Aroohoo
Well-Known Member
- Thread starter
- #1
I haven't seen a dedicated thread on this and haven't read through all of the hundreds of posts since I went to bed, so hopefully it isn't a duplicate.
Lets assume the following:
After 30% cancellation, the revenue is $1,050,000,000.
Rivian is going to be cash flow negative for years...from a business perspective, one can see they would want to try to harvest additional upfront revenue (spread over several years) from existing orders. At the rate they are burning cash, this extra revenue doesn't amount to much, but it does slow their losses.
As others have stated elsewhere, this new pricing structure is probably also closer to "Market value" based on where Tesla (Model X) and Ford (Lightening) are pricing their products
So, while I personally think they botched this price increase from a customer relations standpoint, from a numbers perspective it is something that not only did they probably have to do for the long term viability of the company but something that they thought the market could/would support.
Lets assume the following:
- 100k orders prior to the price increase was announced (probably less than this, but this keeps the math easy)
- $15k average price increase in each order
- 30% cancellation rate (based on all the posts here, this is low. However there is confirmation basis relying on numbers from a forum with members that are a small population of the total order community AND are more "dedicated" than the average buyer. In the end, the number really doesn't matter for this thought exercise)
After 30% cancellation, the revenue is $1,050,000,000.
Rivian is going to be cash flow negative for years...from a business perspective, one can see they would want to try to harvest additional upfront revenue (spread over several years) from existing orders. At the rate they are burning cash, this extra revenue doesn't amount to much, but it does slow their losses.
As others have stated elsewhere, this new pricing structure is probably also closer to "Market value" based on where Tesla (Model X) and Ford (Lightening) are pricing their products
So, while I personally think they botched this price increase from a customer relations standpoint, from a numbers perspective it is something that not only did they probably have to do for the long term viability of the company but something that they thought the market could/would support.
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