Rivian is halting construction on its $5 billion Georgia plant to save money

Rivian generally had a good day yesterday, launching the R2 SUV alongside the surprise R3 crossover and buggy-style R3X, which were met with general acclaim. Buried in it press releasehowever, was the news that the automaker is shutting down production at its $5 billion Georgia plant to save money.

Instead of building the R2 in Georgia as originally planned, the company will begin production of the electric SUV at its existing plant in Normal, Illinois. “In addition to significantly reducing the amount of capital required to bring R2 to market, the company believes this approach significantly reduces risk to market and associated memory,” the company said.

The move will also allow Rivian to bring R2 to market earlier, in the first half of 2026, while saving the company $2.25 billion in capital costs in the short term. This is important as it has been burning cash lately, according to recent reports.

Of all the electric car startups emerging recently, Rivian is one of the most promising thanks to significant investment from Amazon, Ford and others. The company’s electric R1T pickup and R1S SUV were also widely praised for their attractive design, healthy mileage and more.

However, growing an automotive startup is no easy feat, especially in a market that has been hard for EVs lately – even with the hard Tesla pinching sensation. It doesn’t help that startup competitors like Fisker have serious cash flow problems, as that could scare off consumers who are wary of unproven EV brands.

Rivian has chosen Georgia as the location for its second EV factory in 2021, receiving up to $1.5 billion in state incentives. At the time, the company said it hoped to eventually produce 400,000 electric vehicles there a year. With plant changes, the Normal, Illinois facility will increase capacity to 215,000 units per year in R1T, R1S, EDV, RCV and R2.

The Georgia location remains in the picture, but Rivian said only that construction will resume later. “Rivian’s facility in Georgia remains an extremely important part of its strategy for the large-scale production of R2 and R3,” it said in a statement.