Rivian Automotive (NASDAQ:RIVN) announced on Thursday that it has received an incentive package worth $827 million from the State of Illinois to facilitate the expansion of its operations at the Normal facility.
Following the news, shares of the Irvine, California-based company soared nearly 10% in afternoon trading. This surge comes after a tumultuous year, during which Rivian’s stock lost over 60% of its value by Wednesday’s close.
Rivian’s Normal facility, where the company manufactures electric delivery vans for its major investor, Amazon.com, boasts a production capacity of 150,000 vehicles annually.
The expansion will include the production of Rivian’s newly unveiled midsize SUV, the R2 model, which is positioned to rival Tesla’s (NASDAQ:TSLA)Model Y. With the addition of the R2, Rivian anticipates achieving a total annual capacity of 215,000 vehicles.
The funds from the Illinois incentive package will be allocated towards expanding the plant, enhancing public infrastructure, and implementing job training programs for Rivian’s workforce.
This incentive package will bolster Rivian’s already substantial cash reserves, which stood at $7.86 billion by the end of last year.
Earlier plans for capital expenditures included an estimated $1.75 billion investment in 2024, primarily directed towards a second facility near Atlanta, Georgia. However, construction on this facility has been paused temporarily. Rivian clarified that the Georgia site remains integral to its long-term strategy and construction will resume in due course.
While Rivian is scheduled to report its first-quarter results next week, the company raised over $3 billion through two bond issuances last year. Nevertheless, some analysts and investors speculate that additional capital may be necessary by 2026.
Featured Image: Unsplash© Stephen Leonardi
