Rivian Increases Pricing of R1T and R1S – Predatory or Inevitable?
By Edward A. Sanchez – March 3, 2022
This week, Rivian announced de-facto price increases on its R1T pickup and R1S SUV. The price for the quad-motor R1T went from $67,500 to $78,975, while prices for the R1S jumped from $70,000 to $84,000. This is where things get complicated. Based on the initial announcement of the price increase, for the same price as the former quad-motor models, reservation holders could opt for a dual-motor version or choose to pony up the difference for the quad motor they’d originally ordered, as Rivian’s announcement stated that nearly all reservation holders would be affected by the price bump. Predictably, the company received backlash, with many owners claiming they would cancel their reservations. As such, Rivian CEO R.J. Scaringe backtracked, stating that for reservations placed prior to March 1, 2022, Rivian would honor the original, lower pricing.
To be clear as to the outrage from reservation holders, we’re not talking about a difference of $1,000 or $2,000. This is a $10,000+ increase – a substantial chunk of change in anyone’s book.
In response to questions from owners and other bloggers about the dramatic price increase, Rivian claimed this adjustment was necessary due to “inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips).”
Indeed, the entire automotive industry has been hit with the same issues, so it’s not like the company’s reason for the increases are invalid or disingenuous. Plus, the company is likely facing pressure from investors and stockholders to increase margins. Meanwhile, a Reddit poll of R1T reservation holders completed prior to Scaringe opting to honor the original pricing showed a substantial percentage of reservation holders considering canceling their reservations due to the price increase, which would be bad news for Rivian.
For the majority of owners, the difference between a quad-motor and dual-motor R1T might be negligible.
As supply chain constraints alleviate, there’s a possibility that prices could come back down, or if reviews of the dual-motor versions are positive, potential quad-motor buyers may have opted to configure their Rivians that way instead. After all, Rivian is claiming a 0-60 mph time of around 4 seconds for the dual-motor model as opposed to 3 seconds for the quad motor. Still plenty quick for anyone. The point being, had this price increase announcement been handled better from the get-go, it might have been a non-issue.
If there’s a silver lining to any of this hullabaloo, it’s that Rivian is also expanding its battery pack options to include Large and Max packs beyond the standard battery, which is rated at 260 miles. The Large battery has a claimed range of 320 miles, and the Max battery has a claimed range of 400 miles. The towing capacity of 11,000 pounds is reportedly unaffected by the powertrain configuration change between dual and quad motors.
As an early Tesla Model 3 reservation holder, I was “on-again, off-again” during the process, at one time requesting (and eventually receiving) a refund for my $1,000 deposit after losing patience after repeated production delays. I ultimately bought a Model 3, but only after availability was such that I would have one in a matter of weeks, not months or years.
While a dual-motor Rivian R1S might actually be the ideal choice for most use cases, Rivian’s botched price increase announcement may have left the company with a temporary black eye.
At the time that I requested a refund for my Tesla reservation, had there been legitimate EV competition on the market (as there is today), I likely would have shopped around, perhaps buying a Tesla anyway, or perhaps not. Fortunately for Rivian, the EV truck market is hardly overflowing at the moment, so reservation holders might be less willing to give up their place in line, regardless of price increases or ill-handled announcements.
In such a dynamic, fast-moving space as EVs, it should be expected that there will inevitably be price and equipment changes, delays, and substitutions. While this may be upsetting to some people – especially those who hold reservations – it’s simply a reality for fast-growing companies that are trying to juggle supply-chain logistics, keeping investors (both institutional/VC and retail/stock) happy, and customers happy.
While this may be a temporary black eye for Rivian, I expect the company will recover and move on, ultimately working out the supply and logistics issues, and continuing to build by what all accounts are outstanding electric trucks and SUVs.
(Images courtesy Rivian)
- Store - Podcast - Facebook - Google News - Twitter -
