California-based EV maker Rivian Automotive RIVN said on Thursday that it would halt the construction of its planned $5 billion plant in Georgia in a bid to cut costs. The company now intends to launch its new R2 vehicle at its existing facility in Normal, Illinois.
What Happened: The company was initially eyeing the start of production of its newly unveiled R2 SUV at its upcoming factory in Georgia. But the decision to launch the vehicle at its existing factory, the company said, will enable the vehicle to be launched earlier and save about $2.25 billion in capital over an undefined period, including savings in capital expenditures and product development investment.
However, the company noted that its Georgia plant is “extremely important” to its strategy of scaling R2 and R3 CUV production, and construction will resume at a later point in time.
Ross Gerber, the president and CEO of Gerber Kawasaki Wealth and Investment Management, termed the decision to halt construction at the Georgia plant the “right strategy.”
“I like the direction and now they need to deliver,” the investor wrote on X, formerly Twitter. Gerber ordered himself a Rivian R1S SUV a few months back.
Rivian now hopes to start production of the R2 in the first half of 2026 and would enhance capacity at its Normal factory to 215,000 units in a year following plant changes for the purpose.
Why It Matters: Rivian revealed its R2 SUV at an event in Laguna Beach on Thursday. The company also displayed its new R3 crossover at the event.
Both the vehicles are smaller and less expensive than Rivian’s existing R1 offerings priced around $70,000. The R2 will start at around $45,000, the company said, putting it in the same price bracket as Tesla Inc’s Model Y. The R3 will be priced even lower than the R2.
Rivian reported a total revenue of $1.3 billion for the fourth quarter of 2023 and a net loss of $1.52 billion. The company ended the quarter with $9.37 billion in cash and cash equivalents, with a total liquidity of $10.47 billion, including an asset-based revolving credit facility.
The EV maker lost nearly $43,372 per vehicle delivered in the last quarter — up from nearly $31,000 in the previous quarter but significantly down from the $124,000 during the same period in 2022.
However, the company said on Thursday that its current liquidity is expected to be sufficient to fund operations through the start of R2 production.
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