Rivian increased its EV prices by 20%, which also includes an increase in the price of other features like paint, wheels, or other upgrades. This raised comments from Tesla CEO, Elon Musk mentioning that Rivian’s “negative gross margin will be staggering”. Further added that it will be near impossible for other automakers to make affordable electric vehicles.
Rivian, in which Amazon.com Inc holds a 20% stake, said the starting price of its R1T electric pickup trucks has gone up by about 17%. Also, its R1S sport utility vehicles by about 20%. 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. He said, “Price increase was astronomical and unfair to pre-order holders and early supporters. I’m not paying 94k+ for a “mid-size” truck,” Added that he could buy gasoline pickup trucks such as Ford Motor’s F-150 at much lower prices. He stated that Rivian R1T price has gone up by $15,000.
Automakers rising costs
Tesla and legacy carmakers 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 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 shields have also increased. The base price of the Rivian R1T is rising to approximately $79,500 from $67,500, while the R1S is starting at $84,500, up from $70,000.
Additionally, Rivian said it will introduce an R1T model with a lower-range battery pack and dual motors in 2024, pricing it at the original $67,500. Furthermore, 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”. She said in the lawsuit, “The vehicles were underpriced, and each sale would result in a loss for the company.”
Musk said in response to the increasing prices, “Our primary challenge is affordability. Creating an expensive truck is relatively easy. If it is extremely hard to do so for Tesla, despite our much greater economies of scale & better technology, then it is damn near impossible for others,”
