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KEY TAKEAWAYS
- Rivian Automotive shares are rising in premarket trading Friday as it pauses construction of $5 billion Georgia factory to cut costs and says it expects savings exceeding $2.25 billion.
- The company will now shift production of its R2 mid-sized SUVs to its existing facility in Illinois.
- Rivian joins other EV makers like Ford and Tesla in facing a slowdown in EV sales and increased competition.
Rivian Automotive (RIVN) shares are rising in premarket trading Friday after the electric vehicle (EV) startup said that it was halting construction of a $5 billion factory in Georgia.
The news of the halt came as the company also introduced on Thursday three new models to go along with its RT1 truck and RS1 SUV, as well as its EDV delivery van initially designed for Amazon (AMZN).
Rivian said total savings would be more than $2.25 billion from the halting of construction in Georgia. Its production of R2 mid-sized SUVs will now be moved to its existing plant in Illinois, it said.
“To enable R2 to be launched earlier and with a considerable reduction in the capital required for its launch, Rivian plans to start production of R2 in its existing Normal, Illinois manufacturing facility,” the company said in a statement.
It also said shifting the production of the R2 model to its Illinois facility has “pulled forward” its timeline so deliveries will start in the first half of 2026.
The company’s new R2 is priced to start selling at about $45,000, while the R3 is a mid-sized crossover and would cost less.
Rivian said while the Georgia facility would be part of its strategy of scaling up production of both the R2 and R3, construction would only be resumed “later” as it focuses on launching the R2.
Rivian is the latest EV maker to pull back on expanding as EV sales growth slows due to lower demand.
Ford (F) is scaling back its electric F-150 Lightning truck, and Tesla adjusted its pricing strategy in China to boost demand. Apple (AAPL) has canceled its EV plans and EV maker Fisker (FSR) warned that it anticipated “another difficult year” early this month.
Rivian initially announced plans to invest $5 billion in a second plant in Georgia in Dec. 2021. The factory was set to break ground this year and eventually produce up to 400,000 vehicles per year.
Rivian shares were up 3.8% at $12.98 in premarket trading, but are down about 40% since the start of the year.