Raising capital now might be a strategic move to avoid costlier borrowing later.
RJ Scaringe, chief executive officer (CEO) Rivian Automotives, attempted to clarify the air amid its falling share prices due to the announcement of a green bond earlier this month. He explained that the electric vehicle maker’s earlier than expected bond issuance was intended to enhance its financial security for its new vehicle family, R2.
Economic factors are hinting at potentially higher interest rates in the future, which would make borrowing more expensive. There are also geopolitical concerns like the Israel-Hamas conflict that could influence financial markets. Scaringe emphasized that these risks are not specific to Rivian but affect the entire market.
The CEO showed confidence in R2 and its profitability. R2 cars are smaller and cheaper as compared to Rivian’s sports utility vehicles (R1S) and pickup trucks (R1T). Its production is planned to begin in 2026.
The EV maker is focused on boosting production amid rising demand. They also surpassed the expected demand of vehicle deliveries in the third quarter. They have also planned to reduce prices seeing the market trend.
Rivian had raised $1.3bn earlier and mentioned that they have enough funds till 2025. So, the recent issuance of green bonds raised eyebrows. As of September 30, Rivian had about $9.1bn in cash, which is down from $10.2bn in June.
