The name Rivian is seen on one of the new electric SUVs in San Diego, US, December 16, 2022.
Mike Blake | Reuters
Rivian Motors It plans to raise $1.3 billion in cash through the sale of convertible notes, joining a growing list of electric car makers scrambling for cash as demand falters.
Rivian shares were down about 11% in early trading Tuesday.
Related investment news
Rivian said late Monday that it plans to sell convertible notes — bonds that can be paid back with cash, shares, or a combination of the two — to help fund the development and launch of its next, smaller R2 series, now expected in 2026. Institutional investors will have Note purchasers have the option to purchase up to $200 million in additional notes, if they so choose, on top of the initial $1.3 billion.
Rivian is not in an immediate cash crunch, at least not yet. The electric car maker had $12.1 billion in revenue at the end of 2022, it said during its fourth-quarter earnings presentation on Feb. 4th. 28, enough to wind down its operations through 2025. But it recently made a series of moves to conserve cash, cutting 6% of its workforce and pushing the launch of R2 by a year.
Rivian also said last week that it expects to produce 50,000 vehicles in 2023, less than the roughly 60,000 Wall Street analysts had forecast. That could be a sign that demand for expensive pickups and SUVs is not living up to his expectations.
LucidAnother startup that makes high-priced electric cars also tipped investors to lower-than-expected production in 2023 and said it plans to ramp up its marketing in the coming months, indicating it is also seeing lower-than-expected orders.
Rivian raised nearly $12 billion when it went public in late 2021, helping it amass a cash fortune that still dwarfs most other electric vehicle startups. However, the company’s shares have lost more than 80% of their value since their inception.
The convertible bond would qualify as a “green bond,” Rivian said, meaning it meets a set of criteria that tend to attract institutions willing to accept lower yields in return for supporting sustainable development.
The bonds will mature in March 2029. The interest rate and other terms will be determined when the offer is priced.