Rivian (RIVN) set to score extra incentives for bringing R2 production to Illinois
After announcing that R2 production will kick off in Illinois, Rivian (RIVN) is poised to earn additional incentives with plans to expand its Normal EV plant.
Meet Rivian’s more affordable R2 electric SUV
Rivian unveiled its compact, more affordable R2 electric SUV last week at its new Laguna showroom. Tapping into his inner Steve Jobs, Rivian CEO RJ Scaringe had a “one last thing” moment, shocking the crowd with the even smaller and more affordable R3.
Scaringe wasn’t done there. He took it a step further, introducing the rugged tri-motor R3X. The R3X is Rivian’s take on a high-performance electric crossover with wider wheels, more ground clearance, and a tri-motor setup.
Rivian’s R2 is essentially a smaller R1S offered at a cheaper price point. It will be based on Rivian’s next-gen EV platform designed to cut costs with maximum flexibility.
The R2 will be offered in single, dual, and tri-motor setups, with all versions boasting over 300 miles range. Rivan’s entry-level model will start at around $45,000.
According to Scaringe, the R2 is already generating quite a bit of hype. Rivian’s CEO posted on his X Friday that the R2 received over 68,000 reservations in less than 24 hours.
Rivian revealed it would kick off R2 production at its Normal, Illinois plant to accelerate its launch. Despite initial plans to build R2 at its new $5 billion EV plant in Georgia, Rivian said the move will save $2.25 billion while speeding up R2’s launch.
The State of Illinois is working with Rivian for additional incentives as it prepares to build R2 in the state.
According to Automotive News, Illinois looks to double down on the EV maker with new expansion plans at its Normal facility. “The elements of an economic development package are still being finalized,” the Illinois Department of Commerce & Economic Opportunity said.
“Once they are finalized, we will update the public on the details of the incentive package. Although Rivian is delaying its Georgia plant, it’s not expected to be significant.
The move is more to get out R2 quicker. Rivian said it will expand the plant to support up to 215,000 units of annual production capacity, up 43% from the previous 150,000 target.
Rivian has yet to say if it will expand or modify the plant for the added capacity. According to AN, an expansion may qualify Rivian for additional incentives for bringing R2 to Illinois.
Scaringe confirmed Rivian is “absolutely dedicated to bringing our Georgia plant to life with good jobs, economic development, and a product to be proud of” in a letter to the Atlanta Journal-Constitution (AJC).
Rivian’s leader clarified, “I want to be absolutely clear we remain committed to building our future in Georgia.”
R2 production will now kick-off at the beginning of 2026. After that, the smaller and even more affordable R3 and tri-motor R3X will begin rolling out.
After slipping over 45% this year and hitting a new all-time low last month, Rivian’s (RIVN) stock is up almost 20% over the past five trading days since unveiling the R2. Rivian shares are now down around 5% over the past 12 months.
Electrek’s Take
The move to begin building R2 in Illinois saves Rivian much-needed capital as it looks to expand the brand.
CFO Claire McDonough said the EV maker was confident its cash and equivalents would fund operations through 2025 last month. By bringing R2 production to Illinois, Rivian now expects to have enough funding through the start of R2 production.
Rivian expects planned upgrades in Normal this quarter to reduce material costs later this year. The EV maker sees a “modest growth profit” in the fourth quarter.
However, due to the shutdown, Rivian expects deliveries to be around 57,000, about the same as last year.
Rivian is following in Tesla’s footsteps as it looks to build its next-gen EVs in Texas, with Gigafactory Mexico running behind schedule.
Like Tesla, the move to begin production at an existing factory can help Rivian get the R2 out quicker while saving money.
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EV sales kept up their momentum in December 2024, with incentives playing a big role, according to the latest Cox Automotive’s Kelley Blue Book report.
December’s strong EV sales saw an average transaction price (ATP) of $55,544, which helped push the industry-wide ATP higher, according to Kelley Blue Book. The December ATP for an EV was higher year-over-year by 0.8%, slightly below the industry average, and higher month-over-month by 1.1%. Tesla ATPs were higher year-over-year by 10.5%.
Incentives for EVs remained elevated in December, although they were slightly lower month-over-month at 14.3% of ATP, down from 14.7% in November.
EV incentives were higher by an impressive 41% year-over-year and have been above 12% of ATP for six consecutive months. Strong sales incentives, which averaged more than $6,700 per sale in 2024, were one reason EV sales surpassed 1.3 million units last year, according to Cox Automotive, a new record for volume and share.
(My colleague Jameson Dow reported yesterday, “In 2024, the world sold 3.5 million more EVs than it did in the previous year … This increase is larger than the 3.2 million increase in EV sales from the previous year – meaning that EV sales aren’t just up, but that the rate of growth is itself increasing.”)
Kelley Blue Book estimated that in December, approximately 84,000 vehicles – or 5.6% of total sales – transacted at prices higher than $80,000 – the highest volume ever. KBB lumps gas cars and EVs together into this luxury vehicle category, so this is where Tesla Cybertruck is slotted.
However, Tesla bundles sales figures of Cybertruck with Model S, Model X, and Tesla Semi(!) into a category it calls “other models,” so we don’t know for sure exactly how many Cybertrucks Tesla sold in Q4, much less in December. However, Electrek‘s Fred Lambert estimates between 9,000 and 12,000 Cybertrucks were sold in Q4, and that’s not a stellar sales figure.
What will January bring when it comes to EV ATPs? What about tax credits? Check back in a month and I’ll fill you in.
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Tesla is now claiming that Cybertruck was the ‘best-selling electric pickup in US’ last year despite not even reporting the number of deliveries.
There’s a lot of context needed here.
As we often highlighted, Tesla is sadly one of, if not the most, opaque automakers regarding sales reports.
Tesla doesn’t break down sales per model or even region.
For comparison, here’s Ford’s Q4 2024 sales report compared to Tesla’s:
You could argue that Tesla has fewer models than Ford, and that’s true, but Tesla’s report literally has two lines despite having six different models.
There’s no reason not to offer a complete breakdown like all other automakers other than trying to make it hard to verify the health of each vehicle program.
This has been the case with the Cybertruck. Tesla is bundling its Cybertruck deliveries with Model S, Model X, and Tesla Semi deliveries.
Despite this lack of disclosure, Tesla has been able to claim that the Cybertruck has become “the best-selling electric pickup truck” in the US in 2024:
It very well might be true. Ford disclosed 33,510 F-150 Lightning truck deliveries in the US in 2024 while most estimates are putting Cybertruck deliveries at around 40,000 units.
Those are global deliveries, but Tesla only delivered the Cybertruck in the US, Canada, and Mexico in 2024, and most of the deliveries are believed to be in the US.
However, there’s essential context needed here, as we highlighted in our recent ‘Tesla Cybertruck sales are disastrous‘ article.
First off, Tesla had a backlog of over 1 million reservations for the Cybertruck that it has been building since 2019. This led many to believe Tesla already had years of demand baked in for the truck and that production would be the constraint.
However, based on estimates, again, because Tesla refuses to disclose the data, Cybertruck deliveries were either flat or down in Q4 versus Q3 despite Tesla introducing cheaper versions of the vehicle and ramping up production.
Again, that’s after just about 40,000 deliveries.
Furthermore, with almost 11,000 deliveries in Q4 in the US, Ford more likely than not outsold Cybertruck with the F-150 Lightning in Q4.
Electrek’s Take
Tesla is in damage control here. There’s no doubt that it is having issues selling the Cybertruck.
Inventory is full of Cybertrucks and Tesla is now discounting them and offering free lifetime Supercharging.
Tesla is great at ramping up production, and it’s clear the Cybertruck is not production-constrained anymore. It is demand-constrained despite having over 1 million reservations.
Again, those reservations were made before Tesla unveiled the production version, which happened to have less range and cost significantly more.
The upcoming cheaper single motor version should help with demand, but I have serious doubts Tesla can ramp this program up to more than 100,000 units in the US.
As a reminder, Tesla installed a production capacity of 250,000 units annually and Musk said he could see Tesla selling 500,000 Cybertrucks per year.
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