(Reuters) – Rivian Automotive Inc has rolled back price hikes on electric vehicles booked before March 1, days after facing backlash from customers following a 20% increase in prices.
Preorders as of March 1 will not be subject to the new prices and customers who canceled orders can reinstate them with the original price, Chief Executive Officer RJ Scaringe said in a letter to clients on Thursday.
The Amazon-backed company on March 1 increased the base price of the Rivian R1T electric pickup to about $79,500 from $67,500, while the R1S SUV went to $84,500 from $70,000.
The new prices will remain in place for orders placed after the announcement.
Scaringe reiterated that the price increase was prompted by inflationary pressures and higher component costs. Average new vehicle pricing across the United States has risen more than 30% since 2018, he said.
“As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries,” he wrote.
“I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful.”
Many users had taken to social media earlier this week, saying the price increase was a “betrayal” to Rivian’s early supporters.
“We think the damage has been done and many customers will be purchasing EVs from competitors instead,” said Garrett Nelson, analyst at CFRA Research.
Rival Tesla Inc boss Elon Musk tweeted on Tuesday that Rivian’s “negative gross margin will be staggering”.
Pure-play EV companies like Tesla and legacy automakers have also had to raise U.S. vehicle prices to offset high costs related to logistics and supply chain disruptions. Dealers often mark up prices because of vehicle shortages as well.
(Reporting by Akash Sriram in Bengaluru; Additional reporting by Hyunjoo Jin in San Francisco; Editing by Saumyadeb Chakrabarty, Shinjini Ganguli and Devika Syamnath)
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