By: Ted Dabrowski and John Klingner
Electric vehicle maker Rivian’s recent stock price drop to all-time lows points to the dangers – and the failed policy – of Illinois bureaucrats trying to pick winners and losers with taxpayer money. With the EV market struggling despite massive government intervention and subsidies, it shows it’s not just difficult to pick the right companies, it’s hard to pick the right industries.
Rivian’s losses and job cuts should be a warning to Illinois’ goals of doling out hundreds of millions in taxpayer funds to the likes of Chinese-owned EV battery maker Gotion and car manufacturer Stellantis. But it won’t be.
Rivian was one of Illinois lawmakers’ original EV darlings, receiving nearly $50 million in tax credits in 2017 under Gov. Bruce Rauner. Rivian IPO’d at $78 on November 9, 2021 and the stock price spiked to $172 on Nov. 15, 2021, the day before Gov. J.B. Pritzker signed Illinois’ Reimagining Electric Vehicles in Illinois Act – a massive subsidy program – into law.
It’s been all downhill from there. Rivian stock now trades at just $10, a collapse of 94 percent from its all-time high.
Rivian’s vehicles are great in many ways, but the company lost about $43,000 per vehicle in the October-December period. Losses like that plague the EV sector, raising doubts about whether EVs can ever be profitable. Ford’s Model E electric vehicle division, for example, lost an average of more than $47,000 per vehicle in the same period.
The state’s massive investment in Chinese battery-maker Gotion is another big risk. The Pritzker’s administration has provided more than $536 million in state subsidies to build a factory in Manteno, Illinois. Putting aside the national security risk of allowing a company with Chinese Communist Party ties access to American EV tech development, there’s also the risk that the factory is simply a bad investment.
Then there’s Stellantis. Pritzker announced last fall to much fanfare a major expansion of its Belvidere factory to make EV batteries and mid-size electric trucks. But Pritzker still hasn’t given us the price tag of the state’s incentive package for that project, which reportedly is likely to exceed Gotion’s $536 million, as we wrote in November.
The EV market nationally has been flooded with cash thanks to hundreds of billions in federal dollars being thrown around, and that’s created an oversaturated market. Already we’re seeing a major scale back of production across the industry, from cars to batteries, as we’ve written about here.
And recently, word came that the Biden Administration may have to bow to pressure to loosen federal rules on average vehicle emissions, which have served as a de facto mandate for auto makers to crank out EVs. Dealers simply can’t sell them and pushing back. Reduction in that standard would further undermine EV bets like Illinois’ Reimagining Electric Vehicles Act.
The heavily subsidized electric bus market is also a mess. We recently documented huge problems with buses made by Proterra, the leading e-bus maker. However, bankruptcies and product failures plague that entire sector, which we will write about soon.
As our colleague Mark Glennon wrote recently, “The massive bet on EVs is looking more unsound every day and may be shaping up as a historic failure of government industrial policy. Both the Biden Administration and the State of Illinois, with its Reimaging Energy and Vehicles plan, have bet the ranch on EVs. That means taxpayers, not private investors, lose if the bet goes bad, as increasingly appears likely.”
Read more from Wirepoints:
- The special interest smorgasbord inside Illinois lawmakers’ 800-page-plus green energy behemoth
- Two new polls find broad voter opposition to Gotion project, the Chinese electric vehicle battery plant planned for Illinois
- Latest bad news for electric vehicles further imperils massive bets by Illinois and federal government
- Huge Problems With Proterra Electric Transit Buses In Many Cities, Though CTA And PACE Say No Concerns
With $162 billion more from taxpayers, couldn’t you deliver a few bond upgrades, too
Audio and summary 
A largely unasked question is becoming glaring: Is Illinois doing all it should to use artificial intelligence to make government cost less and work better? So far, the evidence says no.
Pritzker hopes to be sitting in the Oval office before IL taxpayers realize the massive failure of handing out subsidies and tax incentives to Chinese battery plants. The cost of his green new steal will be placed on the shoulders of the middle class. EV batteries and wind turbines are more detrimental to the environment considering the materials needed to produce them and problems disposing of them. Check out their projected cost, timeframe and problems upgrading the power grid. Climate change ideology is a political construct, using scientists that will produce the opinions and studies to support their claims. Money… Read more »
Here’s an article about Toyota and hybrid vehicles. They were right from the beginning by concentrating on making hybrids not full EV’s. But in Illinois the opposite is true.
https://www.yahoo.com/autos/toyota-hybrid-cars-along-132650213.html
A few key points the article may have missed. Remember the charging infrastructure is the heavy lift especially with larger numbers of EV fleets. Bezos was an early investor here with Amazon Venture Capital still holding 16%. The whole idea which many thought would have worked (and may still work) was the commercial capabilities of the design and power train when used in Amazon delivery vehicles and other large company fleets with low-medium duty service cycle of under 100 miles from each fulfillment center, warehouse, distribution center. The math behind this may still be in Amazon’s favor as it would… Read more »
+1
Here’s an excellent article on government industrial policy and the perfect solution.
https://reason.com/2024/02/26/not-all-policy-is-industrial-policy/
I think the headline of the article is a bit misleading, I don’t believe the government ever picks any winners, only losers. They definitely should stop investing taxpayer money into what they “believe” are good investments.
Also in Illinois is Navistar which was bought out by woke German company Traton (Volkswagon). Navistar is betting the farm on their EV trucks still in development. They announced that they will never manufacture another diesel engine again. Yet as I drive across the country I see few chargers, but I do see 40 semi’s refueling at the same time in a TA or Pilot truck stop. Can you imagine the electrical load of 40 class 8 semis each having three batteries that are 50% each larger than the biggest car battery all charging simultaneously? Sorry folks it ain’t gonna… Read more »
The upscale luxury jeeps are junk too. They can’t sell the Grand Wagoneers, they just on lots. The electric jeeps are a joke too, they aren’t hybrids, they are electric with a range of like 40 miles or something, with a separate ICE engine. Like what’s the point of that?
Yes we have a cabin in Lac Du Flambeau Wis. about 6.5 hours up. Years ago we contemplated getting, at the time, a cheap Jeep to tool around off road. Jeep was made for that. Now Jeep is trying to be a Lexus at those prices. The stupid Germans completely abandoned their customers and the whole concept of what is a Jeep. Why on earth buy a Jeep now, just get a Lexus. Ram/Jeep/Dodge dealers have over 600 day supply of unsold 2023 jeeps sitting on lots. Their floor plan loans must be going underwater, paying for those cars for… Read more »
No government subsidies mean no successful EV, solar, wind companies, ok maybe Tesla. EV chargers installed by the government no thanks. Let companies spend their money and if it works good for them, no tax money
I heard yesterday that Metra is spending (taxpayers’) billions on new battery-operated trains!
We need to cut our “do-gooder” government down to the basic bones.
And let’s “re-imagine” a more conservative, non-woke governor!
I think the vehicles actually look good. If they dumped the batteries and put in an ICE and transmission, I would take a look.
Here’s more info
https://https://www.yahoo.com/finance/m/05288d2e-907a-3eea-97e1-5cd9880c90f7/rivian-stock-gets-a-rare.htmlwww.yahoo.com/news/rivians-ceo-cant-seem-clear-181306783.html
And news on Mercedes EV’s
https://www.yahoo.com/finance/news/mercedes-benz-chief-vows-build-162016747.html
And Volvo.
https://finance.yahoo.com/news/why-volvo-pulled-plug-electric-060000480.html
Seems like hybrid autos are the way to go in the interim and hydrogen fuel cells for the near future with the proper infrastructure built to accommodate the autos.
Hybrids are the way to go. Too bad not many companies make them, and they’re sold for luxury vehicle prices.
Toyota made a sheeet load of money selling hybrids last year. I bought my wife a 2023 Rav4 Hybrid and she’s getting 43 mpg!!
Toyota is taking some of its profits from hybrids and investing in developing a solid state battery. Once they develop the solid state battery Tesla, Rivian, etc. are done.
We were also looking for a Rav4 Hybrid but they are in very short supply and expensive so we have to wait but her 2016 Toyota Camry still runs good but had to put in new struts and brakes for $2K yesterday. Back seat has to come out for the struts. Anyway if anyone is in the market for a vehicle my advice is rent one for the weekend. Get the model you want to get and drive it for 3 days. This way you will know how your back feels or legs go numb or get leg cramps after… Read more »
Take a look at Mazda, love mine, we’ve driven it coast to coast, border to border, through deserts, mountains and ice storms, we do all driving vacations. Great car as good or better than RAV4.
Thanks. Will rent one for the weekend soon. Problem is comfort since my wife had a few spinal fusions years ago and now needs a knee replacement. A small SUV that we can afford and that is easy to get in and out of will help her a lot.
I rented a Mazda CX 90 a few weeks back, it drove really well and it looks great. It was just as nice as my wife’s European SUV that cost quite a bit more..
I think the solid state battery is a unicorn that will never come to fruition. Possibly a fabricated carrot to make people believe that EV will succeed and start buying them.
Energy has to come from somewhere. A battery that holds more energy will require even more charging than the electrical grid hogs we have now already do.
No thanks. Those batteries still go bad and take thousands to replace. I’ll stick with ICE.
How long can Rivian survive? There won’t be any Federal assistance coming for awhile. Joe can’t even get his Ukraine war funded right now. If they go under, don’t hold your breath waiting for Governor Blowhard to acknowledge it.
They’ve got about $8 billion in cash which should last them about 2 more years. But they lose about $43,000 on every vehicle they sell. They’ve cut production costs enormously to just get to that $43,000 loss per vehicle figure. They need to start selling more vehicles rather quickly so the economies of scale for building their vehicles kick in and the losses turn into profits,
Reminds me of this joke. Two guys decided to sell melons which they bought 100 at a dollar apiece and sold them for 50 cents each. At the end of the day one guy said hey we lost money. The other guy says tomorrow we need to buy 200 melons.