Rivian Automotive is apologizing to customers and walking back its price hikes on existing preorders of its electric vehicles, which earlier this week the company said would cost up to $20,000 more than buyers were originally quoted.
The price hikes, rolled out on Tuesday, spurred immediate outrage from consumers. The updates applied to Rivian’s hotly anticipated electric SUV and pickup truck, for which some fans had already coughed up $1,000 to get on the waiting list as far back as 2018. Two days ago, Rivian told buyers they would either need to pay extra fees starting at $12,000 or expect their vehicles no earlier than 2024—and with smaller batteries, slower drivetrains, and dual-motor engines instead of quad-motors.
According to a letter on Thursday from Rivian CEO RJ Scaringe, the fees were due to hefty inflation in the cost of everything “from sheet metal to seats,” including semiconductors and various raw materials. “We have seen average new vehicle pricing across the U.S. rise more than 30% since 2018,” Scaringe wrote, referencing the date four years ago when Rivian’s vehicles were first promised. “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.”
For all orders placed prior to March 1, Rivian said it will honor the original price. It will also reinstate any orders canceled over the upcharge—social media polls suggested many were nixed—at their original terms.
The price hikes “broke the trust we have worked to build with you,” Scaringe wrote. “We failed to appreciate how you viewed your configuration as price locked.”
But as it were, the trust already seemed to be wearing thin. Rivian, which enjoyed one of the biggest IPOs in American history last November—and whose valuation quickly surged beyond those of legacy automakers Ford and General Motors—has seen a steady stock drop over the past months as analysts wondered if its vehicles could keep living up to the hype. Some cited the challenge of launching multiple new models in succession, or ramping up production to meet sales for the buzzy, but still very green company.
Now, the road is even bumpier. Analysts estimate it will cost Rivian roughly $850 million in future revenues to honor its original commitments, and the higher price tag for vehicles going forward could make it a tougher sell, especially amid a crowded electric-vehicle market with competitors including the likes of Tesla and Lucid.
Its stock is down over 4% midday Thursday, and over 70% from its peak last year.
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