Rivian's $5B Georgia Deal Shows Southeast Is Winning The EV Manufacturing Race

When electric vehicle maker Rivian announced last month that it will build a $5B assembly plant 50 miles east of Atlanta for its electric SUVs, it was the biggest piece of evidence yet showing how the Southeast has become a hub for the car industry's transformation from combustion engines to electric and hybrid vehicles.

Over the past few years, Georgia, Florida, Tennessee and the Carolinas have seen a host of EV makers, battery manufacturers and other suppliers announce plans to open facilities.

“These things kind of started a snowball with Rivian being the big, big one,” said Nathaniel Horadam, a managing consultant with the Center for Transportation and the Environment.

The global market for electric vehicles was $246.7B in 2020, according to a report by Fortune Business Insights, which projects it to grow to over $1.3 trillion by 2028.

The Southeast, long a hub for automotive manufacturing, is now becoming a nexus for EV manufacturers, including traditional automotive companies, battery producers and parts suppliers.

Startup EV makers like Cenntro Automotive Corp. in Florida and Duckyang, GEDIA Automotive Group and TEKLAS USA in Georgia have cemented plans to build factories. The legacy players are building or converting plants in the Southeast to usher in their own EVs, such as Ford's EV plant plans in Tennessee and Kentucky, Volkswagen in Chattanooga and GM's planned Tennessee plant conversion.

But Horadam said the EV industry's movement toward Georgia was cemented by SK Innovation, a Korean battery maker that announced plans in 2018 to build two battery factories on the outskirts of Atlanta, a more than $2B investment that is adding 2,000 new jobs. For its part, Georgia put together $300M in incentives to lure the company here.

“I think the SK Innovation plant was a big turning point for Georgia, and getting the governor's buy-in,” said Horadam, who consults with electric and automated vehicle companies.

The physical footprint of the EV industry has grown across the Southeast with breathtaking speed — just last year, Netherlands-based Heliox announced in May that it was opening its North American headquarters in Atlanta and Plug Power Inc. announced a month later plans to build a hydrogen production facility in Camden County, Georgia.

Volkswagen announced in 2020 that it would expand its Chattanooga plant to make hybrid vehicles. Last year, Ford announced plans to open a $5.6B all-electric vehicle plant outside of Memphis as well as opening two plants with SK Innovation in Tennessee and Kentucky for electric vehicles. General Motors is expected to invest $2B to convert a Spring Hill, Tennessee, plant into an EV factory. Toyota announced in December that it planned to build a battery factory in South Carolina and New Jersey-based EV maker Cenntro Automotive announced last month it will build its first U.S. plant in Jacksonville, Florida.

"The Southeast is quickly becoming the center of gravity for EV production,” corporate site selection expert John Boyd told Bisnow in December.

Just Wednesday morning, Georgia Gov. Brian Kemp announced that Battery Resources plans to open a $43M battery recycling plant that would refurbish 70,000 lithium-ion vehicle batteries a year. The plant, at a 154K SF facility at 9172 Industrial Drive NE in Covington, about 35 miles from Atlanta, is set to open this summer, state officials said in a release.

“This is just the latest job creator to move to Georgia because of our leadership position in the electric vehicle manufacturing space,” Kemp said in a statement.

A commonality that ties many of these projects together: incentives doled out by the largely Republican state governments, which are critical to EV manufacturers whose plants are capital intensive, site selection experts said.

The economic incentive package Georgia is offering Rivian has yet to be released — state officials previously said it was being worked on after the announcement — it is likely to be the largest granted to any one company in the state’s history.

The final package will likely outpace the over $400M in incentives the state gave Kia for its plant in West Point, The Atlanta Journal-Constitution reported, and could involve tax credits at more than $5K per new job totaling $265M over time.

The state may also develop a new interchange on Interstate 20 for the plant, the AJC reported. Georgia officials already announced plans to build a technical school on the campus to train future workers.

In return, Rivian plans to develop a sprawling production campus in one of the state’s megasites outside of Social Circle in Walton County, with plans to eventually employ 10,000 people.

Called Project Adventure in economic development circles, Rivian offered a glimpse of its factory vision for the 2,000-acre property this month when it filed development plans with the Georgia Department of Community Affairs. In its application, Rivian is seeking to develop 20M SF on its site “with potential ancillary services and suppliers.” While the application didn't identify Rivian by name, a state source familiar with the filing confirmed to Bisnow that Project Adventure is the same deal.

Supporting the EV industry is a key strategy for Kemp, who is facing re-election next year and possible challenges from within the Republican Party. Experts say Kemp is likely to tout Rivian as an example of his economic development success as governor.

While California-based Rivian, which was founded in 2009, went public in November and has a market capitalization of more than $85B, it has yet to earn a profit. Prior to its IPO, Rivian had been an EV industry darling, attracting investment from Amazon, Ford and Cox Automotive. Experts say Rivian is part of a new breed of carmaker catering to an industry that is expected to meteorically rise in the next few years. 

Consulting giant McKinsey published a report last year that stated 2020 was the year EV adoption reached a tipping point with the global consumer, despite the pandemic. McKinsey projects that global EV adoption will reach 75% and 50% in the U.S. by 2030.

Consumers are driving a lot of this industry growth. By the end of 2020, there were an estimated 10 million electric cars on the roads, with EV registrations increasing 41% and car buyers spending $120B, according to a report by the International Energy Agency’s Global EV Outlook 2021.

Metro Atlanta's talent base, fueled by the engineering engine that is Georgia Tech, was just as critical to Rivian as any incentive package, said Dan Ives, an equity analyst with Wedbush Securities, which helped Rivian secure its IPO.

“It’s the ecosystem of Atlanta because of the engineering community, as well as the logistics and the infrastructure, makes it a very attractive candidate. It's not just about the production of the car. It's the software and services that are included in the car. And Rivian, that's one of their special sauces,” Ives told Bisnow. “We expect Atlanta to follow the footsteps of what we're seeing in Austin with more EV makers moving to the area."

While they’re ultimately making vehicles, EV manufacturers need a different skill level of employees than the gas-powered engine makers of old, Georgia Tech Ring Family Professor Christopher Saldaña said. Those who labored at the GM factory in Doraville before it shut down in 2008 likely wouldn’t be the same labor EV makers would seek, he said.

“You're really relying on more advanced technology than you have in the past,” Saldaña said. “We're going to start getting this cascade of high-paying, high-tech jobs in these sectors coming here. With companies like Rivian coming down here, there's going to be a need for those kinds of jobs down here.”

It helps that the Sun Belt overall has fast-growing, diverse populations and strong demographic growth, especially against historical vehicle manufacturing areas like the Midwest, Horadam said. The demographic shifts to the Southeast give EV manufacturers confidence that they will be able to tap into a talent pool beyond the next few years.

“Are you going to invest in a growing region, or a stagnant and possibly declining region?” Horadam said.

While highly paid, the engineering and software talent in Georgia tends to be cheaper than what companies have to pay on the West Coast or the Northeast, experts say, which has also become an incentive for EV manufacturers here. Computer programmers in Georgia earn a little more than an average of $59,100 a year, according to ZipRecruiter. New York commanded the largest average salary in the nation at $73,400 a year. The average annual engineer salary in Georgia was over $65K, according to ZipRecruiter, far below the annual average salaries in Washington and New York, where they exceed $80K.

Global Location Strategies President Didi Caldwell said there are many potential EV projects out there that various states and municipalities are competing for.

“We're working on a lot of battery manufacturing projects. They want to be in the corridor, which I would say is I-75 coming down from Ohio through Kentucky, Tennessee and Alabama and over into Texas and up the East Coast,” Caldwell said. “These are the places where we see most of the activity."

While those are wide geographic parameters, the lack of big parcels of land near major talent pools limits manufacturers, especially since available skilled labor remains critical for factories. 

“If you really want to recruit the company, you have to demonstrate you can produce the worker," Caldwell said.