Rivian Automotive Inc. has set a new bar for sticker shock in the electric vehicle era. The company, citing increased materials costs, is boosting prices as much as 20 percent on some models.
But there may be more to the huge bump than increasingly expensive materials.
Last fall the company abruptly terminated Laura Schwab, who was lured away from Aston Martin to head Rivian's sales and marketing.
Schwab, in a lawsuit against the company, said one reason she was fired is because she questioned Rivian's pricing. The R1T electric truck's starting sticker price of $67,500 was too low, Schwab said in her suit. Rivian was on the cusp of launching its IPO and had already booked thousands of orders for its pickup.
Her suit says: "First, it was clear that the vehicles were underpriced, and each sale would result in a loss the company. Ms. Schwab ultimately contacted Dennis Lucey, Rivian's Finance Director, and worked with him to develop projections showing how much of a loss the company would incur if Rivian did not raise prices. Ms. Schwab raised this issue with several executives, including Mr. Behl, Stuart Dixon (Director of Product Management), and Andy Zicheck (Principal Product Manager).
"Mr. Behl brushed her off. Eventually, Mr. Hunt raised the issue with Mr. Behl, at which point Mr. Behl agreed that they would need to raise the vehicle prices after the IPO."
Other EV makers, with most of their products new to the market, are facing the same challenges with chips and raw material costs. However, any that have raised prices have not done so to the degree of Rivian. Tesla, for example, last fall bumped up sticker prices between $2,000 and $5,000 on many of its models.
Ford's Mustang Mach-E has seen a $1,000 price increase, and the automaker has found ways to reduce the cost to manufacture the hot-selling electric crossover.
According to Bloomberg: "Debut versions of the R1T with a quad-motor, all-wheel drive and a large battery pack, giving a claimed 310 miles of range, started at $67,500. That vehicle will now cost around $79,500. The R1S with the same specifications is rising from around $70,000 to around $84,500."
Grumbling from reservation holders — who have to pay the higher costs after waiting as long as two years for their vehicles — is growing.
Rob, a Rivian R1T reservation holder from Pittsburgh wrote: "I'm right on the verge of cancelling. With so many delays, discontenting, and now this ENORMOUS price increase, I'm really sour on the idea of a Rivian right now."
A San Francisco customer who goes by dtb369 who is waiting on a Launch Edition R1T wrote: "Confirmed with CS as well that LE orders are impacted. My truck is expected in the April/May window and it will have the price increase. If this is true, I am likely out as I was already on the border of what I could afford, unfortunately. Very disappointing that they are not honoring their longtime, loyal customers. They should see raw material price increases as a sunk cost to build brand loyalty with their biggest fans."
A former R1T reservation holder from Philadelphia posting as Generalname wrote: "As a shareholder I applaud the increase. As a former pre-order holder the increase is laughable. My preorder went up over 20%. That is not inflation. Love to hate it I guess. I cancelled. Maybe some of my shares will buy the truck in 2025 when I was scheduled to get it anyway."
Some customers, however, say they will pay the price increase.
"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)," a Rivian spokesperson wrote to Automotive News in a statement.
"This rise in cost and complexity due to these challenging circumstances necessitate an increase to the prices of the R1T and R1S models we offer today — prices which were originally set in 2018. This decision will allow us to continue to offer competitive products that maintain the high standard of quality, performance and capabilities that our customers expect and deserve from Rivian."
It continued: "Along with the adjusted prices for our current offerings, we are also announcing Dual-Motor AWD and Standard battery pack options for R1T and R1S, which will provide a broader range of choices for customers as part of our expanding portfolio of options, upgrades and accessories."
