By: Ted Dabrowski and John Klingner
Gov. J.B. Pritzker recently promised electric car maker Rivian $827 million in taxpayer subsidies when he shouldn’t have given the company a penny. The question is, was it negligence or something more?
At issue is the fact that there was no need for the governor to entice Rivian with new subsidies – the company had no real choice but to invest more in Illinois. What’s more, Rivian’s financial situation is precarious, so Gov. Pritzker’s support for the company is a pure gamble with taxpayer dollars.
Below, we make our case for why the governor’s handout to Rivian is so problematic.
Rivian in trouble
If you’re following the slumping EV industry, you’ll know that Rivian is in deep trouble. Despite the popularity of its cars, “with less than $8 billion in the bank, Rivian will run through the last of its cash in about 16 months,” warned The Motley Fool. The company currently loses about $33,000 per truck sold.
The company’s stock price reflects that risk and it now trades at just $10 a share – down 94 percent from its $172 high 2.5 years ago.
The company’s need to conserve cash has become so dire that in early March it announced a delay in the build out of its promised $5 billion Georgia factory. Without that investment, the only way Rivian can meet its car production targets is to invest more in its Normal, Illinois facility. It’s the company’s only factory.
The switch will “save more than $2.25 billion in capital spending, product development and supplier sourcing compared with launching R2 production in Georgia.” according to Rivian. “They need to stem the bleeding,” said Sam Fiorani of AutoForecast Solutions.
Enter Gov. Pritzker’s announcement of $827 million in taxpayers subsidies, purportedly to “lure” Rivian’s investment to Illinois.
But that’s not what’s happening here. Rivian didn’t need to be “lured” because it had nowhere else to go. There was no need for any incentives.
And yet Gov. Pritzker promised the company nearly a billion dollars anyway.
It’s always wrong for government bureaucrats to try and pick winners and losers with taxpayer money, but Pritzker’s decision is even worse than that. With all the doubt surrounding Rivian’s finances, it’s an open question as to just how viable Rivian is. Financial research firm Investorplace warns, “With the company producing electric trucks at a huge loss and burning through cash at an alarming rate, there are questions being raised about whether Rivian can remain a going concern.”
Which begs the question, how can Pritzker justify propping up a high-risk venture with taxpayer dollars?
At best, the handout is negligence. Did the Pritzker Administration truly not know how limited Rivian’s options were?
At worst, it’s something more nefarious. The governor is gambling with taxpayer funds to his benefit, whether it’s to push a personal ideology or to further his political aspirations.
Gov. Pritzker is a true believer in advancing the green movement at any cost. His big legislative achievement, the state’s massive green-energy omnibus, is evidence of that. Pouring taxpayer subsidies into Rivian is just another way to further that agenda – all at an astronomical cost of more than $1.5 million per new job created.
Rivian’s fate will also have a big impact on Pritzker’s personal “green” reputation. The state’s subsidies to Rivian may have started with Gov. Bruce Rauner, but it’s Gov. Pritzker who has staked a large part of his political standing on Illinois becoming a leading “green” state.
Rivian’s success would be another green mark for the governor. It’s failure, an unmistakable black mark. Better for him to tip the scales in the company’s favor.
The governor is getting away with this because he can. Until there’s finally a viable opposition in Illinois, count on the legal corruption and waste of taxpayer dollars to continue.
Read more from Wirepoints:
- Latest bad news for electric vehicles further imperils massive bets by Illinois and federal government
- Pritzker doubles down with $827 million of taxpayer money for expansion by troubled electric vehicle maker, Rivian
- Rivian shaping up as another example of why government shouldn’t pick winners and losers
The bill passed despite their votes in response to certain incidents where local prosecutors are thought to have been too lenient with non-citizens assaulting cops.
The Wall Street Journal Editorial Board cited Wirepoints’ analysis of Chicago student proficiency data in their latest piece condemning the Chicago Teachers Union’s outrageous contract demands…all while a vast majority of Chicago’s children graduate unable to read at grade level.
It’s something more. Has he opened up any LLC’s lately???
Silly question. He doesn’t care. It’s not his money and he may (or not, again, he doesn’t REALLY care) benefit.
What was Pritzker thinking when he promised to give Rivian, the EV carmaker, $827 million in subsidies? I can think of at least two possibilities:
Rivian isn’t receiving a cash influx of $827 million from Gov. Santa Klaus. Over 75% of this money is in tax incentives ($634 million) spread out over 30 years, or about $21 million per year. There is $118 million for a second training center. In order to earn the incentives it must add 500 jobs and maintain a workforce of 6,000 (current workforce is 8,000). If Rivian goes bankrupt in 2 years, like a poster below stated as a possibility, virtually none of the incentive package will have been implemented. But having said that, it is not the government’s job,… Read more »
Driving Illinois downhill and off a cliff. A Normal decline.
RIVN’s stock price was $130 in November 2021. It’s now $10. Public estimates of bankruptcy in the next 24 months are greater than 50%. “I believe in the future of Rivian and the state of Illinois does too and we’re making investments to prove it,” said Pritzker.
Just be glad he’s not managing your 401(k).
It’s flat out negligence brought on by a bad case of climate change blues. JB leaves a wet spot each time a green company comes calling. He is incapable of controlling his urge to champion any initiative or company that aligns itself with the greenies. Rivian is a laughable company that simply can not survive without huge cash infusions and incompetent public officials. They proudly toast Governor Blowhard which he just loves. It’s a sick twisted relationship that Illinois taxpayers are funding.
Biggest question to me is whether he’d invest his own money on the same terms. If the answer is no, then he’s virtue signaling and/or promoting his own political interests with our money.
What, nothing for Navistar? They’ve been in Illinois for 170 years and also make EV truck and bus and sell them at a loss. It’s not fair, Navistar gets shafted while a start up gets the red carpet?
Who Made America? | Innovators | Cyrus McCormick (pbs.org)
One of Pritzker’s goals is headlines for the Democrat convention when he can stand up and proclaim how he has turned Illinois around and made it a hub of green energy projects for his future presidential aspirations. After the convention the headlines, having served their purpose, will be gone but the bills will stay attached to the Illinois taxpayers for decades and, can we say, that the money will come from funds that should be going to the pension liabilities that are strangling the State as it is? Illinois has enough spending problems as it is and does not need… Read more »
Absolutely spot on. This Rivian thing is entirely a dog and pony show serving the Pritzker for President Campaign. The dunderheaded MSM will praise and gobble up JB like he is a plump tasty hors d’oeuvre.
When Rivian uses up this subsidy and is still unprofitable, there can always be another subsidy courtesy of the Illinois taxpayers.
Does anybody wonder if the Pritzker organization have any stocks or other financial interest in Rivian ongoing and if so is Pritzker using tax payers money to shore up his business interests to offset any losses.
I was going to post the same thing
Not that I know of and I don’t think that’s it. Instead, I think Pritzker’s self-interest in the project is the political one nicely described by Riverbender above, which I think is really the point of the article.
Yes, Riverbender is spot on
With the EV business today, with any government participation… seems like each deal should be examined closely. Ever since the Peloci’s coincidentally made millions on a stock trade with Tesla, buying just before the government made this EV a mandate…each deal needs a close look regarding the motivation and who benefits.
If I’m not mistaken she made a killing on Visa and possibly NVidia. Insider trading for them is legal but jail time for us.
Most of the subsidy is tax incentives in future years which really reduces the risk compared to the headline number. I believe Illinois is on the hook for $75 to $100 million in infrastructure upgrades
Got it, so it’s only $75M – $100M for a soon to be bankrupt electric vehicle manufacturer.
Wow is this an ignorant waste of words. You clearly are clueless about the automotive industry, business in general, and how tax incentives work. You’re really dodging the facts here to serve your irrational bias. So why would someone be as wilfully ignorant and malignant as you? Because you have an ulterior motive. Basically what you’re saying is you don’t like jobs being created if it means progress. If they gave tax incentives for a coal mine you’d be head over heels, and still ignorant AF.
Tax incentives should not go to coal mines, or Chinese semiconductor manufacturers, or professional sports teams, or corn farmers, or anyone else. I know it’s difficult for you, but imagine a world in which a taxpayer kept his own dollar, to spend it in a way he saw fit, instead of having it extorted from him on the threat of fine and imprisonment, and used to pay off a politician’s grifting friend.
Better make that dollar about 65 cents, courtesy of Bidenflation.
Nope. Don’t agree to tax credits for companies. I don’t want government bureaucrats taking money from other companies and taxpayers so they can dole it out to their preferred companies and industries. Pols kill other jobs to act like they are creating new jobs. In the Rivian case, it’s costing taxpayers $1.5 million per new job. That’s crazy stuff, even if it’s spread out over 30 years.
Even with good intentions, politicians have no idea what they’re doing when investing taxpayer money.
Ted, Billy Bob does have a point. The “facts” are always open to both interpretation and how they are presented makes a difference as well. You’ve done great work at Wirepoints. I see that you’re getting more and more traction though. That’s a good thing for the taxpayers.
I’m interested in your statement on tax credits. They are a common tool to boost jobs and encourage business and spur investment. Our pols are the problem as they’re corrupt and the we have no independent journalism.
Tax credits for profitable companies that are a going concern is one thing. This is a wildly unprofitable company that only gets Pritzker’s love and affection because it’s a silly green initiative company. In this case the tax credits are completely indefensible.
Correct …just look at the great job they did with the social security fund!
Speaking of “coal” mining still provides jobs and exports for our State. What exactly has Rivan done as in “done?” Now, regarding coal, as reported by the Daily Egyptian last year “After exporting 13 million tons of coal last year, a recent report showed Illinois has been labeled one of the largest coal producing and exporting states in the country. According to a report released Wednesday by the Illinois Office of Coal Development, coal production has increased more than five times the amount exported two years ago — 2.5 million. Coal has also made its way to 18 different countries, such… Read more »
Tax incentives? How about reducing taxes like other states have done, that seems to be a pretty good incentive. That way everyone wins not just the politician’s favored company.
BB……think you are the ignorant one!
Sue – I can’t follow Billy Bob’s arguments. First, the worst argument around is to assert bias in the absence of facts. Casts considerable suspicion on the level of education. Second, is there something about the auto industry that requires tax subsidies? Rivian is a luxury car maker that pumps out expensive products. Why does this make them eligible for tax benefits, and why does a complaint about tax credits mean conflated with not knowing anything about the auto industry. Third, wouldn’t a reliable path for business growth be to have a business friendly environment with low taxes and reasonable… Read more »
You can’t defeat leftists with logic or words or rationality. They can’t only be defeated at the ballot box and by sheer will. They are an ideology that must be defeated completely, but like cockroaches, they keep coming back, and you must remain ever vigilant .