The EV industry’s growth is slowing, but Rivian investors have a little good news to dig into.
Considering Rivian Automotive (RIVN -2.25%) is dealing with a second-quarter planned plant shutdown, stalling production and delivery estimates for the year, and slowing demand, you might not think there’s much good news to be found surrounding the young electric vehicle (EV) maker.
But you’d be wrong. Let’s dig into a couple of recent announcements that are certainly positive for the company.
Incentive package
In a piece of solid news for the company, Illinois is providing the electric vehicle maker an incentive package worth $827 million.
The package breaks down to $75 million from its deal-closing fund, $634 million in tax incentives over 30 years, and the state will also fund a second manufacturing training academy in Normal, Illinois, where the factory is located.
Rivian plans to add more than 500 jobs while it expands its production process in its Normal factory and the incentive package requires that Rivian maintain 6,000 jobs in Illinois.
“The support from the state will allow us to quickly bring our midsize SUV, R2, to market and provide even greater consumer choice for EVs,” Rivian CEO R.J. Scaringe said in a press release.
What Scaringe alluded to is the key takeaway, as the company has opted to bring production of its R2 crossover into its Normal factory to fill excess capacity, rather than wait until its Georgia plant is up and running.
The move was a no-brainer as it uses up excess capacity at a time its production and deliveries are expected to stall in 2024, and it saves the company roughly $2.25 billion while accelerating the production and launch schedule of the R2.
Collecting talent
Another piece of good news for investors is that Rivian recently hired Javier Varela as its chief operations officer (COO) to help launch its lower-cost R2 model. Varela is the former COO and deputy chief executive officer of Volvo and played a key role in Volvo’s opening of a U.S. factory in 2018.
Further, Varela was previously picked by Volvo CEO Jim Rowan in 2022 as one of two deputy CEOs to help lead Volvo’s transition to becoming a fully electric vehicle brand by 2030 — this is an excellent hire by Rivian.
What it all means
The electric vehicle (EV) market is saturated at the high end as many automakers have struggled to bring prices down fast enough to attract mainstream consumers. Right now it’s a race to get prices around $30,000, which would make EVs comparable to gasoline-powered vehicles and open the door to soaring EV sales as mainstream consumers jump into the market.
That’s why Rivian’s future could depend largely on the success of its R2, and eventually the R3. These moves make it more clear Rivian is preparing by hiring specific talent for the launch of the R2, while also receiving support from Illinois to ramp up its factory to produce the R2 faster than it originally anticipated.
For Rivian investors, amid a flurry of not-so-great industry news, this is finally a breath of fresh air.
Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
