The Biden-Harris administration announced a massive loan for electric vehicle maker Rivian on Monday. The $6.6 billion loan comes as Rivian struggles with significant financial losses.
Rivian reported a $1.1 billion loss in the third quarter of 2024. Revenue also dropped by nearly $500 million. The electric vehicle industry is facing slower consumer demand, impacting growth.
The U.S. Department of Energy (DOE) has conditionally committed to the loan. It will fund Rivian’s new manufacturing facility in Georgia, according to the DOE’s Loan Programs Office.
“This loan will help create thousands of new American jobs and further strengthen U.S. leadership in EV manufacturing and technology,” said Rivian CEO RJ Scaringe in a press release.
The Georgia facility will complement Rivian’s existing factory in Normal, Illinois. The new plant will produce sport utility vehicles priced at about $45,000. This is significantly lower than Rivian’s current offerings, which start around $70,000.
“This loan would enable Rivian to more aggressively scale our U.S. manufacturing footprint for our competitively priced R2 and R3 vehicles that emphasize both capability and affordability,” Scaringe added.
The loan is part of President Biden’s Investing in America agenda. This initiative has directed nearly $700 billion in taxpayer funds to infrastructure, semiconductor, and green energy projects. The EV sector has been a key beneficiary.
Government subsidies include a $7,500 federal tax credit for certain EV purchases. Another $12 billion has been allocated to help car manufacturers retrofit plants for EV production.
Despite these efforts, demand for EVs is slowing. EV sales grew only 31% in the first half of 2024, compared to a 71% jump during the same period in 2022. Consumer interest appears to be waning.
A June poll highlighted this trend. About 46% of respondents said they were unlikely or very unlikely to buy an EV. Only 21% were “very” or “extremely” likely to make the switch.
“Even after throwing money at EVs hand over fist, basically paying people tax dollars to drive these cars off the lots, you have a dire spiral of (1) not enough demand to support the number of cars being produced, and (2) the people you paid to buy them now wanting to go back to what they had before,” said O.H. Skinner, executive director of the Alliance for Consumers.