLE COMPONENTS TO CUT PRODUCTION COSTS.

“This is our core focus is on driving towards profitability … We remain optimistic around overall performance, and looking at q4 we’ve continued to guide towards positive growth margin.”

RIVIAN IS ALSO BETTING ON ITS UPCOMING CHEAPER EV MODELS TO GENERATE STRONGER CONSUMER DEMAND-

MEANING THE GOVERNMENT ASSISTANCE COULD PROVE CRUCIAL IN STABILIZING THE AUTOMAKER’S FINANCES.

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