After Hiking Prices By Up to 20% This Week, Rivian CEO Reverses Course, Will Honor the Original Prices Quoted to Reservation Holders
【Summary】After public outcry over electric truck maker Rivian unexpectedly raising prices on March 1, CEO R.J. Scaringe has reversed course. He sent an email to reservation holders saying the company will honor the original prices quoted to customers that put down deposits before March 2 for a Rivian vehicle. He also explained what led to the price hikes in the first place, which was not communicated to customers.
Electric truck maker Rivian has dealt with one of the worst weeks in the company's history. On March 1 without notice, Rivian hiked prices by up to 20% for its R1T electric pickup and R1S SUV, in a move it said was due to semiconductor shortages and rising costs of parts due to inflation.
The price increase also applied to Rivian reservation holders, some of which put down deposits for an electric Rivian vehicle back in 2020 and locked in favorable prices.
Rivian CEO R.J. Scaringe addresses the price increases in an email to reservation holders. He explained that costs have increased since setting up the company's original pricing structure, which led to the decision to raise prices.
"The costs of the components and materials that go into building our vehicles have risen considerably," Scaringe wrote. "Everything from semiconductors to sheet metal to seats has become more expensive and with this we have seen average new vehicle pricing across the U.S. rise more than 30% since 2018. Given our build lead up times, we need to plan production costs not only for today, but also for the future."
The backlash over the sudden hike in prices on social media was brutal, causing a flood of cancellations for Rivian. The company's problems were made worse by not providing an official explanation for two days to thousands of reservation holders that had already locked in pricing for their vehicles. Rivian also acknowledged its lack of communication that led to price increases.
But on Thursday, Rivian CEO R.J. Scaringe sent an email to reservation holders saying the company would honor the original prices quoted to reservation holders that put down deposits before March 2. He also explained what led to the price hikes in the first place, which was not communicated to customers.
Customers that canceled their pre orders on or after March 1 will now be able to reinstate it. Rviian said it would restore original configuration, pricing and delivery times.
Rivian also added new options for its electric vehicles, which included the introduction of a new Dual-Motor configuration and Standard 260-mile range battery pack. The company said the move was designed to enable Rivian to maintain lower starting prices, while adjusting the pricing of a new Quad-Motor option and larger battery packs to reflect rising costs, according to the company.
With the price hike, the base price of the electric Rivian R1T pickup would have risen to about $79,500 from $67,500, while the R1S SUV would jump to $84,500 from $70,000 before adding options. For new customers after Mach 2, the R1S starts at $72,500, while the base price of the R1T pickup remains at $67,500 with the Standard 260 mile-range battery.
Scaringe apologized to Rivian customers for the situation and wrote that the company "wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders."
For those R1T customers interested in the Rivian options, the Large battery pack offers 320+ miles of range and costs an additional $6,000. The Max battery targets an EPA estimated range of over 400 miles, but costs another $16,000.
Rivian's stock price is down nearly 20% this week. It fell to $50.04 on Thursday after a flood of customer cancellations, a slow production ramp up and investor fears that Rivian would see reduced margins of its EVs.
The entire situation is a lesson learned for Rivian and shows the growing influence that social media can have on a business that is not upfront with its customers.
"I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful. I am truly sorry and committed to rebuilding your trust," Scaringe wrote in his email.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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