By Ed Ludlow | Bloomberg
Rivian Automotive has fallen to an all-time low after the electric vehicle maker pushed back the price increases of its debut cars for existing customers, marking a shameful change of face as production increases and seeks to win over more buyers.
The Irvine-based carmaker suffered customer cancellations this week after it raised the prices of its R1T pickup with electric battery by 17% and its R1S SUV by 20%, citing higher entry costs and a shortage of semiconductors.
Rivian declined to specify how many cancellations he received.
“As we work to update prices to reflect these cost increases, we have erroneously decided to make these changes apply to all future deliveries, including pre-existing orders set up,” CEO RJ Scaringe said in a letter to customers on Thursday. “We made a mistake in how we approached our price changes, and the important thing now is that we fix it.”
Rivian said it would respect the original price for customers who placed pre-orders before March 1, when the increase was announced. Buyers who have subsequently canceled will be able to restore orders at the original price, time and settings.
The reversal sparked shares of Rivian, which closed 4.9% on Thursday to a new low of $ 50.91. This followed a 13.5% decline the day before, driven by Rivian’s decision on Tuesday to raise prices. The automotive industry has suffered sharp declines amid concerns over the disruption of the supply chain following Russia’s invasion of Ukraine.
Rivian’s initial public offering in November was the sixth largest in U.S. history, as investors opted for its larger, more tech-savvy vehicles to help challenge Tesla Inc. and legacy carmakers in the growing field of electric vehicles. The company went public at $ 78 a share and quickly reached a high of about $ 172, with its market capitalization exceeding $ 100 billion over a short period of time.
A drop in prices could cost Rivian about $ 850 million in future revenue, assuming cancellations, RBC Capital Markets analyst Joseph Spak wrote in a note to clients on Thursday. Spak, which has a neutral rating and a $ 116 share price target, said higher prices in the future could make it difficult for the startup to attract new consumers.
“The thesis was that Rivian could sell everything he could do, but now there may be more holes in that,” Spak wrote.
Customers who pre-order the first-spec R1T with a quadruple engine, all-wheel drive and a large battery will pay the original cost of $ 67,500. With the increases, new customers who did not place an order before March 1 will pay about $ 79,500. The R1S with the same specifications will return to about $ 70,000 for first-time customers and will amount to $ 84,500 for new buyers.
Rivian shares tumble after Irvine automaker cancels price hikes amid outcry – Press Telegram Source link Rivian shares tumble after Irvine automaker cancels price hikes amid outcry – Press Telegram