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.