The United States based electric car startup Rivian Automotive Inc announced that it had raised the selling pricing of its vehicles by around 20 per cent owing to inflationary pressures and higher component costs, angering some consumers.
Rivian’s “negative gross margin will be staggering” and it is “near impossible” for other companies to make affordable electric pickup trucks, according to Elon Musk, CEO of rival Tesla Inc., who tweeted the comments.
Amazon.com Inc owns a 20 per cent share in Rivian which announced a surge of 17 per cent in the starting price of its R1T electric pickup trucks as well as a 20 per cent rise in the starting price of its R1S sport utility vehicles. The price hikes, according to the company, would affect the majority of clients who have already made pre-orders for the vehicles.
“Well, it’s a sad day for me. Cancelled 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 $15,000, including options.
In the United States, Tesla Inc. and other traditional automakers have increased car prices to cover significant logistical and supply chain disruption costs, and dealers regularly mark up prices owing to 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.
Due of supply-chain difficulties, the California-based business missed its manufacturing target last year.
According to Rivian, the cost of various choices like as paint and wheels, as well as enhancements such as a stronger underbody protection, has increased.
The Rivian R1base T’s price has risen to around $79,500 from $67,500, while the R1S’s price has risen to $84,500 from $70,000.
Rivian said that in 2024, it will release an R1T model with a lower-range battery pack and two motors, priced at the original $67,500.
Laura Schwab, Rivian’s former head of sales and marketing, said in a November complaint against the firm for purported “gender discrimination and retaliation” that Rivian accepted the necessity to hike car costs “after the IPO.”
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 $79,500 from $67,500, while the R1S is starting at $84,500, up from $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 $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.
Musk was asked about the pricing of Tesla’s planned electric pickup truck, the Cybertruck, following his tweet late Tuesday in reaction to a report about Rivian’s price hike.
“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,” he said.
Tesla is postponing the introduction of the Cybertruck until next year, Musk announced in January, citing parts shortages as the reason for the delay.
(Adapted from Reuters.com)