Rivian Planning to Raise $1.3 Billion in Green Bonds

Matt Posky
by Matt Posky

On Monday, Rivian announced a plan to sell $1.3 billion in bonds as a way to cope with rising production costs.

The news comes just days after the company addressed rumors that it might build as many as 62,000 vehicles through 2023. Despite credible reporting, Rivian said its official production forecast remains set at the original 50,000 electric vehicles by year’s end.

This is presumably due to persistent supply chain issues incurred by the global response to the pandemic, rising costs across the board, and claims of weakening demand for EVs provided by smaller manufacturers (e.g. Rivian, Lucid, Nikola). Though the quarterly reports coming out of those businesses aren’t particularly heartening, whether or not they’ve received framing from corporate media.

Rivian seems to think that, by selling bonds, the company will be in a better position to deliver on its stated production goals. But it’s also vying to manufacture smaller EVs that would be more affordable – useful considering the premium EV market seems to be nearing maximum saturation.

Allegedly coming in 2026, Rivian’s R2 models are assumed to be cheaper versions of the R1 pickup and SUV targeting a broader income bracket. However, due to unstable economic conditions, the company seems to believe that it’ll need cash on hand to manage the situation.

According to Reuters, initial investors will get an option to buy an additional $200 million of the bonds for settlement 13 days after the bonds are issued.

From Reuters:

The capital from this offering will help facilitate the launch of Rivian's smaller R2 vehicle family, a Rivian spokesperson told Reuters, adding that convertible debt was "optimal cost of capital versus selling equity at today's levels."
Irvine, California-based Rivian, which makes R1T electric pickup trucks and R1S SUVs, has said its cash balance will fund its operations through 2025. It reported cash and cash equivalents of $11.57 billion at the end of December, down from $13.27 billion a quarter earlier.

Like many manufacturers, Rivian has also opted for layoffs – cutting roughly 6 percent of its workforce last month. But it’s also been scaling back some of its goals.

In 2022, the company abandoned plans to build delivery vehicles in Europe with backing from Daimler. Its R2 program has also been delayed with rumors that the responsible factory might be delayed by actions taken by the Georgia Department of Economic Development, in addition to local boards that have expressed concerns about what might happen if Rivian goes bankrupt. By selling the bonds, it could be assumed that the company is helping to assuage those fears. But we’ll have to see how things progress, as most of these smaller EV brands (Fisker excluded) don’t seem to be riding quite as high as they once were.

Though it does seem unfair to claim that investors are abandoning smaller EV companies specifically when the entire stock market is on a downward trajectory. Many of the issues confronting Rivian are shared by legacy manufacturers with deeper pockets and massive production capacities.

For those that care, the bonds will be of the “green” variety. However, constant green-washing from a multitude of industries over the years has effectively made the term meaningless in 2023 as there's no standard metric to determine what qualifies.

All one really needs to do is to get the relevant financial institutions to sign onto the scam premise and you can call them whatever you want – provided they are accompanied by vague promises that the funding will be used specifically to benefit the environment or are part of a sustainable economy. In exchange, companies are provided the opportunity to raise debt more cheaply from investors who are willing to take lower returns in exchange for supporting allegedly green projects.

The bonds will mature in March of 2029 and investors will have the option to convert the bonds into cash or additional shares in the EV firm – if they’re so inclined. Interest rate, initial conversion rate, and other terms of the bonds will be decided at the pricing of the offering.

[Image: James Yarbrough/Shutterstock]

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Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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4 of 24 comments
  • 95_SC 95_SC on Mar 07, 2023

    Trump NFTs are a better and safer investment. Hopefully they get treated better than GM bond holders in the bankruptcy

  • Stuki Moi Stuki Moi on Mar 08, 2023

    Hey, if you don't posess the competence to sell anything profitably to actual buyers; at least you can sell paper to gullible idles collecting welfare checks from The Fed. It ain't called The Age of Incompetence for nothing.

    • See 1 previous
    • VoGhost VoGhost on Mar 08, 2023

      I don't think you understand how the bond market works, Stuki.

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