Rivian might come to regret raising prices on customers now that both customers and shareholders associated with the company are mad about it. One shareholder is so mad, in fact, that Reuters reports he’s suing the company over the price increases and eventual rollback.
During the first week of March, Rivian announced price increases on its R1T and R1S models. Remember, there are thousands of people who still haven’t received their vehicle and Rivian told them they were going to have to pay more. The increases were steep and a little confusing but ultimately boiled down to this: You could take a price hike now and get your truck sooner, or you could save some money by waiting a couple of years, though you’d get a vehicle with less range. From Automotive News:
Before the price hikes, the quad-motor R1T with the Large battery pack and 314 miles of estimated range started at $67,500 before shipping. Now that’s up 18 percent to $79,500. Higher trims with additional options saw bigger price increases.
But for buyers willing to wait for a 2024 delivery, at the earliest, the R1T can be downgraded to a dual-motor setup for a savings of $6,000. Likewise, choosing the Standard battery pack with an estimated 260 miles of range saves another $6,000, putting the base configuration back at $67,500.
The R1S base price for the quad-motor, Large-pack version starts at $84,500 after a 20 percent price hike for orders after March 1. But downgrading the SUV to the dual-motor, Standard-pack version decreases the price to $72,500, similar to the previous price for an R1S with more motors and a bigger battery.
Rivian CEO RJ Scaringe attributed the increases to material costs in a letter two days after the price hikes. The letter outlined how the company was rolling back the increases.
The costs of the components and materials that go into building our vehicles have risen considerably.
He apologized. But that apology did him no favors. In a case filed with the U.S. district court in San Fransisco, shareholder Charles Larry Crews claims the company hid the fact that it knew its vehicles were underpriced. Crews claims that Rivian knew it needed to raise prices not long after the company’s IPO last November. Per Reuters:
Crews said the increases “would tarnish Rivian’s reputation as a trustworthy and transparent company,” putting a large number of 55,400 preorders dating back to 2018 in jeopardy of cancellation.
He may be right. A poll taken on the Rivian subreddit the day the price increases went live showed over 2,000 reservation holders would cancel their orders.