Rivian does rapid reverse on price hike after customer backlash

Rivian has been forced into a rapid reversal of its proposed price hikes, at least for existing customers, following a massive backlash and order cancellations.

CEO RJ Scaringe said late Thursday (US time) that the EV maker will now honour the pricing set for thousands of existing customers, many of whom cancelled orders after the company announced on Tuesday (US time) a hefty price hike to its range of electric utes and SUVs.

The price hike – which was in the order of $A15,000 in some cases – was announced by the company  in the wake of supply chain challenges that have sent the price of many components up, affecting all automakers.

The price hike involved a rejigging available options for customers, meaning cheaper options were no longer available.

As The Driven reported on Thursday, it resulted in as much as 60% of Rivian’s preorders being cancelled, based on reports from Reddit, a Rivian owner’s forum and Sawyer Merritt, an electric vehicle industry watcher on Twitter.

In his letter, Scaringe apologised to customers, admitting that Rivian “broke the trust we have worked to build with you.”

“Since originally setting our pricing structure … The costs of components and materials that go into building out vehicles have risen considerably,” he said.

“Everything from semiconductors to sheet metal to seats has become more expensive,” he said, adding that the average new vehicle price in the US has risen by 30% since 2018.

He said that the new pricing structure sought to plan for future cost increases also, but admitted the company “wrongly assumed” the new dual-motor and standard configurations would “deliver price points similar to your original configuration.”

“While this was the logic, it was wrong and we broke your trust in Rivian,” he said.

Rivian’s R1T electric ute and R1S electric SUV were originally priced at $US69,000 back in 2018, then after Tesla announced its considerably more affordable Cybertruck, boasting similar specifications, Rivian then dropped the pricing in 2020: from $US67,500 for the base R1T up to $US75,000 for the Launch Edition.

The new pricing structure no longer offers the standard 260+ miles battery pack unavailable with the quad motor option, meaning they will have to upgrade to a larger battery pack the get the quad-motor functionality including “crab mode”.

Rivian has also introduced a dual-motor option for the R1T and R1S, but only the quad-motor option is in production, and it also has become $US6,000 more expensive. Production of dual-motor and standard battery size options will start in 2024, the company’s website states.

Seeking to regain that trust in customers and avoid further cancellations, Rivian will now honour original pricing for orders submitted before March 1.

Future customers will be able to make orders based on a  new pricing structure. The Standard and and Dual-Motor configurations will enable the EV maker’s offering to start at a lower price, and the more powerful Quad-Motor configurations will reflect rising costs.

“Building a durable business is core to the continued impact we can delivery as a company,” said Scaringe. “We are focused on building a brand and products that will continue to scale to different vehicle sizes, use cases, price and markets – this growth will only be possible with your support and continued feedback.”

Investors also showed their disapproval for the way Rivian handled the price increases. Rivian shares prices fell 5% to $US50.91 at close of business Thursday, and almost 20% over the last five days.

It’s a hard lesson for the EV start-up, which shot to the sixth most valuable carmaker worldwide with a market cap just shy of $US100 billion when it began trading on the Nasdaq stock exchange in November.