Rivan CEO Robert “RJ” Scaringe unveiled the new R2 on Thursday as the electric car maker looks to recover. Patrick T. Fallon/AFP
Rivian Automotive Corp. is scrapping plans to build a new multibillion-dollar factory in Georgia, a move aimed at cutting costs as the company prepares to launch cheaper electric vehicles. This was a sudden change in policy.
The decision will save the company more than $2.25 billion in capital expenditures, the company said in a filing Thursday. Moving planned production of the next R2 model to an existing facility in Illinois will allow Rivian to begin deliveries earlier than expected in the first half of 2026. The surprise announcement threw the high-profile factory project into uncertainty, but CEO RJ Scaringe said the project remains important to the company.
After the announcement, the company's stock price rose as much as 16%, the biggest increase since July. Shares had already fallen more than 50% this year through Wednesday due to concerns about Rivian's cash and consumer demand for its products.
Rivian secured the largest $1.5 billion state and local incentive package in Georgia history in 2022 to build a large factory outside Atlanta. At the time, the company promised to create 7,500 jobs by the end of 2028, drawing praise from local lawmakers.
The withdrawal comes two weeks after Rivian announced layoffs and said it would keep production flat this year, but it fell well short of expectations and caused a steep drop in its stock price. The company has struggled to transition to mass production since going public in 2021, and the high prices of its models have not been a selling point as overall demand for EVs has waned. Rivian has never been profitable, losing more than $40,000 per vehicle delivered in the last three months of 2023.
Also on Thursday, Scaringe announced the long-anticipated R2 mid-size electric sport utility vehicle, which will start at about $45,000. That's about $30,000 cheaper than Rivian's existing SUV and just under the average new car sticker price in the U.S. of $48,000.
This two-row SUV is available in two battery pack sizes, with the larger option offering more than 300 miles of range on a single charge. Customers can choose from his one, two or three motor variants of the SUV. Rivian also offers more advanced self-driving technology in its vehicles, with a sensor suite consisting of 11 cameras and five radars.
Read more: Elon Musk says Rivian needs to 'significantly reduce costs' and executives should 'live in the factory' if Tesla's struggling rival is to survive
Rivian, one of the few pure-play EV makers that manufactures in the U.S., is trying to take market share from Tesla Inc. with a new model aimed at the mass market for the first time. The initiative highlights how automakers are cutting costs in an environment where EV demand is slowing, with manufacturers from Tesla to Ford Motor Co. and China's BYD cutting prices. .
Scaringe also surprised investors with a prototype of a future crossover EV called R3. Rivian said the model would be priced lower than the R2, but declined to say how much or when it would be manufactured.
Rivian currently manufactures two consumer plug-in EVs, the R1T pickup and R1S SUV, and a commercial van primarily for Amazon.com, its largest shareholder. All manufactured at our factory in Normal, Illinois.
