Rivian surprised many of its preorder customers on March 1 with the announcement of a significant price increase for its R1T pickup truck and R1S SUV. On Thursday, the company issued a press release authored by CEO RJ Scaringe that modified the planned price increase, promising customers who placed their preorder for either vehicle prior to March 1 that their original price will be honored, and offering to restore any preorders from customers who cancelled as a result of the planned change.
Rivian’s price change means that the base model of the R1T pickup went from $67,500 to just under $79,000, while the R1S base model had a similar jump, from $70,000 to $84,000. The plan as announced was that all preorder customers who weren’t in the final stages of actually paying for and taking delivery of their vehicles would have to pay for the difference in order to have their preorder honored.
In his public note today, Scaringe reiterated that the price increases are a result of challenges in the supply chain and the resulting hike in costs for components, including “[e]verything from semiconductors to sheet metal to seats.” However, he also owned that the company went about implementing the price changes in the wrong way, and communicated them poorly:
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. We failed to appreciate how you viewed your configuration as price locked, and we wrongly assumed the announced Dual-Motor and Standard battery pack would provide configurations that would deliver price points similar to your original configuration. While this was the logic, it was wrong and we broke your trust in Rivian.
We also didn’t manage communications well. We didn’t give you enough insight into what was driving these decisions. The most important aspect of what we are building is our relationship with all of you. As we demonstrated earlier this week, trust is hard to build and easy to break. In speaking with many of you over the last two days, I fully realize and acknowledge how upset many of you felt. I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful. I am truly sorry and committed to rebuilding your trust.
As mentioned, Rivian has partially reversed its planned course of action, promising that “for anyone with a Rivian preorder as of the March 1 pricing announcement, [the] original configured price will be honored” and further offering the option to any customers who cancelled a full reinstatement of their preorder, including all promised pricing and delivery time frames.
The business realities and industry pressures that Rivian faces haven’t changed, but it’s actually refreshing to see a business react so quickly and decisively to negative customer feedback and reverse aspects of a decision that harmed some of their earliest supporters.