How Rivian ticked off its fan base

It's Rivian's turn in the penalty box after sharply raising prices for its R1T pickup and R1S SUV in response to soaring supply chain costs.

Rivian, the Amazon-backed electric vehicle startup based in Southern California, joins dealerships, legacy automakers and even Tesla as the object of consumer wrath over the steady rise of vehicle prices.

While some auto dealers are adding on $10,000 "market adjustments" to popular vehicles, Rivian is hiking prices by 17 to 20 percent, which can add $12,000 or more to the brand's original pricing for its launch vehicles.

While Rivian was forced to backtrack on the increases for existing preorders and acknowledge the public outcry, new customers will still see their configurations move significantly closer to six figures.

Before the price hikes, the quad-motor R1T with the Large battery pack and 314 miles of estimated range started at $67,500 before shipping. Now that's up 18 percent to $79,500. The R1S has a similar price increase.

"This a definitely a pay-up or move-on statement," popular YouTube content creator Jon Rettinger said in response to the updated prices for his family's R1T and R1S orders. "Not sure what's worse, this or dealer markups from legacy automakers," he wrote on Twitter.

Rettinger publicly documented a Mercedes-Benz dealer's surprise $50,000 markup on an EQS electric sedan he ordered last year. Rettinger rejected the Mercedes surcharge and instead bought an electric Air sedan from Silicon Valley startup Lucid.

On Rivian forums last week, outraged early adopters posted screenshots of their canceled R1T and R1S orders after the price increase. Some with preorders said they felt betrayed after supporting Rivian as it struggled to ramp up production, while others said the additional cost was just too much for their budgets.

Rivian said in December that it had

71,000 customer orders.

That number is likely to be updated this week when the automaker reports fourth-quarter earnings on Thursday, March 10.

In response to the wave of bad publicity, CEO RJ Scaringe partially backtracked two days after announcing the hikes, saying the automaker would respect the original prices for customers who ordered before March 1.

Rivian delivered 920 vehicles last year after starting production in September.

"Earlier this week, we announced pricing increases that broke the trust we had worked to build with you," Scaringe wrote in an open letter to customers. "We wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders."

"We also didn't manage communications well," he wrote. "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."

In addition to the price rollback for reservation holders, the Rivian CEO said the automaker would reinstate orders canceled on or after March 1, with the original configuration, pricing and delivery timing — for customers who request it.

Scaringe also explained Rivian's rationale for the price hikes, given fast-rising costs that have affected all automakers. "Everything from semiconductors to sheet metal to seats has become more expensive," Scaringe wrote last week. "And with this, we have seen average new-vehicle pricing rise more than 30 percent since 2018."

Rivian did attempt to placate early adopters by announcing new configurations of the R1T and R1S last week, with two motors instead of four, and with a smaller battery pack in order to respect the original price points. But Scaringe acknowledged that the company underestimated customers' reactions to the choice of a price hike or a vehicle downgrade.

"It was wrong and we broke your trust in Rivian," he said in the letter.

Even Tesla CEO Elon Musk got involved in the fracas, writing on Twitter that Rivian's "negative gross margins will be staggering" in response to a news article on R1T and R1S pricing.

But that opened a fresh public debate on Tesla's own highly anticipated, and repeatedly delayed, Cybertruck. Musk had said it would start at just under $40,000 when the pickup was unveiled in 2019, but Tesla has since removed pricing guidance from its website.

Asked directly by a Twitter user to address Cybertruck pricing, Musk demurred.

"Our primary challenge is affordability," he wrote. "Creating an expensive truck is relatively easy. If it's extremely hard to do so for Tesla, despite our much greater economies of scale & better technology, then it is damn near impossible for others."