We have been eagerly watching and tracking the developments around Rivian for a number of years now. It’s fascinating watching a fledgling company appear and go through the many joys and (many more) struggles that come with trying to enter something as complex and challenging as the automotive production industry. Rivian has often been lauded, even by myself, as one of the automotive startups that is “doing things right” and had a methodical and realistic ramp up, despite how slow the rest of the world saw it to be. Hey, it’s pretty freaking hard to get a car to market from nothing.
When R1S (the SUV) reservations opened up, we threw our $1,000 hat into the ring. The idea of a 3-row EV is very compelling to us. We loved our plug-in hybrid Chrysler Pacifica and our EV journey through the Audi e-tron and now the Polestar 2. There’s still a decided lack of electrified 3-row options, but that is growing. For a long time it was only the Volvo XC90 plug-in hybrid, there’s now a Lincoln Aviator plug-in hybrid and Kia Sorento plug-in hybrid is one of the newest to the set. There are also the Tesla Model X and the Y for full EV shoppers today.
With our initial reservation, our R1S came out to a still hefty $79,800. But that seemed good given the fact that it would be a new brand, but an EV with 300+ miles of range, 7 seats, etc. It didn’t have crazy (and costly) falcon wing doors.
Then March 1st, we received a curious email blast from Rivian that there would be updates to pricing. It pegged the changes to be driven primarily by inflationary pressures through suppliers and raw materials.
Then we went to go check what the pricing looked like on the Rivian site… cue jaw drop. Our $79,800 build now rang up to a whopping $97,000. That’s nearly 22% of “inflation.” Yes the base price went up slightly from $75,500 to $78,000 and they now wanted to charge $2,500 for the 20″ wheels, up from $1,800 before. Those are relatively reasonable price changes and ones that you might expect to see model year to model year, especially for something that has the relative demand that Rivian commands.
The biggest changes come from the Quad-Motor AWD, previously included, now is expected to be a $6,000 premium, same for the large pack battery. Rivian tried to mitigate those knock out blows by announcing the availability of their Dual Motor AWD system and a standard battery pack for the base configuration. But selecting those would also result in yet another bump/delay in expected delivery timing into 2024. This doesn’t seem like simply inflationary pressures at work here.
Obviously (or apparently not so obviously to those at Rivian), reservation holders, some of the company’s earliest and most ardent cheerleaders, were dismayed. Comments and backlash were immediate and severe. People were cancelling reservations left and right. In all my experience in product planning, strategy and pricing, I’ve never seen such a disconnect for the process or customer experience. There was no recognition or ability for reservation holders (some of which have been in line now for quite some time) to lock in pricing or any kind of concession. Basically Rivian said, this is our new pricing, take it or leave it. We were on the verge of cancelling our own order, as $97,000, while maybe that price is more feasible given the capabilities and performance of the R1S and today’s market, was now in some pretty lofty territory. Yes, it is still somewhat unchallenged from a good 3-row EV perspective, but that won’t be for long with the onslaught of vehicles, especially from Hyundai (IONIQ 7) and Kia (EV9). No, those likely won’t have the off-road chops of the Rivians, but may have their own advantages for the day to day urban dad.
Enter the walk back. on March 3rd, just two days after “The Announcement,” we received “The Tank Turn.” See below:
So, turns out (see what I did there?) anyone with a reservation as of March 1st would now be able to purchase at that original configured price. In addition to that, Rivian will go to the added measure of untangling the mess for those that did immediately cancel their reservation and reinstate their place in line. This is a pretty big corporate mea culpa.
What does that mean for us? We will continue to hold our reservation, for now, especially given the “value” that is somewhat baked into our order, ever buy a car that was immediately worth potentially $17,000 more (maybe just you Bronco and Maverick owners)? But there is a lingering wonder of what else is going on behind those Rivian doors that we aren’t privy to. The fact that this decision was proposed and approved makes me think that there is a pretty insular group/culture running the show. This is just the one item that has some outward visibility and direct impact at the moment. Could Rivian’s cost estimates for their product offering really have been that far off? Are they now losing significant money on the 70,000+ reservations that were initially on the books? Or are they simply leveraging the huge demand and backlog to push through some steep pricing actions? It was probably both, but we will be watching to see how this roller coaster dips and turns over the next year or so at least.