Rivian Automotive, a manufacturer of electric vehicles, announced plans to sell $1.5 billion in convertible green bonds and a projected increase in quarterly income.

In after-hours trading, shares of the business with headquarters in Irvine, California, decreased by over 8%. When issued, convertible bonds are often viewed unfavourably by investors since they can be diluted when converted into shares.

The bond issued by Rivian will maturity in October 2030, and investors will be given the choice of exchanging their bonds for cash or business stock, according to a filing.

An extra $225 million of the bonds may be purchased by initial investors for settlement 13 days after the bonds are issued.

Even if the issuance is hurting the company, Rivian was “prudent” since the “market could get really tight,” according to Ivana Delevska, chief investment officer of Spear Invest, which holds Rivian through its Spear Alpha ETF. Spear Invest owns a majority stake in Rivian. To be safe is preferable to being sorry.

The company’s plan to sell green bonds on Wednesday follows a similar $1.3 billion bond sale in March that Rivian claimed would aid in the introduction of its smaller R2 vehicle family. Green bonds typically give companies the opportunity to raise debt more affordably from investors who are willing to accept lower returns in exchange for supporting green projects.

“The purpose of this offering, similar to our raise earlier this year, is to de-risk the launch of R2 in Georgia,” a Rivian spokesperson told Reuters. “Our primary goal is to maintain a conservative balance sheet.”

Like its EV competitors, Rivian has been spending money like crazy to increase production and stay up with market leader Tesla, which has lowered costs on worries about waning demand for electric vehicles in the US.

According to the company, Rivian had an anticipated cash balance of $9.1 billion as of September 30 compared to $10.2 billion in June.

This week, the Amazon-backed startup company outperformed forecasts for third-quarter deliveries by increasing output to keep up with steady demand for its pickup trucks and SUVs despite high borrowing rates for customers.

In comparison to about $540 million a year earlier, the company anticipates sales for the three months ending September 30 to be between $1.29 billion and $1.33 billion.

According to LSEG estimates, analysts were anticipating $1.30 billion on average.

(Adapted from Bloomberg.com)