Price Hikes Are A Good Move, but I am likely still cancelling

[Scott]

I know lots of people are (rightfully) angry today, especially those early reservation holders who got screwed out of ~$15k by very arbitrary cut off points for who got to keep the old price and who has to pay the new prices. However, I believe this is a good move for Rivian.

My reasoning:
1. Rivian has way more pre-orders than they can fulfill anytime soon. That is likely still true after the many cancellations. This move will probably increase revenue in the next 18 months by ~20%. That is good for burning less cash, and good for the stock price.
2. Cancellations will shorten the line, and therefore make it more likely that people willing to pay 20% more will put down a deposit. How many posts have we seen where people are looking to jump the line by throwing around some cash? There are a number of those people out there.
3. Vehicle prices have gone through the roof in the last few years. I think that most people here thought that, at the old prices, Rivian was an amazing value in the current market, even if it was a very expensive vehicle. It was underpriced at the old price. Period.
4. Post price hike, Rivian is much more in line with the market in terms of value. Probably still more vehicle for your dollar than direct competitors in the truck market. But the added risk of a startup offsets that and makes it close to fairly priced.
5. In the SUV market, there are still no competitors today. Show me a 3 row, electric SUV that can actually go offroad that you can buy today. It doesn't exist.
6. The R1 series was always intended to be a very pricey early adopter vehicle before they moved downmarket to cover a much larger market with R2s. What "very pricey" is has just moved up significantly in the last few years. This doesn't kill their mission of helping save the planet. Their impact there in the short term will be the same, but they will have more cash leftover to fund those larger market endeavors in 2024 and beyond

In general, I think this is a good move for the company, and the stock price (I do not own stock though, I am an index fund kind of guy). That said, they definitely made mistakes. Their communication was sudden, and poor thus it alienated a lot of people who were their champions. The anger and emotional responses are totally justified.

Personally, I am not cancelling today. However, the value prop is no longer amazing, and if Rivian offered me delivery tomorrow I would not take it at the 90k+ for my R1S I have on pre-order now. I don't drive enough to justify that level of expenditure on a toy. My ID.4 handles most of our miles driven in an environmentally friendly way, and is a nice enough car. And my Subaru gets me to the off road places I like to go. I don't NEED a Rivian. I just wanted one. At the new price I will likely wait until supply chain issues ease and the car market is less bananas. I might even switch to a dual motor configuration just to hold my place in line.

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[astonius]

Have you seen the reaction? This is a whole forum dedicated to the Rivian brand, and the sentiment is overwhelmingly in the “I’m cancelling/don’t know what I’ll do yet” camp. Imagine what a non-fanboy who saw his price increase today is thinking.

I agree with the theory that a price hike could have all the potential benefits you’ve outlined, but it’s not black-and-white. There’s a threshold where the cancellation wave and public backlash is so overwhelming it completely ruins a company’s early reputation and snowballs from there. You have to balance the amount of the increase, who’s affected, etc in the price increase calculation.

The perception, true or not, is that Rivian did not do this. They simply looked at numbers on a page, made a “rational”, purely math-based decision in response to raise prices 20%, and didn’t think about the intangibles. This may not be accurate, but that’s how it appears to the emotional side of buyers.

 

[MBuster]

Have you seen the reaction? This is a whole forum dedicated to the Rivian brand, and the sentiment is overwhelmingly in the “I’m cancelling/don’t know what I’ll do yet” camp. Imagine what a non-fanboy who saw his price increase today is thinking.

I agree with the theory that a price hike could have all the potential benefits you’ve outlined, but it’s not black-and-white. There’s a threshold where the cancellation wave and public backlash is so overwhelming it completely ruins a company’s early reputation and snowballs from there. You have to balance the amount of the increase, who’s affected, etc in the price increase calculation.

The perception, true or not, is that Rivian did not do this. They simply looked at numbers on a page, made a “rational”, purely math-based decision in response to raise prices 20%, and didn’t think about the intangibles. This may not be accurate, but that’s how it appears to the emotional side of buyers.

So many think they all that and this forum is represent everyone. So much negative feed more negative and everyone else go away. I came back to watch at what I know is much anger.
I think maybe Rivian see who complain and whine at every little and get them higher price.

I know I order maybe later than some and still get guide and build at second price after first drop. I pay my $, take truck and have fun. Must think of sell quick since now worth much more than paying. Much like truck but as I have cost $78k instead of $98k for what I buy hard not to think of taking profit. This probably make here more mad, but what you do if me? Only few make at lower price so market say value high.
Problem is to buy another truck I want cost what I sell for and I have nothing in end but money. Get back in line and pay more or have less truck like dual. I order because I want to play and use it so maybe value more than money. I take truck and afraid drive or won't do smart thing to sell.

 

[SeaGeo]

Have you seen the reaction? This is a whole forum dedicated to the Rivian brand, and the sentiment is overwhelmingly in the “I’m cancelling/don’t know what I’ll do yet” camp. Imagine what a non-fanboy who saw his price increase today is thinking.

Forget the forum. Check out the reaction from previously positive EV press on Twitter. Years of goodwill absolutely getting hammered.

Honestly, as a stockholder jacking prices up on essentially all preorder holders when they have cash on hand makes me *more* concerned.

 

[Dark-Fx]

Personally I'd rather Rivian increase the price of my truck by 20k than have to pay 10k in ADM that is just the middleman price gouging. Rivian has actual costs that have increased, their solvency is dependent on being able to make money selling vehicles.

 

[COdogman]

I know lots of people are (rightfully) angry today, especially those early reservation holders who got screwed out of ~$15k by very arbitrary cut off points for who got to keep the old price and who has to pay the new prices. However, I believe this is a good move for Rivian.

My reasoning:
1. Rivian has way more pre-orders than they can fulfill anytime soon. That is likely still true after the many cancellations. This move will probably increase revenue in the next 18 months by ~20%. That is good for burning less cash, and good for the stock price.
2. Cancellations will shorten the line, and therefore make it more likely that people willing to pay 20% more will put down a deposit. How many posts have we seen where people are looking to jump the line by throwing around some cash? There are a number of those people out there.
3. Vehicle prices have gone through the roof in the last few years. I think that most people here thought that, at the old prices, Rivian was an amazing value in the current market, even if it was a very expensive vehicle. It was underpriced at the old price. Period.
4. Post price hike, Rivian is much more in line with the market in terms of value. Probably still more vehicle for your dollar than direct competitors in the truck market. But the added risk of a startup offsets that and makes it close to fairly priced.
5. In the SUV market, there are still no competitors today. Show me a 3 row, electric SUV that can actually go offroad that you can buy today. It doesn't exist.
6. The R1 series was always intended to be a very pricey early adopter vehicle before they moved downmarket to cover a much larger market with R2s. What "very pricey" is has just moved up significantly in the last few years. This doesn't kill their mission of helping save the planet. Their impact there in the short term will be the same, but they will have more cash leftover to fund those larger market endeavors in 2024 and beyond

In general, I think this is a good move for the company, and the stock price (I do not own stock though, I am an index fund kind of guy). That said, they definitely made mistakes. Their communication was sudden, and poor thus it alienated a lot of people who were their champions. The anger and emotional responses are totally justified.

Personally, I am not cancelling today. However, the value prop is no longer amazing, and if Rivian offered me delivery tomorrow I would not take it at the 90k+ for my R1S I have on pre-order now. I don't drive enough to justify that level of expenditure on a toy. My ID.4 handles most of our miles driven in an environmentally friendly way, and is a nice enough car. And my Subaru gets me to the off road places I like to go. I don't NEED a Rivian. I just wanted one. At the new price I will likely wait until supply chain issues ease and the car market is less bananas. I might even switch to a dual motor configuration just to hold my place in line.

Agree on all points. This is a hard pill to swallow and Rivian‘s name is mud now among everyone who loved them the most for the last 5 years, but they knew that would happen. There are obvious ways they could have at least attempted to mitigate that reaction but they chose to rip that band aid off and move on.

For now I plan to switch to a dual motor and make other changes - by playing with the configurator I was able to keep it to *only* a $6,000 increase. But if I see a vehicle I like better between now and 2024 I would cancel without thinking twice about it.

 

[Bobthebuilder352]

If their executive level marketing was this *wrong* it makes me question how the execs are treating the engineering process too. This was an arbitrary price increase a week before earnings call so it pushes up their sales value by that amount for the next two years since there won’t be enough cancellations to show they will sell every car they make for the next few years.

 

[Guy]

You really think the dual Motor price in 2024 will stay at the current price?

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