Rivian Scores $6.57 Billion Jackpot From LPO, For Georgia Factory – CleanTechnica

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So much for all the doom-and-gloom headlines about the health of the electric vehicle maker Rivian. Fresh off the news about a lifesaving deal with Volkswagen, the US startup just scored a $6.5 billion conditional loan from the Biden administration, enabling it to move forward with the construction of Project Horizon, a new factory that will bring thousands of new jobs to Georgia. Hmmm…Georgia…

Why The Rivian Loan Might Never Have Happened…

Before we get into the details about the new loan, the new Rivian factory, and Georgia, let’s take a quick look why it might have never happened. The loan — which Rivian is supporting through an equity investment — comes through the Advanced Technology Vehicles Manufacturing Loan Program, which sits under the umbrella of the Loan Programs Office of the US Department of Energy.

The LPO was established by Congress in the Energy Policy Act of 2005 during the Bush administration, with the aim of incentivizing the private sector to commercialize high-impact, innovative energy technologies in the national interest. For the record, the mandate includes innovations in nuclear and fossil energy, not just renewables.

Also during the Bush administration, in 2008 Congress passed the Energy Independence and Security Act. That law expanded the LPO to cover vehicles under the new Advanced Technology Vehicles Manufacturing program.

As a portfolio-based program, the LPO had failure built into it from the start, though not in a bad way. The high-impact mission entails some risk. However, with careful due diligence the portfolio is credited with remarkable success, regardless of individual failures (see more LPO background here).

If this is beginning to ring some bells, run right out and buy yourself a cigar. After all the administrative details were sorted out, the LPO was finally up and running by the time President Obama took office in 2009, and that’s when things went south. In 2011, the solar manufacturer Solyndra defaulted on a $535 million LPO loan, done in by competition from China, among other factors.

The LPO went on to thrive, but the Solyndra failure was red meat to Republican members of Congress, who drew out their knives and made the most of a high profile opportunity to trash both President Obama and the LPO.

As part of the trashing, Republican members of Congress made a lot of noise about killing the program. Thank goodness they didn’t follow through on the threats — right, Rivian?

The LPO Is Back, Bigger Than Ever

Well, here’s to second chances. The LPO never died, though it took a sort of holiday during the first Trump administration. In fact, it’s even bigger and better now. The Inflation Reduction Act of 2022 (IRA) expanded the office’s lending capacity by almost $412 billion.

As a reminder, the IRA is the Biden administration’s signature “climate bill.” Exactly zero Republican members of Congress voted for it. That explains why US Senator John Barrasso (R-WY) kicked off the 2024 election cycle by dragging Solyndra up out of the grave, cobwebs and all, and vowing to kill the LPO, somehow.

“‘Solyndra is going to look like chump change’” this time around,” is how Bloomberg Law reported the Senator’s comments on January 4th of this year.

The LPO, Georgia, & The New Rivian Factory

As it turned out, the Republican Party’s anti-LPO messaging failed to resonate during the campaign. Somewhere along the way it got dropped in favor of full throated scare-mongering over minority groups. Besides, the LPO supports job-creating ventures in red and blue states alike.

Georgia is a good example. The state has two Democratic US senators, but otherwise it is dominated by Republican office-holders. Georgia holds 14 seats in the US House of Representatives, with Republicans holding a 9-5 advantage in the delegation. “The Republican Party controls the offices of governor, secretary of state, attorney general, and both chambers of the state legislature,” Balletopedia also reminds us.

Nevertheless, the state employment picture will benefit from an LPO loan guarantee of up to $1.45 billion to support a new factory in Georgia for the solar manufacturer Qcells. The Energy Department anticipates that will involve 1,200 construction jobs and almost 2,000 permanent jobs.

That’s peanuts compared to the total of $12 billion in loan guarantees that the LPO deployed to support the expansion of the Vogtle nuclear power station in Waynesboro, Georgia. The project involves a peak of 9,000 construction jobs, with 800 jobs remaining once in operation.

Rivian can’t beat Vogtle on construction jobs, but it runs away with the prize for permanent job creation. Project Horizon, located near the city of Social Circle, will have 7,500 slots to fill. Georgia is chipping in with an assist from its QuickStart technical training incentive program, helping to ensure that qualified workers from local communities are available to fill many of those jobs.

Here’s What Rivian Will Produce For $6.57 Billion

When fully built out, Project Horizon will occupy 9 million square feet, which is big enough to accommodate the manufacture of 400,000 EVs per year. “At its Georgia facility, Rivian will produce its all-electric midsize platform (MSP) with its R2 and R3 models as the first variants in production,” the Energy Department explains, noting that the company currently produces commercial vans, the R1S three-row SUV, and the R1T pickup truck in Illinois (see lots more background here).

As of last year Rivian was still struggling to scale up, which may leave one wondering why the LPO would make a bet on it. That’s a fair question. However, the central mission of the LPO is to strengthen the manufacturing competitiveness of the US. In the EV space, that doesn’t necessarily mean providing more federal support to established automakers that are already racking up big EV sales numbers.

Spreading manufacturing capacity among different businesses contributes to resiliency and helps to accelerate EV adoption, here in the US and abroad. “As one of a few American EV startups with light duty vehicles already on the road, Rivian’s Georgia facility will allow the company to reach production volumes that make its products more cost competitive and accelerate access to international markets,” the Energy Department notes.

The Energy Department also anticipates a significant impact on transportation decarbonization. Once Project Horizon is up to speed, the vehicles rolling off the assembly line are expected to save 146 million gallons of petroleum every year.

As a side note, the diversification strategy is also at work in California, where Governor Gavin Newsom is preparing to propose new legislation to relaunch a state EV tax credit if President-Elect Trump follows through on his threat to cancel the federal one. Tesla EVs would not qualify because it still holds more than 50% of the California market, while the new program is aimed at supporting up-and-coming manufacturers. There may be other reasons behind the exclusion as well. CleanTechnica editor Zachary Shahan ran through lots of other aspects of the tax credit proposal yesterday.

If you can think of any aspects he missed, drop us a note in the comment thread. Bonus points for bringing up the LPO loan of $456 million that Tesla Motors received in 2010. The company fully repaid the loan ahead of schedule in 2013, and the rest is history.

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Image (cropped): The US electric vehicle startup Rivian is targeting 400,000 EVs per year at its new Project Horizon factory, taking shape in Georgia with a $6.57 billion assist from the Bush-era Loan Programs Office in the US Department of Energy (courtesy of US DOE).