As lackluster demand and high expenses tighten a cash grip around electrical car companies, Rivian Automotive announced on March 6 that it aims to issue bonds worth $1.3 billion.
After-hours trading saw a decline in Rivian stock of about 7%.
Thirteen days after the bonds are issued, initial investors will have the option to purchase an additional $200 million in bonds for settlement, according to a statement from Rivian.
According to a spokeswoman for Rivian, the money raised from this sale will aid in the introduction of the company’s smaller R2 vehicle family. The representative added that convertible debt offered an “optimal cost of capital” in comparison to selling shares at the current levels.
Rivian, a manufacturer of R1T electric pickup trucks and R1S SUVs, has declared that its cash reserves will support its business through the year 2025. At the end of December, it reported having $11.57 billion in cash and cash equivalents, down from $13.27 billion a quarter earlier.
The business fired 6% of its employees last month in an effort to reduce costs.
The introduction of a smaller R2 vehicle family at the $5 billion plant it is building in Georgia was previously postponed by a year, to 2026, and plans to manufacture delivery vans in Europe with Mercedes were also canceled late last year.
After narrowly missing its objective last year, Rivian, which has been losing money on every vehicle it produces, anticipates output for 2023 to be significantly lower than analysts’ expectations as it struggles with ongoing supply chain difficulties.
The bonds, according to Rivian, would be “green” ones, which normally allow businesses to acquire loans more affordably from investors willing to accept lesser returns in exchange for backing green projects.