Rivian Automotive Inc. rolled back price hikes on EVs booked before March 1 on Thursday, days after facing backlash from customers following a 20 percent price hike.
Prices for preorders as of March 1 will roll back to the previous price and customers who canceled orders can reinstate them, CEO RJ Scaringe said in a letter.
“Earlier this week, we announced pricing increases that broke the trust we have worked to build with you,” the letter said.
The startup automaker said on Tuesday it had increased selling prices of its vehicles by about 20 percent due to inflationary pressures and higher component costs.
Under the previous plan, the base price of the Rivian R1T electric pickup would have risen to about $79,500 from $67,500, while the R1S SUV to $84,500 from $70,000.
Rivian shares fell 5.7 percent to $50.51 in morning trading.
“Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply-chain shortages and delays for parts” including semiconductors, Rivian’s Chief Growth Officer Jiten Behl said in a statement.
The automotive industry globally is facing higher input costs while also experiencing greater leeway to increase prices. Average transaction prices hit a record $47,243 in December and Truecar.com, an auto pricing and marketing website, projects they rose 15 percent in February from a year ago.
Irvine, Calif.-based Rivian, a closely followed upstart, is seen as a potential competitor to industry leader Tesla.
While the company has delivered relatively few vehicles — 920 as of Dec. 31 – its listing in November was the sixth biggest in U.S. history. Rivian is backed by big names like Amazon.com and T. Rowe Price along with legacy automaker Ford Motor Co.
Rivian only started production and deliveries of the pickup in September after having delayed its release several times due to supply chain challenges. The SUV went in to limited production in December.
Starting 2024, Rivian plans to offer a dual-motor version of the R1T with a “standard” sized battery pack, that allows around 260 miles of range, for $67,500 — the same starting price that Rivian launched its vehicles at last year.
The price increase also invited comments from Elon Musk, CEO of rival Tesla Inc, who tweeted that Rivian’s “negative gross margin will be staggering” and it is “near impossible” for other firms to make affordable electric pickup trucks.
Reuters and Bloomberg contributed to this report.