Rivian rolls back big price increases on preorders after customer backlash

R.J. Scaringe, Rivian’s CEO, introduces the planet to his firm’s R1T all-electric powered pickup and all-electric powered R1S SUV at the Los Angeles Automobile Exhibit in Los Angeles, California, November 27, 2018.

Mike Blake | Reuters

Rivian Automotive immediately backtracked from a plan to raise prices on autos that had presently been requested by shoppers.

In a letter to stakeholders on Thursday, Rivian CEO RJ Scaringe acknowledged that Tuesday’s cost will increase “broke the trust” that Rivian had hoped to construct with its prospects. He reported the firm’s original costs will be honored for all preorders positioned as of March 1.

Rivian had reported on Tuesday that rates on quad-motor versions of its electric powered R1T pickup and R1S SUV would boost by about $12,000, and that the improve would be used to pending orders as very well as new kinds.

The strategy led to an instant outcry from customers.

“In speaking with a lot of of you around the last two days, I completely know and accept how upset many of you felt,” Scaringe wrote.

Scaringe mentioned that sharp will increase in the fees of vital parts were driving the price raises.

“Since at first placing our pricing construction, and most in particular in modern months, a good deal has modified,” Scaringe wrote. “The charges of the factors and resources that go into developing our automobiles have risen noticeably. Every thing from semiconductors to sheet metal to seats has develop into far more pricey and with this we have witnessed average new motor vehicle pricing across the U.S. rise more than 30% due to the fact 2018.”

He extra: “Presented our construct guide up moments, we want to plan production charges not only for right now, but also for the foreseeable future.”

The value rollback gained praise from Wall Road. In a be aware on Thursday, RBC Money Marketplaces analyst Joseph Spak wrote that Tuesday’s abrupt selling price enhance was “not a great way to create brand name fairness” and that Rivian’s final decision to roll back again the cost increase on existing orders was “the appropriate issue to do.”

Rivian’s shares had been investing down about 3.1% as of noon ET.