Shares of the company fall due to the attempt to stop the cancellation of cars
Rivian Automated Inc. hit a new low after canceling price rises on its first vehicles as it speeds up manufacturing and tries to attract more customers.
Rivian has had client cancellations this week after raising tentative pricing for its RIT battery-electric pickup by 17% and RIS SUV by 20%, citing rising production costs and chip shortages as reasons.
A price hike rollback could cost $850 million.
We made the mistake of applying these modifications to all future shipments, including pre-existing bespoke pre-orders, because we were working on pricing revisions to reflect this cost increase. “We made a blunder in our pricing strategy, and it’s critical that we correct it now,” said CEO RJ Scaringe.
Customers who placed pre-orders before March 1, when the price hike was revealed, will receive the original pricing. Buyers who cancel a purchase later can have it reinstated at the provisional price, timing, and configuration.
According to RBC Capital Markets analyst Joseph Spak, a price cut might cost the firm around $850 million in future revenue, and higher pricing in the future could make it tougher for startups to recruit new consumers.