The Rivian name is shown on certainly one of their latest electric SUV vehicles in San Diego, U.S., December 16, 2022.
Mike Blake | Reuters
Rivian Automotive plans to boost $1.3 billion in money via a sale of convertible notes, joining a growing list of EV makers scrambling to hoard money as demand falters.
Shares of Rivian closed down over 14% on Tuesday.
Rivian said late Monday it plans to sell the convertible notes — bonds that will be paid back with money, stock or a combination of the 2 — to assist fund the event and launch of its upcoming smaller R2 series of vehicles, now expected in 2026. The institutional investors purchasing the notes may have the choice to purchase additional notes price as much as $200 million, in the event that they select, above the initial $1.3 billion.
Rivian is not in an urgent money crunch, not less than not yet. The EV maker had $12.1 billion available as of the top of 2022, it said during its fourth-quarter earnings presentation Feb. 28, enough to fund its operations through 2025. Nevertheless it recently made a series of moves to conserve money, shedding 6% of its workforce and pushing the R2 launch out a 12 months.
Rivian also said last week that it expects to supply 50,000 vehicles in 2023, fewer than the roughly 60,000 that Wall Street analysts had expected. That could be an indication that demand for its high-priced pickups and SUVs is falling wanting its expectations.
Lucid, one other startup making high-priced electric vehicles, also guided investors to lower-than-expected production in 2023 and said that it plans to ramp up its marketing in coming months, suggesting that it too is seeing fewer orders than expected.
Rivian raised nearly $12 billion when it went public in late 2021, helping it amass a money hoard that also dwarfs that of most other EV startups. The corporate’s shares have lost over 80% of their value because the debut, though.
Rivian said the convertible notes will qualify as “green bonds,” meaning they meet a set of criteria that tends to draw institutions willing to simply accept lower returns in exchange for supporting sustainable development.
The notes will mature in March 2029. The rate of interest and other terms might be decided when the offering is priced.