Rivian Leaves Georgia’s Dreams of Becoming an EV Hub Uncertain

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(Bloomberg) — Georgia Governor Brian Kemp has appointed himself the figurehead of Rivian Automotive Inc.’s massive $5 billion development outside of Atlanta. In 2023, the first day of March was dubbed “Rivian Day.”

Just a year later, the second-biggest economic development project in the state’s history is faltering after a surprise announcement that Rivian has halted plans to build the multibillion-dollar factory. The news marks an abrupt reversal for the electric vehicle manufacturer and casts doubt on promises to bring thousands of high-paying jobs to the Southeast state.

It also represents a blow to Kemp’s ambitions to make Georgia a manufacturing hub for EV companies and encroach on rival states like Texas. To lure Rivian, the state and its localities offered the company $1.5 billion of subsidies including grants and land. Georgia officials maintain the deal is not dead.

“This is going to be a very damning case study to unpack if this deal is kaput – and it won’t surprise me if it’s kaput,” said Greg LeRoy, founder of Good Jobs First, an advocacy group that tracks corporate subsidies.

The Rivian project’s struggles illustrate the risks of corporate handouts that states and localities have rushed to provide in the fierce race to attract large manufacturing deals that are often accompanied by lofty promises of high-paying jobs and an economic boon. The competition has intensified since the Inflation Reduction Act of 2022, which provides hefty federal investment to build battery and EV assembly plants, and has led to a surge of company pledges to boost production.

When announcing the development in 2021, Kemp said he was “so proud” of the project and credited his administration’s emphasis on “innovation and development in the electric mobility ecosystem.” A Rivian official called Georgia “the place for Rivian to scale and thrive.”

Though, the Irvine, California-based company said it was shifting production of an upcoming EV model to a factory in Illinois to cut costs. Chief Executive Officer RJ Scaringe said at a company event that the Georgia factory, which was originally envisioned as producing up to 400,000 cars a year, remains important to the company and is “core” to scaling across its vehicles.

Rivian notified and discussed the pause with all relevant Georgia agencies before it made its announcement on Thursday. “The company confirmed with Georgia it remains a very important partner,” a spokesperson said.

Kemp’s office declined to comment, referring all questions to the state’s economic development arm. That department said that Rivian has “restated its commitment to Georgia,” in a joint statement with a local agency. They said the state and relevant authorities are “in steady communication with Rivian regarding its manufacturing plans at Stanton Springs North.”

The Metro Atlanta Chamber also noted in a statement that Rivian had “reaffirmed” its commitment to the project.

$5 Billion Project

Rivian had made a “contractual” commitment to invest $5 billion in the Georgia plant, according to the Joint Development Authority, a four-county agency that worked on the development. As a part of the agreement, the company is required to create 7,500 jobs.

There are mechanisms in place if Rivian falls short of its commitments. The company has agreed to meet 80% of its investment commitment in addition to its job promise by the end of 2030 and maintain those figures until 2049. If it doesn’t, it must repay a portion of the subsidies that it’s received.

The plant is expected to span 2,000 acres and be carbon-conscious, including an abundance of outdoor space and technology centers to support company research and development. It was intended to manufacture the company’s R2 and R3 mid-size sports-utility-vehicles.

Georgia estimated that it would receive a whopping $7.3 billion in benefits from the Rivian facility, which included about $1 billion of labor income annually as well as other direct and indirect impacts. Rivian promised jobs with an average wage of $56,000, according to the state.

Because of the property tax break it was given, Rivian was supposed to pay a bevy of local governments $300 million over 25 years, in payments-in-lieu-of-taxes — known as a PILOT. Rivian has made two PILOT payments to the Joint Development Authority on the property totaling $3 million, with the most recent payment made on March 1.

The Rivian project is often mentioned along with a second major EV project in the state, Hyundai Motor Co.’s $7.6 billion auto and battery factory called the “Metaplant” near Savannah. Despite Rivian’s setback, the Metaplant is on target to start production in the fourth quarter of this year, spokeswoman Bianca Johnson said in an email.

Local Pushback

Despite the promises of more jobs and an economic windfall, the project has drawn very vocal opponents among residents of surrounding areas, including several residents from Morgan County, with a population 21,000.

A group of Morgan County citizens sued to challenge the project’s complicated financing structure, a suit that was denied in an appellate court last year. The residents are still pursuing litigation against the factory on other grounds.

John Christy, an Atlanta attorney representing the Morgan County residents, said his clients never felt the project was viable, in part because of Rivian’s financial condition. Their fears were “borne out” on Thursday, Christy said, and his clients are happy to have been vindicated.

However, they now face living near a project where 2,000 acres have been deforested to the point “it’s just red, Georgia clay,” he said.

“I think the state has spent a considerable amount of taxpayer money for a project that was ill conceived,” Christy said.

JoEllen Artz, one of the leaders behind the No2Rivian, a local group against the project, said the announcement is a relief.

“We are are a retirement county, you move out here to retire,” she said. “We are not prepared to have this factory here.”

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