Rivian announced on Tuesday that has raised the price of its R1T pickup by 17% and R1S SUV by about 20%. The company didn’t unveiled how many orders were cancelled, however many reservation holders immediately complained about the decision. Today, the company sent an e-mail to all reservation holders reversing the decision saying that the “original configured price will be honored” .
“Earlier this week, we announced pricing increases that broke the trust we have worked to build with you. Since originally setting our pricing structure, and most especially in recent months, a lot has changed. The costs of the components and materials that go into building our vehicles have risen considerably. 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. As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders. We failed to appreciate how you viewed your configuration as price locked, and we wrongly assumed the announced Dual-Motor and Standard battery pack would provide configurations that would deliver price points similar to your original configuration. While this was the logic, it was wrong and we broke your trust in Rivian. We also didn’t manage communications well. We didn’t give you enough insight into what was driving these decisions.”
“The most important aspect of what we are building is our relationship with all of you. As we demonstrated earlier this week, trust is hard to build and easy to break. In speaking with many of you over the last two days, I fully realize and acknowledge how upset many of you felt. 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. One of the things we talk about a lot internally is that we will make mistakes – it’s part of building something complex. The key is to learn from them and address them when they are made. It is how we grow. We made a mistake in how we approached our pricing changes, and what is important now is that we fix it.”
“For anyone with a Rivian preorder as of the March 1 pricing announcement, your original configured price will be honored. If you canceled your preorder on or after March 1 and would like to reinstate it, we will restore your original configuration, pricing and delivery timing. Our team will be sending an email in the next few days with more details. Regarding our updated pricing for future preorders, the introduction of our Dual-Motor configuration and Standard battery pack has been designed to enable us to maintain lower starting prices while adjusting the pricing of the Quad-Motor and larger battery packs to reflect rising costs. Building a durable business is core to the continued impact we can deliver as a company. We are focused on building a brand and products that will continue to scale to different vehicle sizes, use cases, price points and markets – this growth will only be possible with your support and continued feedback.”
Increases in the cost of raw materials, inflationary pressure and the already known chip shortage issue were pointed as the main reasons for this price increase affectting also the existing reservation holders.
“The Rivian R1T’s price is increasing 17% which will increase the base cost from $67,500 to approx $78,975. The R1S will see a whopping 20% price increase, bringing the new base price from $70k to about $84k.”
“Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips).
“This rise in cost and complexity due to these challenging circumstances necessitate an increase to the prices of the R1T and R1S models we offer today — prices which were originally set in 2018. This decision will allow us to continue to offer competitive products that maintain the high standard of quality, performance and capabilities that our customers expect and deserve from Rivian.
Along with the adjusted prices for our current offerings, we are also announcing Dual-Motor AWD and Standard battery pack options for R1T and R1S, which will provide a broader range of choices for customers as part of our expanding portfolio of options, upgrades and accessories.” — Rivian said in an emailed statement. Also acessories prices increased with the Rivian Camp Kitchen costing now $6,750, up from 5,000.
Last week, Rivian‘s Chief Executive Officer R.J. Scaringe said that the company is “making progress” in the increase of production for electric vehicles at its Normal, Illinois, assembly plant and is aiming to take 10% share in the EV market by 2030. The global semiconductor chip shortage is seen by Scaringe as the “most painful” constraint in the push to build production.
Earlier this month, the company hired Tim Fallon to be the new Vice President of Manufacturing. Fallon previously worked at Nissan, where he was vice president for manufacturing at the company’s assembly plant in Canton, Mississippi. Tim Fallon worked with Nissan for more than 16 years having 6 different roles before reaching the Manufacturing VP position.
According to SEC’s filling document unveiled recently, George Soros’ Fund Management, revealed a new stake in electric truck Rivian Automotive valued at $2 Billion. However, with the recently decrease of the stock price, the investment worths noe around $1.17 billion.
Recently, the company said it expects to soon be delivering as many as 200 electric R1T pickup trucks per week – quadrupling its production rate from where it was some time ago, and putting it on track to surpass 10,000 pickups manufactured this year.