© Reuters. Rivian CEO RJ Scaringe speaks at a press event at the Amazon Logistics Facility in Chicago, Illinois, U.S. July 21, 2022. REUTERS/Jim Vondruska/File photo
By Abhirup Roy
SAN FRANCISCO (Reuters) -Rivian’s earlier-than-expected bond issuance this month was meant to strengthen the EV maker’s balance sheet before geopolitical risks tighten capital markets and does not reflect any concerns around its cash and operations, its CEO told Reuters on Tuesday.
After a $1.3 billion convertible green bond in March, Rivian (NASDAQ:) had said it had enough money to last it through 2025 and it would not need to raise capital until then.
But the maker of R1S sport utility vehicles and R1T pick up trucks announced plans to issue $1.5 billion worth of convertible green bonds this month, sparking concerns among investors and some suppliers about the company’s financial health and sending shares plummeting.
Seeking to allay those concerns, Rivian CEO RJ Scaringe told Reuters the capital raise was meant to create an additional buffer as it was kicking off meaningful investments to build the R2 and to make sure “that we are never at risk of having a overly constrained or overly tight balance sheet.”
“We don’t control the macro economic environment, we cannot control political conflict, and those are real risks that exist not just specific to Rivian,” Scaringe said in an interview. “That’s a risk to our capital markets and the liquidity of those capital markets.”
“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,” he said.
Rivian has been focusing on ramping up production to meet demand and doubling down on cutting cost to limit burning cash even as the industry grapples with a price war sparked by market leader Tesla (NASDAQ:) to stimulate softening demand.
The Irvine, California-based startup beat third-quarter deliveries expectations this month as it produced more vehicles but shied away from further raising its full-year target of making 52,000 vehicles, disappointing investors.
Scaringe declined to comment on the production target as the company is set to announce results early next month. Despite supply chain visibility improving, the guidance baked in some lingering risks, Scaringe had told Reuters in August while raising its target by 2,000 vehicles.
Rivian’s cash balance as of Sept. 30 was estimated to be at $9.1 billion, down from $10.2 billion in June.