Department of Energy Loan Programs Office

An agency of the federal government has decided to loan failing EV automaker Rivian $6.57 billion to build a manufacturing facility in Georgia. Rivian has yet to make a profit in any quarter of its existence that began in 2009.

 

There's a smidgen of politics in the DOELPO news release: "Today’s announcement reinforces the Biden-Harris Administration’s commitment to strengthen the nation’s manufacturing competitiveness, helping ensure American businesses remain global leaders in the rapidly expanding EV industry." How would making the price of Rivian EVs make them competitive with internal combustion automobiles when there's no comparison between the EV charging infrastructure and the many thousands of gas stations in the US?

It seems there has been a lot of complaining and even  diplomatic fervor over various nations unfairly subsidizing manufacturing that puts the US at a disadvantage. Chinese PRC shipbuilding has recently received attention for undercutting production costs through government subsidies. Since China is said to be a communist country with government ownership of assets it seems that it would be the logical place to go for finance. An early nail in the coffin of the renewable energy components business was Janet Yellen's complaint that Chinese solar panels were so much cheaper than their western competitors.

If a bank loans a business a substantial amount of money they essentially become part owners of it and able to approve or cancel management decisions. The defenders of capitalism in Washington are now in the car manufacturing business, just like East German Trabant was.  Rivian has a market capitalization of $14.504 billion so the loan, which is meant to build a car factory, is almost one half of the market value of the company itself. Though the terms of repayment aren't spelled out, maybe they will be similar to that of the student loan fiasco and failure to repay will be accepted. Or, at some point, the facility can be repurposed as an immigrant shelter.

Subsequently, EV start-up Canoo has filed for bankruptcy and ceased operations. It's a loser in a contest for market decided by government agencies with the ability of determining who gets how much taxpayer funding, evidently a feature of modern capitalism.