Electric vehicle (EV) company Rivian issued an apology for the retroactive prices increases it had announced earlier in the week on pre-ordered EVs. In an open letter, CEO RJ Scaringe said that the company “broke the trust we have worked to build with you” and that he is “truly sorry and committed to rebuilding your trust.”
Scaringe said in the letter that since originally setting the pricing structure a lot has changed and the costs of the components and materials that go into building the vehicles have risen considerably.
“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,” he said.
In turn, he announced that for anyone with a Rivian preorder as of the March 1 pricing announcement, the 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,” Scaringe wrote.
The Wall Street Journal reported that the increase added around 20% to the price of some model configurations. The pickup, the R1T, previously was priced at $67,500, while the R1S SUV started at about $70,000. For some customers, the rise translated into a $10,000 to $20,000 premium over what they had originally planned to pay.
In turn, CFRA Research downgraded its opinion on Rivian to Hold from Buy, saying that the customer backlash to the company’s bait-and-switch move has already been severe, with existing reservation holders posting their order cancellations on social media sites, according to a research note sent to GOBankingRates.
“The company faces a predicament where it will likely struggle to meet certain benchmarks on its path to profitability (positive gross margin, then positive EBITDA, and finally positive net income) absent higher prices realizations or significantly higher sales volumes,” Garrett Nelson, equity analyst at CFRA Research, wrote in the note. “With the macro backdrop for unprofitable high-growth companies having become increasingly difficult and the fallout from the price hike likely to outweigh the benefits (and consumers soon to have other EV truck/SUV options), we lower our opinion to Hold.”
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