Rivian Keeps an Eye on China Trade Tensions as It Breaks Ground on $5B Georgia Plant

In the long run, Rivian’s road to profitability runs through Georgia, the state where it broke ground this week on a $5 billion factory devoted to U.S.-made electric SUVs. 

But after turning over the soil next to Gov. Brian Kemp, with a huge American flag at their backs, CEO RJ Scaringe stressed the short-term importance of keeping trade lanes with China open. 

Known for its affordable and technologically advanced electric vehicles, so far kept out of the U.S. by 100 percent tariffs, China also has a stranglehold on heavy rare earth metals crucial to batteries and EV motors. During President Trump’s trade war deliberations, it has weaponized them to great effect by imposing export controls and license requirements.

As Rivian broke ground, U.S. negotiators were in Madrid for the latest round of talks with China aiming to strike a deal before their current trade detente ends in November. Without a deal, President Donald Trump has vowed to snap sky-high tariffs back into place.

Mr. Scaringe told CNBC at the groundbreaking that Rivian has been spending a lot of time in Washington talking about Chinese export controls and “going very deep technically” with the administration on the problem presented by China’s fundamental monopoly over the processing of the metals and the production of related magnets. 

Rivian is aiming to diversify its supply chains and modify its designs to eliminate these metals where possible, even as the U.S. tries to bring on new rare-earth capacity. But all that could take many years. Production at the plant in Social Circle, Ga., is set to start in 2028, though Rivian is launching its R2 SUV, with a lower starting price of around $45,000, in Normal, Ill., in 2026.  

“We’re very confident that over time this is an issue that is going to be solved,” Mr. Scaringe told CNBC on the rare-earth issue. 

It’s not only rare earths, but also critical metals and minerals for batteries and other parts that are mainly found outside the United States, creating problems for automotive manufacturers like Rivian even as they try to fulfill the goals of the new administration to create more U.S. factory jobs. 

Mr. Trump’s tariffs have invited retaliation in many markets, pushing up costs and injecting uncertainty into supply chains.

Take nickel, a crucial component for batteries, Mr. Scaringe explained in a recent appearance on the Everything Electric podcast. More than 90 percent of the global supply is found in Indonesia, meaning that the U.S. could not localize the mining and processing of that metal in the short term, even if it tried. And Americans would likely not want such mines and processing plants in their backyards, Mr. Scaringe said. 

On top of that, Rivian works with a cascading group of suppliers that is often sourcing inputs around the world, he said. A headlight may have 40-50 tier 1-3 suppliers with their own international supply chains. Rivian has devoted more resources to vetting the health and reach of its suppliers, as well as pre-empting trade policy. Reports indicate that Rivian stockpiled batteries from Asia ahead of Mr. Trump’s so-called reciprocal tariffs in April.

“When you start a car company, you don’t think to yourself, ‘I’m going to be an expert in mining and understanding the geology of the Earth’s crust,’” Mr. Scaringe told host Imogen Bhogal. “Suddenly it puts you right in the middle of those geopolitical big questions.”

The Impact for Georgia 

These international trade questions, along with the elimination of tax credits for battery and car producers, could bring major consequences for Georgia, which has bet big on the electric mobility sector and was promised 7,500 jobs from Rivian.

Rivian unveiled plans for its massive plant in 2021, at the time the largest economic development project in the state’s history. It had just raised $12 billion in an IPO, though it had only produced 652 vehicles. The project has faced a multitude of hurdles since, from local opposition to a precipitous drop in Rivian’s stock price and questions about the strength of EV demand in light of Mr. Trump’s recent budget bill, which eliminates $7,500 tax incentives some saw as crucial to driving demand. Rivian has lost about $1.7 billion this year, though sales are growing and software has become a bright spot. Deliveries are expected to land between 40,000-46,000 this year. 

Rivian does have some wind at its sails, including a $5.8 billion joint venture with Volkswagen, which included a $1 billion equity investment and a software licensing arrangement. It was also selected for a $6.6 billion Department of Energy loan signed on the eve of President Biden’s departure from office. That funding has yet to be drawn down, and some worry Mr. Trump may claw it back as he seeks to slash government spending.  

Mr. Scaringe told CNBC that Rivian has built a solid relationship with the Department of Energy. Mr. Kemp, who has elsewhere criticized the Biden administration for “picking winners and losers” in the EV space, has reportedly urged the DOE to support Rivian. 

Georgia, meanwhile, has put forth a $1.5 billion incentives package. Most of the money comes in the form of statutory jobs tax credits which only come if Rivian builds the plant and meets its hiring pledges. Bonds were issued to enable Rivian to abate taxes on the property for 25 years, though it will pay $300 million in payments in lieu of taxes over that time. 

The plant is to be built in two phases, the first ramping up to a capacity of 200,000 vehicles annually, doubling that at a later date. The company has said it will build not only the R2, but the smaller R3 crossover at the facility. 

The state and the local joint-development authority of Jasper, Morgan, Newton and Walton counties have spent some $198 million on acquiring and preparing the 1,978-acre site. The state will also spend $50 million on a training center and $20 million out of its deal-closing fund, the Regional Economic Business Assistance, or REBA, grant. 

The Irvine, Calif.-based company said in July it would put an East Coast headquarters in an office right off the Atlanta Beltline by next year, hiring 100 for what will be a focal point for Rivian’s “global growth strategy.”  

The plant construction is set to create 2,000 temporary jobs, with the facility’s operations spurring an additional 8,000 indirect jobs, fueling $1 billion in annual labor income when combined with the 7,5000 factory positions, Rivian said in a news release. 

As he has before, Mr. Scaringe emphasized in the CNBC interview that the R2 will be a “global product” that will be exported from the U.S.

“The administration and the president’s objective is to bring jobs to the United States, make sure that the United States continues to lead on technology, and to make sure the companies that are building that technology are supporting not just U.S. customers but are global companies.”