Members of a state Senate subcommittee explored ways Monday to potentially punish electric vehicle maker Rivian days after the company put on hold its $5 billion Georgia factory and asked about options for the state-owned land if the plant is never built.
Republican lawmakers grilled top state leaders about the surprise decision, with some urging a halt to infrastructure projects underway until Rivian starts construction. One even said more oversight might be needed by lawmakers for huge economic development deals.
Rivian has said the factory near Social Circle remains a big piece of its future, though the company has not said when it will start construction. To conserve cash, Rivian will launch its R2 crossover in Normal, Illinois, in 2026, the year the Georgia plant had been expected to open.
State Sen. Randy Robertson, R-Cataula, called Rivian’s decision “completely irresponsible” and said it shook his faith that the project will ever take place.
“If they come back to Georgia and start making good on their promises, I’ll be the one surprised,” Robertson said.
The California-based company said pausing its second factory — and the 7,500 promised Georgia workers it would employ — will save it more than $2.2 billion, a significant amount of cash during a critical time. Rivian has yet to turn a profit and has seen its cash reserves decline from nearly $20 billion in 2021 to less than $8 billion at the end of last year.
“Our Georgia plant remains an extremely important part of our strategy to scale production of R2 and R3,” a Rivian spokesperson told the AJC in a Monday statement, referencing two of the three new vehicle models it introduced last week. “We remain deeply committed to the state and the community, and we anticipate resuming construction following the initial ramp of R2 production at our Normal facility.”
Credit: Getty Images for Rivian
Credit: Getty Images for Rivian
Rivian is also reportedly negotiating an incentive deal with Illinois related to R2 manufacturing, but terms have not been disclosed.
When Gov. Brian Kemp announced the Rivian deal in late 2021, it was Georgia’s largest-ever jobs deal. It has since been surpassed by the Hyundai Motor Group Metaplant near Savannah.
Pat Wilson, commissioner of the Georgia Department of Economic Development, told subcommittee members he learned of Rivian’s plans only two days before the public announcement. Earlier disclosure, he said, might have run afoul of insider trading laws.
But he cautioned against overreacting in the wake of Rivian’s decision. The company has several years before it would violate its incentives agreement with the state, and Wilson said “until they tell us they can’t live up to that commitment or breach contract, then we are under obligation to allow them to live up to their commitment.”
Rivian still has the potential, he said, to emerge as a top U.S. automaker.
“This is a company that everybody in the country was recruiting,” Wilson said. “This was not us going on a limb to recruit a startup. This was a company that everybody wanted.”
Tax dollars spent
When Georgia landed Rivian, it offered a $1.5 billion package of state and local incentives.
Some of those inducements — including land and infrastructure improvements — have come upfront. Most will only flow to Rivian if it meets the vast majority of its jobs and investment goals, with terms forcing repayment if certain thresholds aren’t met.
Wilson said his department has spent about $141 million on the project site so far, including the cost to buy nearly 2,000 acres of land and grade and mitigate wetlands on about a third of the site to prepare for vertical construction. Control of the site was transferred to Rivian last fall, meaning the company is responsible for maintaining it.
“As of today, that site is not set to be an idle site,” Wilson said. “So they have to pay for maintenance and they have to pay to prepare it to be idle.”
The Technical College System of Georgia has spent $1.4 million on design work for a QuickStart training center that will train future Rivian employees, but that project is now on hold.
The Georgia Department of Transportation, meanwhile, has spent $67 million so far to widen U.S. 278 and build a new frontage road. A $29 million bridge spanning a future railroad spur also is on hold, but a new I-20 interchange at Old Mill Road is still moving forward, GDOT Chief Engineer Meg Pirkle said.
Several subcommittee members criticized the $91 million interchange moving forward, saying they would rather see the funds redirected to other needs. But Pirkle said that would likely increase the cost of a project that will be needed if a large facility is ever built.
Credit: Curtis Compton
Credit: Curtis Compton
‘We did our due diligence’
Some subcommittee members already see Rivian in the rearview mirror.
But Wilson warned against giving up too quickly. The state’s agreement with Rivian prohibits the state from trying to sell the land or find a replacement project.
“We did our due diligence probably more so than we do on most projects,” he said. “... We have more claw backs in this contact than any we’ve ever negotiated.”
The economic development agreement, which was signed by Rivian, the state and a local development authority, gives the company until the end of 2030 to deliver 80% of its promised job and investment figures. Wilson said the state would have to sue Rivian over a breach of contract to void the deal and advertise the site to other potential suitors.
Rivian officials say they will abide by the terms, suggesting they expect the factory to be up-and-running with several thousand employees before 2031.
Credit: TNS
Credit: TNS
Part of the Rivian deal provides about $700 million in local property tax savings. In return, Rivian signed a payment in lieu of taxes or PILOT agreement with area county governments and schools.
Rivian is in compliance with that deal and has paid $3 million so far, Wilson said. The company has to pay $1.5 million for the next three years, and then the amount periodically increases until 2049.
Wilson said those PILOT payments are not contingent upon Rivian starting construction, so the company is currently paying more than what the land would have generated in property taxes.
If the project does not happen, Wilson said he doesn’t expect to have a hard time finding a similarly sized facility to take its place.
“This site is significantly more valuable today than it was before,” Wilson said. “... I guarantee you that there would be a project that would land on that site very quickly.”
Cox Enterprises, owner of The Atlanta Journal-Constitution, owns about a 4% stake in Rivian.
About the Author
