Rivian RIVN -5.84%
Automotive Inc. is retreating from a huge price hike for its electric trucks and SUVs that went into effect earlier this week, saying it will now honor prices for customers who previously ordered a vehicle.
In a letter released Thursday, Rivian CEO RJ Scaringe apologized to customers for retroactively applying the price increase. He said the startup was trying to cope with the rising cost of spare parts and materials, but was wrong to apply price increases to existing orders instead of adhering to the original terms.
Customers who ordered their Rivian vehicles before Tuesday’s price increase will honor their original price, the company said. The increase added about 20% to the price of some model configurations. The pickup, the R1T, was previously priced at $ 67,500, while the R1S SUV started at around $ 70,000.
“As we worked to update prices to reflect these cost increases, we erroneously decided to apply these changes to all future deliveries, including pre-existing pre-orders,” Scaringe wrote. “Although that was the logic, it was wrong and we broke your trust in Rivian.”
Shares of Rivian fell more than 13% on Wednesday after the revelation of price increases, as angry customers expressed their frustration on social media and online forums. Shares fell further on Thursday, by 5% in morning trading.
Rivian went public last November in a major listing that helped the California-based startup raise nearly $ 12 billion in new capital. Its stock continued to rise after its market debut, bringing its valuation to $ 120 billion at one point, well beyond that of General Motors Co. and Ford Motor Co. Valuation has declined in recent months.
Many investors are betting on Rivian to emerge as the next Tesla Inc., a maker of purely toy electric vehicles that can challenge traditional car companies in the growing market for battery-powered trucks and SUVs.
This year, however, proved to be tougher as Rivian worked to escalate operations and meet first customer orders.
Rivian shares have fallen about 50 percent since January 1, and the company is facing the challenge of launching several new models in succession — a task that analysts say is difficult even for established car companies.
In his letter, Mr Scaringe said the startup was trying to manage inflationary pressures from the rising costs of sheet metal, semiconductors and other components. However, he said it was wrong to apply the increase to customers who ordered their vehicles in the expectation that their prices would be locked. He spoke to angry first-hand customers this week, he said.
“I am fully aware and acknowledged how upset many of you felt,” he said. “I’ve made a lot of mistakes since I started Rivian more than 12 years ago, but that was the most painful thing.”
I write to you Mike Colias at Mike.Colias@wsj.com
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Startup Electric-Vehicle Rivian returns to the price increase and apologizes to customers
Source link Startup Electric-Vehicle Rivian returns to the price increase and apologizes to customers