Rivian Opens Milpitas Facility Under $19 Million Tax Deal to Help City Close Budget Gap

Electric vehicle manufacturer Rivian has opened a new sales and service facility in Milpitas, launching an eight-year tax incentive agreement that city officials hope will generate millions in revenue to address mounting budget deficits.

The facility, called a “Last Mile Hub,” opened on Yosemite Drive in Central Milpitas near Highway 680 with a ribbon-cutting ceremony late last month, according to city officials. The location will handle vehicle sales, pickups, inspections, leases and service for Rivian’s electric trucks and SUVs, which currently carry price tags of $70,000 or more.

“It’s a win-win situation. It’s gonna be beneficial to the city,” said Milpitas Mayor Carmen Montano.

Under the agreement approved by Milpitas City Council in March 2025, Rivian will receive substantial sales tax rebates in exchange for locating in the city. The Irvine-based company, founded in 2009, will get a 35% rebate on sales taxes for the first three years, increasing to 50% in subsequent years, according to a city staff report.

The deal could generate more than $19 million in revenue for Milpitas over the eight-year contract period, even after accounting for $16 million in rebates to Rivian. City officials view the incentives as necessary to attract the business.

“You give some to get some,” Montano said of the rebate structure.

The facility will bring at least 25 jobs to the city, according to the staff report, though officials described the employment impact as modest compared to the potential tax revenue.

Milpitas faces significant financial pressures, with city staff estimating a $19.2 million budget shortfall over the next five years. Finance Director Luz Cofresí-Howe said the sales tax revenue from Rivian could help fill this gap, though the projections have not yet been updated to include the potential income from the new facility.

“If the Rivian’s sales predictions hold, the sales taxes could help fill a multi-million dollar budget gap forecasted over the next five years,” Cofresí-Howe said.

The Milpitas location joins other Rivian facilities in the Bay Area, including locations in San Francisco and north San Jose. The company operates in a challenging market environment, as the electric vehicle sector faces headwinds from federal policy changes, including rollbacks of EV tax credits and weakened efficiency standards, according to industry reports.

Despite these broader market challenges, Rivian has performed better than many of its competitors in the electric vehicle space.

“Milpitas is now a key link in Rivian’s mission to keep the world adventurous forever,” said Tommy Carrillo, director of commercial facilities real estate at Rivian, in a statement. “The City of Milpitas has been an invaluable partner in bringing this project to life, and we are grateful for its collaboration.”

Given the facility’s potential to address the city’s budget challenges, Cofresí-Howe expects officials will renegotiate the agreement before it expires in eight years.

The opening represents a significant economic development win for Milpitas, which has been seeking new revenue sources to maintain city services amid projected deficits. The success of the arrangement will largely depend on Rivian’s ability to meet sales projections in the competitive luxury electric vehicle market.