The Biden administration has preliminarily approved a $6.6 billion loan to Rivian Automotive, an electric vehicle (EV) manufacturer that currently has billions of dollars in debt. These government funds are intended to aid the company in constructing a new production facility in Georgia, which could bring up to 400,000 vehicles to market and create an estimated 7,500 jobs.
The new plant is expected to serve as the production hub for Rivian’s latest EV offerings, which aim to provide a more affordable option for consumers.
The upcoming models are projected to start at around $45,000, more than $3,000 less than the average price of a new car, according to Kelley Blue Book.
However, news of this loan comes at a time when Rivian is experiencing some significant financial challenges.
As of September, the company’s long-term debt totaled $5.46 billion, an over 100% increase from the previous year. Despite these financial pressures, Rivian’s CEO, RJ Scaringe, has expressed optimism, expecting the company to achieve profitability by the end of the year.
“Our core focus is on driving towards profitability,” Scaringe said. “We’re seeing significant progress, and what we’re going to see as we go forward is a very clear staircase or set of steps that get us to profitability.”
Rivian has undertaken several cost-cutting measures, including renegotiating supplier contracts, laying off 10% of its workforce, and redesigning components to reduce production expenses.
The introduction of lower-cost models is also a crucial part of Rivian’s strategy to improve its financial outlook, meaning the federal government’s loan to build the facility that will make those vehicles could be key for stabilizing the automaker’s finances.
