Rivian will raise $1.3 billion based on EV demand

The Rivian name is displayed on one of their new electric SUVs in San Diego, USA on December 16, 2022.

Mike Blake | Reuters

Rivian Automotive plans to raise $1.3 billion in cash through the sale of convertible notes, joining a growing list of electric car makers struggling to raise cash as demand falters.

Rivian shares fell more than 14% on Tuesday.

Rivian said late Monday it plans to sell convertible notes — bonds that can be redeemed for cash, stock or a mix of the two — to help finance the development and launch of a smaller series of R2 vehicles expected in 2026. Institutional investors purchasing the notes will have the option to purchase up to $200 million in additional notes above the initial $1.3 billion.

Rivian is not in dire need of cash, at least not yet. At the time of its fourth-quarter earnings presentation on Feb. 28, the EV maker had $12.1 billion on hand at the end of 2022, enough to fund its operations through 2025. 6% of its workforce and push R2 per year launch.

Rivian also said last week it expects to produce 50,000 vehicles in 2023, down from the roughly 60,000 expected by Wall Street analysts. This could be a sign that demand for its premium pickups and SUVs is falling below expectations.

UnderstandableAnother high-priced electric vehicle startup pointed investors to lower-than-expected production in 2023 and said it plans to expand its marketing in the coming months, suggesting it too will see fewer orders than expected.

Rivian raised about $12 billion when it went public in late 2021, helping it raise a fund that dwarfs that of many other electric startups. Since its debut, the company’s stock has lost more than 80% of its value.

Rivian said the convertible notes qualify as “green bonds,” meaning they meet criteria that tend to attract institutions willing to accept low returns rather than support sustainable development.

The notes mature in March 2029. The interest rate and other terms will be decided when the offer price is determined.

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