Rivian Cancels Price Hikes for Existing Customers After Outcry
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Rivian Automotive Inc. dropped to a record low after the electric-vehicle maker rolled back price increases on its debut cars for existing customers, marking an about-face as it ramps up production and seeks to win over more buyers.
The automaker was hit by customer cancellations this week after it raised the sticker prices of its battery-electric R1T pickup by 17% and its R1S SUV by 20%, citing higher input costs and a shortage of semiconductors. Rivian declined to specify how many cancellations it received.
“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,” CEO R.J. Scaringe said in a letter to customers March 3. “We made a mistake in how we approached our pricing changes, and what is important now is that we fix it.”
Irvine, Calif.-based Rivian said it would honor the original price for customers who placed preorders prior to March 1, when the increase was announced. Buyers who subsequently canceled will be allowed to reinstate orders at the original price, timing and configuration.
The reversal roiled Rivian’s stock, which closed down 4.9% March 3 to a fresh low of $50.91. That followed a 13.5% slide the day prior, driven by Rivian’s late-March 1 decision to raise prices. The autos sector suffered broad declines amid concerns over supply chain disruption following Russia’s invasion of Ukraine.
Rivian’s initial public offering in November was the sixth-biggest in U.S. history as investors bet its bulkier, tech-packed vehicles would help it challenge Tesla Inc. and legacy automakers in the growing EV field. The company went public at $78 a share and quickly hit a high of about $172, with its market capitalization topping $100 billion for a short time.
The rollback on pricing could cost Rivian around $850 million in future revenues, assuming cancellations, RBC Capital Markets analyst Joseph Spak wrote in a note to clients on March 3. Spak, who has a neutral rating and $116 price target on the stock, said the higher prices going forward could make it more difficult for the startup to attract new consumers.
“The thesis had been that Rivian could sell whatever it could make, but there may now be some more holes in that,” Spak wrote.
Preorder customers of the debut spec R1T with a quad-motor, all-wheel drive and a large battery pack will pay the original $67,500 cost. With the increases, new customers who didn’t place an order before March 1 will pay around $79,500. The R1S with the same specifications will go back to around $70,000 for early customers and rise to $84,500 for new buyers.
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