The Price of Rivian’s $6 Billion Rescue

The company vows not to oppose the UAW at its Illinois factory

WSJ editorial.

"Government money always comes with a price, and now we are learning what Rivian Automotive’s is for its recent $6 billion loan from the U.S. Energy Department. The struggling electric-vehicle manufacturer will subject its workers to union domination.

President Biden in September issued an executive order directing agencies to prioritize projects that promote “positive labor-management relations” with “agreements designed to facilitate first collective bargaining agreements, voluntary union recognition, and neutrality by the employer with respect to union organizing.” Want government money? Better surrender to the unions that back Democratic politicians.

Rivian has been tangling with the United Auto Workers union that wants to organize its employees. Bloomberg News reports that Rivian has now struck a so-called neutrality agreement with the UAW that commits the company not to oppose unionization efforts at its factory in Illinois. While the deal doesn’t take effect until the company reaches certain profitability and other metrics, it greases the wheels for future unionization.

Ford Motor likewise struck a neutrality agreement with the UAW at its new Tennessee EV plant that let the unions organize workers through a card-check process rather than a secret-ballot election. The Energy Department recently finalized a $9.6 billion loan for the Ford-SK On battery joint-venture in Tennessee and Kentucky.

One risk for the companies is that the union’s costly demands make it harder to make money on EVs. Rivian lost $107,043 on each vehicle it sold during the first nine months of the year. Ford is losing about half as much on each EV. Both are struggling to compete with Tesla, which is profitable and not unionized.

Rivian executives project that the company could soon become profitable thanks to sales of credits to manufacturers struggling to comply with EV mandates. But such credits will lose value if the new Trump Administration rolls back the Biden greenhouse-gas emissions standards and yanks a waiver for California’s EV quotas.

In agreeing to the union neutrality agreement, Rivian is undermining its chances of future success on which the Biden crowd has bet $6 billion. Industrial policy inevitably puts political demands above economic or commercial priorities, as taxpayers may learn the hard way with Rivian."