Rivian CEO RJ Scaringe has taken steps to address concerns and reassure investors about the recent issuance of $1.5 billion in convertible green bonds by the electric vehicle (EV) manufacturer.
Earlier this month Rivian revealed through a regulatory filing plans to add up to $1.5 billion to its bank accounts through the sale of green convertible senior notes to institutional buyers. The capital raise subsequently raised concerns about the company’s financial health, sending the stock price down, even though its most recent financial statements showed they still had a healthy pile of cash on hand, enough to keep them up and running into 2025.
However, considering the significant investments required for the development of the R2 vehicle platform and the desire for a robust financial cushion, Scaringe said they opted to raise additional capital through bonds. In an interview with Reuters the CEO said the bond issuance was taken to establish a safety net and mitigate any potential constraints or risks associated with a tight financial balance.
Addressing concerns regarding Rivian’s financial health, Scaringe made it clear that the company cannot control macroeconomic variables or political conflicts, which can threaten capital markets and liquidity. He explained the decision to raise capital should not be misconstrued as a lack of faith in the execution to develop the R2 platform or the company’s cost structure, but rather that it demonstrates their commitment to their future product offerings.
“I would not say this is any reflection of the degree of confidence we have for R2 both in terms of execution and in terms of our cost structure,” Scaringe said.
Rivian first started selling their electric vehicles late in 2021 with the launch of the R1T, and then later the R1S. The company did get off to a bit of a rough start but has been able to steady the ship, increasing production and deliveries, while at the same time cutting their financial losses.
Rivian beat expectations with their Q3 2023 production and delivery figures, and with the strong performance they remain on track to meet their production guidance of 52,000 vehicles this year.