Rivian has had a rough ride as a public company. The electric vehicle company's share prices spiked shortly after the IPO, but have cratered ever since, trading 69% off their all-time highs as of early Wednesday.
Rivian is raising truck and SUV prices by 20% for all of its consumer vehicle models, shocking long time reservation holders. The question is whether or not the company can survive the backlash against the changes.
Rivian announced on Tuesday that it is raising prices for its R1T truck and R1S SUV. Many customers got notices of a price increase that pushed the price tag above $90,000.
Rivian advertises an R1T truck for $67,500 and an R1S SUV for $72,000, but that is not the same vehicle that could be pre-ordered for slightly lower prices just a few days ago.
My R1S pre-order saw a $6,000 increase in price for a quad motor (formerly standard) compared to a dual motor, and another $6,000 increase for a large battery pack with a 320-mile range, which can be replaced with a 260-mile range standard pack.
The company advertised the standard battery as having over 300 miles of range and the larger pack as having over 400 miles. You have to spend $6,000 to get around what those who pre-ordered the smaller pack expected.
LA Silver is the only paint without an up charge that can range from $1,750 to $2,500. Even accessories saw price increases.
The price increase of Rivian was quickly reacted to on social media. As of Tuesday night, people were posting reservation cancelations and comparisons of their pre-order price estimates to the updated estimates.
It is hard to argue with the sentiment. When compared to similarly equipped gasoline-powered vehicles, a $70,000 truck or SUV is a stretch from a start-up, but buyers were willing to pay a premium of $10,000 to $30,000, depending on their comparison, for going electric and getting great range and performance for the price. It's a little different for me when I pull back some of the most important performance features.
Why the move is happening right now is not known. Is Rivian willing to live with a reduced consumer wait that it cannot deliver anyways, if it needs to prioritize Amazon commercial truck deliveries? Is the company willing to lose 20% of customers if it can charge 20% higher prices? Is inflation pressure bad?
The public sentiment around Rivian will be watched in the coming weeks. Even a small mistake can be overlooked by the brand loyalty built by Musk and his company. There was never a 20% price increase for existing reservation holders. Rivian doesn't have the same goodwill and may have overplayed its hand with this pricing move, which could turn off formerly loyal customers.
What to think of Rivian's stock is the hardest thing to think about. I would have said this is a compelling company because it has a potentially disruptive product in the truck and SUV market that is being sold at a price point that is hard to ignore.
Rivian is trying to sell the most expensive mid-size truck and SUVs on the market. An R1S SUV is more expensive than a BMW X7, Chevy Suburban, and Land Rover.
Rivian may be trying to be a premium brand, but it still needs to compete with traditional automakers building gasoline-powered vehicles. I needed 7 seats for a growing family and $70,000 was a stretch, but I thought it was worth it to get an electric SUV. I will buy a gasoline-powered vehicle for one-third the price for a few years.
Rivian may have lost some of its most loyal customers with one late-night announcement. The company can reverse course and honor the previous pricing. If it thinks it can survive selling trucks and SUVs for over $90,000, that is a tough sell.
I am not spending $90,000 on a vehicle if I cancel my current reservation. I will be one of a growing number of people canceling my pre-order if pricing is not changed.
Customers should be excited about the delivery of their Rivian vehicles, but the company has pulled a bait and switch. I don't like the move and the market doesn't seem to like it either.
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