U.S. electric vehicle startup Rivian Automotive said on Tuesday it has increased selling prices of its vehicles by about 20 per cent due to inflationary pressures and higher component costs, angering some customers.
The price increase also invited caustic comments from Elon Musk, chief executive of rival Tesla, who tweeted that Rivian’s “negative gross margin will be staggering” and it is “near impossible” for other firms to make affordable electric pickup trucks.
Rivian, in which Amazon.com holds a 20-per-cent stake, said the starting price of its R1T electric pickup trucks has gone up by about 17 per cent; and its R1S sport utility vehicles by about 20 per cent. It said the price increases would affect most of the customers who have already placed pre-orders for the vehicles.
“Well, it’s a sad day for me. Canceled the Rivian order. So bummed out,” ‘Zach Jump-Start Marino,’ who said he lives in Georgia and holds Rivian shares, said on his Facebook posting. “Price increase was astronomical and unfair to pre-order holders and early supporters. I’m not paying 94k+ for a ‘mid-size’ truck,” he said, adding he could buy gasoline pickup trucks such as Ford Motor’s F-150 at much lower prices.
He told Reuters his R1T price has gone up by US$15,000, including options.
Their negative gross margin will be staggering
— Elon Musk (@elonmusk) March 2, 2022
Tesla and legacy car makers have also raised U.S. vehicle prices to offset high costs related to logistics and supply chain disruption, and dealers often mark up prices because of vehicle shortages.
“Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips),” Jiten Behl, Rivian’s chief growth officer, said in a statement.
The California-based startup fell short of its production target last year due to supply-chain constraints.
Rivian said the cost of certain options including paint and wheels and upgrades like reinforced underbody shield have also increased. The base price of the Rivian R1T is rising to approximately US$79,500 from US$67,500, while the R1S is starting at US$84,500, up from US$70,000.
Rivian said it will introduce an R1T model with a lower-range battery pack and dual motors in 2024, pricing it at the original US$67,500.
Rivian’s former head of sales and marketing, Laura Schwab, said in a lawsuit against the company in November over alleged “gender discrimination and retaliation” that Rivian has acknowledged a need to raise the vehicle prices “after the IPO.”
“The vehicles were underpriced, and each sale would result in a loss for the company,” she said in the lawsuit. Rivian, which went public in November, declined to comment on the lawsuit.
Keyword: Rivian raises EV prices by 20%, inviting customer ire