Rivian Automotive (RIVN.O) announced on Thursday that it has secured an $827 million incentive package from the State of Illinois to expand its operations at the Normal facility.
Following this news, shares of the Irvine, California-based company surged nearly 10% in afternoon trading, recovering from a decline of over 60% in value since the beginning of the year.
The Illinois plant, where Rivian also manufactures electric delivery vans for its primary investor, Amazon.com (AMZN.O), has a production capacity of 150,000 vehicles per year. Rivian plans to produce its newly unveiled midsize SUV R2 model at the facility, directly competing with Tesla’s (TSLA.O) Model Y.
With the addition of the R2 model, Rivian anticipates increasing its total annual capacity to 215,000 vehicles. The company stated that the funds from Illinois would be allocated towards expanding the plant, enhancing public infrastructure, and implementing job training programs for its workforce.
This incentive package will supplement Rivian’s existing cash reserves, which stood at $7.86 billion at the end of last year. While Rivian initially projected capital expenditures of approximately $1.75 billion in 2024, including investments in a second facility near Atlanta, Georgia, construction at the Georgia site has been temporarily halted. However, Rivian emphasized that the Georgia facility remains a crucial component of its long-term strategy, with plans to resume construction in the future.
Rivian, which is scheduled to report its first-quarter results next week, raised over $3 billion through two bond issuances last year. Nonetheless, some analysts and investors anticipate that Rivian may require additional capital by 2026.
