Photo: Rivian
Rivian relocated the R2 production start from the Georgia plant to its main production facility in Normal, Illinois. This allows it to cut costs and speed up deliveries of its mass-market SUV, but it's only a temporary solution. Rivian planned for 155,000 units per R2 production capacity, but the only paint shop at the factory is a bottleneck.
Rivian made a lasting impression when it launched the R2 SUV on March 7. Although it looked like a shrunk R1S, the compact SUV is much more than that, bringing Rivian closer to Tesla in terms of technology and cost structure. R2's price and feature set will also make it an instant hit with customers, especially as Rivian packs it with practical details in line with the company's "adventure vehicle" mantra.
The initial plans were to start R2 production at a new factory in Georgia built from the ground up for high production run rates (over 400K EVs per year). However, as losses mounted, Rivian decided to change its strategy and begin production of the compact SUV at its main factory in Normal, Illinois. Although the Normal plant doesn't have enough capacity to accommodate R2's full production ramp-up, it is enough for the first phase. The move allows Rivian to save $2.25 billion in the short term.
The EV startup announced that it earmarked about 155,000 units in yearly production capacity for the R2 at the Normal factory. Since the plant has been upgraded to a 215,000-vehicle annual run rate, this leaves 60,000 units for the R1S, R1T, RCV, and EDV models combined. Rivian recently unveiled plans to invest $1.5 billion at Normal to expand production capacity, including about $830 million in state incentives over 30 years.
Although 155,000 units per year sounds like a solid capacity for the early stages of production, there is a bottleneck that might require additional investments. Specifically, the only paint shop at the factory has a capacity limited to 150,000 vehicles per year. This means that Rivian needs to find other ways to paint 65,000 units before reaching that capacity ceiling.
It's safe to assume that the limit will not be reached immediately, as the R2 ramp-up will take time. However, once it goes there, it would be interesting to see how Rivian will prioritize production between its various models. Currently, the company has guided for about 57,000 R1 vehicles in 2024, which means it's still far from exhausting the production line or paint shop capacity.
Rivian plans to sell the R2 globally, and given its size and features, it might prove a sales hit. Expanding the production capacity will become crucial at that point, which is why the Georgia plant is still important for Rivian.
During the first-quarter earnings call, Rivian confirmed that the Normal plant will be shut down again next year to prepare the lines for the R2 production. The start of deliveries will not occur earlier than Q1 2026 because Rivian wants to iron out all possible issues before the car gets to customers.
The initial plans were to start R2 production at a new factory in Georgia built from the ground up for high production run rates (over 400K EVs per year). However, as losses mounted, Rivian decided to change its strategy and begin production of the compact SUV at its main factory in Normal, Illinois. Although the Normal plant doesn't have enough capacity to accommodate R2's full production ramp-up, it is enough for the first phase. The move allows Rivian to save $2.25 billion in the short term.
The EV startup announced that it earmarked about 155,000 units in yearly production capacity for the R2 at the Normal factory. Since the plant has been upgraded to a 215,000-vehicle annual run rate, this leaves 60,000 units for the R1S, R1T, RCV, and EDV models combined. Rivian recently unveiled plans to invest $1.5 billion at Normal to expand production capacity, including about $830 million in state incentives over 30 years.
Although 155,000 units per year sounds like a solid capacity for the early stages of production, there is a bottleneck that might require additional investments. Specifically, the only paint shop at the factory has a capacity limited to 150,000 vehicles per year. This means that Rivian needs to find other ways to paint 65,000 units before reaching that capacity ceiling.
It's safe to assume that the limit will not be reached immediately, as the R2 ramp-up will take time. However, once it goes there, it would be interesting to see how Rivian will prioritize production between its various models. Currently, the company has guided for about 57,000 R1 vehicles in 2024, which means it's still far from exhausting the production line or paint shop capacity.
Rivian plans to sell the R2 globally, and given its size and features, it might prove a sales hit. Expanding the production capacity will become crucial at that point, which is why the Georgia plant is still important for Rivian.
During the first-quarter earnings call, Rivian confirmed that the Normal plant will be shut down again next year to prepare the lines for the R2 production. The start of deliveries will not occur earlier than Q1 2026 because Rivian wants to iron out all possible issues before the car gets to customers.
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