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Rivian wins $827M incentive package to expand Illinois factory for R2 production

Image Credits: Rivian

Rivian is getting $827 million in incentives from the state of Illinois to support building its next-generation electric vehicle, known as the R2.

The company announced Thursday that the Illinois Department of Commerce and Economic Opportunity will dole out the funds, which will be used to expand the automaker's existing factory in Normal, Illinois, to build out supporting infrastructure and boost job training programs for its workforce. Updates to the factory will begin "in the coming months."

The funding announcement comes just two months after Rivian unveiled the midsize R2 SUV, which is supposed to start at around $45,000 when it goes on sale in 2026. It also plans to make and sell a hatchback called the R3 that is powered by the same EV platform that underpins the R2.

Rivian had initially planned to build the R2 at a brand-new $5 billion factory in Georgia. But the company announced at the R2 event in March that it had decided instead to build the R2 in Illinois, where it currently makes the R1T pickup, the R1S SUV and its commercial electric vans.

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The decision to pivot away from the Georgia plant allows the startup to move up the timeline for the R2 SUV and save more than $2 billion. Rivian has said it remains committed to building the factory in Georgia. But the company's continued losses and struggles to scale production -- it will make around the same number of EVs this year as it did last year -- forced it to rethink its plans for the next-generation vehicle.

Rivian stands to receive $1.5 billion in incentives from Georgia if it ever builds a factory there. That incentives package, the biggest in the state's history, comes with several commitments from Rivian, including that it will hire 7,500 people who will earn an average annual salary of $56,000 by the end of 2028. Under the agreement, Rivian has agreed to continued maintenance of these jobs through 2047. Rivian has to make repayments to the state and joint development authority (JDA) in any year in which it is 80% below its maintenance.