Sponsored

Skeptical Of Rivian's Prices

Engi_Nerd

Well-Known Member
Joined
Jul 21, 2021
Threads
6
Messages
220
Reaction score
425
Location
Western NY
Vehicles
Model Y LR, Alfa Romeo Giulia
I have said since the R1T and R1S prices were revealed that despite the vehicles being obviously quite expensive, they are actually a an amazing value when you consider what you're getting and what you're competing against. Unfortunately I am personally becoming less and less convinced that these advertised prices can actually be legit due to a few reasons:

GUT FEELING 1: No meaningful price adjustments conveyed despite significant inflation and supply chain disruption, huge increases at Tesla

GUT FEELING 2: Current Model Y Performance is $63K, 82 kwh, dual motor, fixed suspension. $68K R1T has 135 kwh, 4 motors, adaptive air suspension, and a much larger vehicle. Lucid's cheapest vehicle is ~$80K. New vehicles like EV6/Ioniq5, Mach-E are all easily pushing $60K+, despite being much smaller, simpler vehicles with much smaller battery capacity.

GUT FEELING 3: Comparable pricing to Ford Lightning (similarly equipped), despite Ford being able to leverage huge swaths of their existing F-150 production line and supply chain. Despite this, Ford will still only build 20K units in 2022 and will prob not make money on them.

FROM THE HORSES MOUTH: Exec from discrimination lawsuit claimed exactly this, that pricing structure isn't realistic and that Rivian's plan is to increase prices post-IPO

Obviously this is all speculation, but everything that sounds too good to be true always is. Tesla's cheapest vehicle with air suspension is $95K and that's a smaller vehicle with a smaller battery. I just don't see how a brand new company can sell an 800 HP EV truck that competes with Land Rover suspension and interior quality for what they're quoting.
Sponsored

 

yizzung

Well-Known Member
Joined
Jul 30, 2020
Threads
50
Messages
794
Reaction score
1,470
Location
California / Colorado
Vehicles
R1T | Audi allroad
Occupation
Tech
All this is fair. OP raises some good points.

A few thoughts:
  1. I don't know much about manufacturing/selling vehicles but in tech (my domain) it's not uncommon to fiddle with price as a lever to manipulate demand. There's 55K preorders right now but it might be 35K orders if they cost $100K. Or 20K if they cost $130K. I think they want to be a bit niche-y but not too niche-y. Just my gut.
  2. Why is it normal in tech to price something lower than cost but not at a place like, say, Honda? Because Honda grows at 3% YOY. It's not a growth stock and it's equity does not get valued as such. Honda would lose a ton of value if it ran at negative margins because there's no growth to make up the gap. Rivian is/will be a growth stock and is/will be valued accordingly.
  3. That means that it's far more important for Rivian to demonstrate huge growth in demand than it is to demonstrate a good income statement. Rivian will be able to run at a loss for years without paying a price on Wall Street, if they can continue to justify it with big YOY growth.
  4. Lastly, there are adjacent businesses/income streams that Rivian wants to pursue, as indicated in their road show (e.g. electrification of the home, the fleet stuff, the software, the subscription models, etc.) The car itself could just be a loss leader that enables them to generate more revenue elsewhere.
I'm actually less concerned about them jacking up the price than I am about #4. I worry a little that they'll hand me the keys and then inform me that I need a Rivian wall charger and Rivian solar panels and Rivian OTA updates and Rivian driving gloves to make it work effectively, pushing the total cost of ownership well north of what we thought it would be.
 

moosehead

Well-Known Member
Joined
Sep 16, 2021
Threads
63
Messages
2,058
Reaction score
4,483
Location
Denver, CO
Vehicles
‘22 Ioniq 5, ‘78 Jeep Wagoneer
Thread title sounded like another Rivian IPO debate.
 

thedole

Well-Known Member
Joined
May 18, 2021
Threads
3
Messages
81
Reaction score
124
Location
Portlandia
Vehicles
R1T LE
Occupation
Brewmeister
Good points here. I think I have been subconsciously thinking prices are too low as well given what has happened to supply chains and raw material prices in the last year, but secretly hoping they were going to leave things as is until LE orders were filled. I would be very sad to have to pay more obviously, but I would likely still buy as I think the R1T is relatively a good value. We'll see where prices move to though.
 

Sponsored

André

Well-Known Member
First Name
André
Joined
Oct 25, 2021
Threads
0
Messages
67
Reaction score
76
Location
Quebec, Canada
Vehicles
Mercedes Sprinter, Tesla Model Y Long Range
Occupation
Finances
We can’t base a judgment on Rivian pricing by comparing with Tesla which can’t fulfill customers demand even though they can build 1M cars/year now. They increased prices because new orders at the new prices won’t be filled before 2023 and may be later if they start to get other commercial fleet orders like the Hertz mega deal.
 

André

Well-Known Member
First Name
André
Joined
Oct 25, 2021
Threads
0
Messages
67
Reaction score
76
Location
Quebec, Canada
Vehicles
Mercedes Sprinter, Tesla Model Y Long Range
Occupation
Finances
Good points here. I think I have been subconsciously thinking prices are too low as well given what has happened to supply chains and raw material prices in the last year, but secretly hoping they were going to leave things as is until LE orders were filled. I would be very sad to have to pay more obviously, but I would likely still buy as I think the R1T is relatively a good value. We'll see where prices move to though.
Shhh… Rivian marketing team is reading this forum ! ?
 

jjswan33

Well-Known Member
First Name
Joshua
Joined
Sep 17, 2021
Threads
116
Messages
3,649
Reaction score
7,724
Location
Sandy, OR
Vehicles
Rivian R1T LE, Hyundai Ioniq 5 Limited
Occupation
Engineer
Clubs
 
I have said since the R1T and R1S prices were revealed that despite the vehicles being obviously quite expensive, they are actually a an amazing value when you consider what you're getting and what you're competing against. Unfortunately I am personally becoming less and less convinced that these advertised prices can actually be legit due to a few reasons:

GUT FEELING 1: No meaningful price adjustments conveyed despite significant inflation and supply chain disruption, huge increases at Tesla

GUT FEELING 2: Current Model Y Performance is $63K, 82 kwh, dual motor, fixed suspension. $68K R1T has 135 kwh, 4 motors, adaptive air suspension, and a much larger vehicle. Lucid's cheapest vehicle is ~$80K. New vehicles like EV6/Ioniq5, Mach-E are all easily pushing $60K+, despite being much smaller, simpler vehicles with much smaller battery capacity.

GUT FEELING 3: Comparable pricing to Ford Lightning (similarly equipped), despite Ford being able to leverage huge swaths of their existing F-150 production line and supply chain. Despite this, Ford will still only build 20K units in 2022 and will prob not make money on them.

FROM THE HORSES MOUTH: Exec from discrimination lawsuit claimed exactly this, that pricing structure isn't realistic and that Rivian's plan is to increase prices post-IPO

Obviously this is all speculation, but everything that sounds too good to be true always is. Tesla's cheapest vehicle with air suspension is $95K and that's a smaller vehicle with a smaller battery. I just don't see how a brand new company can sell an 800 HP EV truck that competes with Land Rover suspension and interior quality for what they're quoting.

?

But seriously you make some good points, at the same time I think they have a hard time using their ultimate production capacity selling a 100k+ truck so they are modeling a business model where they make revenue from other sources. Time will tell if it works or if they raise prices.

For myself if they raise the price over the EV tax credit that would be hard to swallow.
 

Taycanfrank

Well-Known Member
First Name
Frank
Joined
Oct 30, 2021
Threads
1
Messages
465
Reaction score
1,165
Location
Seattle
Vehicles
Taycan 4S
While there likely will be a small increase, I don't see a world where they make the R1T/R1S ineligible for the tax rebate.

Based on more unbiased tests I've seen, the R1T/R1S are more akin to the midrange JLR products in terms of quality/driving/etc. That's still great and makes sense for the price point. I'm all for an electric mid range RR with a better company behind it.

The interior materials don't seem especially expensive, the infotainment looks pretty standard, driving sounds pretty standard for an electric vehicle, and other than an air suspension and the EV tech there isn't a ton of fancy stuff going on. All of that makes sense at the price point. You're paying for the bigger battery, off road capability, and company vision/design.

As for comparisons, the Mach E GT isn't my cup of tea but to call it "simpler" is odd. It tops out at about 66k and you get a ton of software/materials/sportiness for that price. If anything that's a good indication that the 78-80k as speccd price most of us will be looking at for the R1T/R1S is on point.
 
Last edited:

CommodoreAmiga

Well-Known Member
Joined
Dec 30, 2020
Threads
39
Messages
4,104
Reaction score
7,706
Location
INACTIVE
Vehicles
INACTIVE
I think Rivian is focused on growth and they've got significant barriers to overcome -- both being "first" in this market as well as serious competition coming soon from incumbents.

I think looking at a per-unit cost/profit is not the perspective Rivian is taking, right now. They need to establish themselves. Losing money for the short-term is expected and planned for.

I do think price increases will come -- but I hope it isn't for existing reservation holders.
 

Sponsored

LordUlhtred

Well-Known Member
Joined
Sep 3, 2021
Threads
1
Messages
58
Reaction score
83
Location
Fairfax, VA
Vehicles
Model 3
I have said since the R1T and R1S prices were revealed that despite the vehicles being obviously quite expensive, they are actually a an amazing value when you consider what you're getting and what you're competing against. Unfortunately I am personally becoming less and less convinced that these advertised prices can actually be legit due to a few reasons:

GUT FEELING 1: No meaningful price adjustments conveyed despite significant inflation and supply chain disruption, huge increases at Tesla

GUT FEELING 2: Current Model Y Performance is $63K, 82 kwh, dual motor, fixed suspension. $68K R1T has 135 kwh, 4 motors, adaptive air suspension, and a much larger vehicle. Lucid's cheapest vehicle is ~$80K. New vehicles like EV6/Ioniq5, Mach-E are all easily pushing $60K+, despite being much smaller, simpler vehicles with much smaller battery capacity.

GUT FEELING 3: Comparable pricing to Ford Lightning (similarly equipped), despite Ford being able to leverage huge swaths of their existing F-150 production line and supply chain. Despite this, Ford will still only build 20K units in 2022 and will prob not make money on them.

FROM THE HORSES MOUTH: Exec from discrimination lawsuit claimed exactly this, that pricing structure isn't realistic and that Rivian's plan is to increase prices post-IPO

Obviously this is all speculation, but everything that sounds too good to be true always is. Tesla's cheapest vehicle with air suspension is $95K and that's a smaller vehicle with a smaller battery. I just don't see how a brand new company can sell an 800 HP EV truck that competes with Land Rover suspension and interior quality for what they're quoting.
As expensive as R1T and R1S are. I do believe they represent a very good value for the amount of tech/design/material in those cars. I also tend to think they will increase the price at some point in the near future (post IPO and post EV rebate reconciliation passage). However, i am hoping/speculating that Rivian will keep the same pricing for reservation holders. Any new orders will have the new pricing.
My thinking is the following. By maintaining the existing price for current reservation holders, Rivian will gain a lot of good will from early adopters which tend to be the most supportive/vocal bunch.
In the grand scheme of things, initial 50K + order means very little if their long term plan is to be a viable automaker.
My hope/guess is that they will raise the price and it will only be for New reservation holders after the price increase.
 

kurtlikevonnegut

Well-Known Member
Joined
Sep 1, 2021
Threads
24
Messages
2,096
Reaction score
5,635
Location
SC/TX
Vehicles
R1T QM, Honda Odyssey
Clubs
 
Price is an agreement between buyer and seller. For a startup like Rivian, cost and price don't necessarily have to be connected since they are using investment ramp to mitigate costs associated with production. They have to price their vehicles in such a way that they can attract sufficient buyers, and right now they have to use the vehicles that are currently available. The current demand is strong, but not so strong (as I see it) to justify an increase in price that would not be detrimental to demand. I expect prices for the R1 series to start increasing when the R2 line comes to market. Right now it is their only offering and they need adoption from a wider spectrum to increase brand awareness. Once that has been accomplished and they have a more entry level line available in the 40-50k range (before tax incentives) they can start increasing the prices on their premium line to reflect it's place in the market.

This is actually encouraging for me, because it means that I will have a much better chance of getting strong trade in value on my R1 in a few years to get an R2 with likely better range and battery tech.
 

DaveA

Well-Known Member
First Name
David
Joined
Nov 17, 2020
Threads
12
Messages
1,897
Reaction score
3,348
Location
Texas
Vehicles
Rivian R1T
A price increase will signal its time for a refund for me. I'm already paying more than I should
I would probably not cancel, but I'd remove all accessories and ask that they just keep it primer color to save money. :cool:
 

dleewla

Well-Known Member
Joined
May 13, 2021
Threads
92
Messages
2,295
Reaction score
2,481
Location
WA
Vehicles
Rivian, Toyota, Lexus
Clubs
 
All this is fair. OP raises some good points.

A few thoughts:
  1. I don't know much about manufacturing/selling vehicles but in tech (my domain) it's not uncommon to fiddle with price as a lever to manipulate demand. There's 55K preorders right now but it might be 35K orders if they cost $100K. Or 20K if they cost $130K. I think they want to be a bit niche-y but not too niche-y. Just my gut.
  2. Why is it normal in tech to price something lower than cost but not at a place like, say, Honda? Because Honda grows at 3% YOY. It's not a growth stock and it's equity does not get valued as such. Honda would lose a ton of value if it ran at negative margins because there's no growth to make up the gap. Rivian is/will be a growth stock and is/will be valued accordingly.
  3. That means that it's far more important for Rivian to demonstrate huge growth in demand than it is to demonstrate a good income statement. Rivian will be able to run at a loss for years without paying a price on Wall Street, if they can continue to justify it with big YOY growth.
  4. Lastly, there are adjacent businesses/income streams that Rivian wants to pursue, as indicated in their road show (e.g. electrification of the home, the fleet stuff, the software, the subscription models, etc.) The car itself could just be a loss leader that enables them to generate more revenue elsewhere.
I'm actually less concerned about them jacking up the price than I am about #4. I worry a little that they'll hand me the keys and then inform me that I need a Rivian wall charger and Rivian solar panels and Rivian OTA updates and Rivian driving gloves to make it work effectively, pushing the total cost of ownership well north of what we thought it would be.
I had similar thoughts. While I also believe the price for the R1T/R1S is low or could be higher based on competition, I do also think they might want to focus on growth in the beginning. Since stocks are really about speculation and potential in the tech sector and I believe, like Tesla, Rivian sees itself as a technology company not a car company, they might want to focus on YoY growth over profits (at least for the first few years). Tons of examples in tech that followed this model and are successful now (and make profits too cause eventually you do need make a profit for investors). Of course probably even more examples of this not working so its a gamble for investors.

Now, all the being said, I still think the price of the vehicles may go up after the IPO. I'd like it not to and the tax incentive limit of $80k is a good reason not to but I have a feeling they will raise it so that the base price is still below $80k. Maybe another $2000-3000 per vehicle.
 

LordUlhtred

Well-Known Member
Joined
Sep 3, 2021
Threads
1
Messages
58
Reaction score
83
Location
Fairfax, VA
Vehicles
Model 3
A price increase will signal its time for a refund for me. I'm already paying more than I should
If the price increase, which I think it will come post IPO, is applicable to both existing and new reservation holders. Like yourself, i plan to cancel and get me a Tesla Model Y
Sponsored

 
 




Top