$1.5 billion Georgia incentives helps Rivian's 2nd plant

Rivian Automotive is rapidly moving forward with plans for a massive new factory in Georgia after securing $1.5 billion in incentives from state and local authorities, marking a milestone for the California electric vehicle startup as it struggles with parts shortages at its sole plant in Illinois.

Georgia authorities said last week that the automaker signed an agreement to move forward on the $5 billion project east of Atlanta, which is estimated to create 7,500 jobs by 2028 with an average salary of $56,000. At full ramp, the plant will have a capacity of approximately 400,000 vehicles a year, Rivian said.

The plant is opposed by some local residents because of the expected environmental impact on the 2,000-acre site in rural Rutledge and surrounding areas.

The plant and its incentive package are also a point of contention between Gov. Brian Kemp, who has championed the project, and former U.S. Sen. David Perdue. Perdue has criticized the deal in his campaign against Kemp in the May 24 Republican gubernatorial primary. Kemp was running ahead in polls.

Construction is expected to begin as early as this summer and production is slated for 2024.

Rivian is expected to use the plant to build smaller, more affordable EVs on the upcoming R2 platform.

The company said the agreement last week "marks a milestone in our progress towards the development of our second U.S. manufacturing plant, in Georgia." The economic development agreement for the plant was approved by Rivian, the state and four affected counties, the automaker said.

Rivian launched production of the R1T pickup, R1S SUV and EDV commercial vans for Amazon at its Normal, Ill., plant last September. The company expects to build about 25,000 of those vehicles combined this year, which is about half what it could be producing with adequate parts supplies, the company has said.

In an interview last month, CEO RJ Scaringe said that the automaker's current struggles would not affect its ambitious future plans, including the Georgia factory that will expand its lineup with more accessible vehicles for consumers. The R1T starts at $68,575 with shipping.

"We have to be hyper-focused on executing in the short term," Scaringe said. "But if we set our strategy, and the things we're working on long term, based around short-term supply blips that we're feeling today, that would be ludicrous."

The generous Georgia incentive package requires Rivian to meet its ambitious production and employment goals in order to receive all of the economic benefits, the state government said in a statement. If the automaker fails to do so, it would have to repay some of the incentives on a pro-rata basis.

"The agreement requires Rivian to comply with a 25-year claw back period and is among the strongest the state has ever secured," the government statement said. "Rivian has until the end of 2028 to meet 7,500 jobs and make $5 billion in capital investment. It must then maintain these figures through 2047."

The package includes tax credits, abatements and subsidies such as site preparation and job training support from the state, according to the Georgia Department of Economic Development.

Rivian will get $476 million in statutory tax credits if it fulfills its promise to create a total of 7,500 jobs by the end of 2028. Georgia is putting in another $288 million in discretionary spending in the form of site preparation and job training programs.

Tax abatements from the four counties hosting the plant make up the rest of the package — about $700 million over 25 years.

Bloomberg contributed to this report.