? RJ's Letter -- Making it Right -- REVERSING THE PRICE CHANGE FOR PREORDER HOLDERS

[LeoH]

Assuming Rivians sell at the high price point. Most of us said we couldn't afford it and were NOT willing to get a lower end model. Don't forget how quickly that changed. It does no good to have a car worth 90k is no one wants to buy it. Man, it's amazing how quickly the tune changes.

I think what most people are missing is that things did not go back to normal just because they reversed the price change. This is not a like for like situation. Now we know we have equity of 20% right upon delivery.

The rage was mainly from people who already committed to an extent, and were not willing to pay the 20% increase ( whether they can't afford it, or felt 100K could be spent elsewhere ).

I also believe a segment of people who said they would/did cancel because they can't afford it, actually just had emotions embroiled in that and not just their finances.

In my situation, I figured I could get Lexus GX and a Q4 E-tron instead of the R1S for about the same amount of money. And I did actually start looking an inventory, but now situations has changed, so why would I look for an alternative?


With the exception of Rivian itself, reading into the reactions of the past couple of days should be taken with a mountain of salt.

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[Friscorays]

You guys, before you get too excited about a discounted truck with instant equity, remember a ton of us were going to cancel because we couldn't afford the truck anymore. AND no one wanted to compromise for a lesser truck.

You think this logic won't apply to all other prospective buyers in the future?.....

I felt the vehicle was worth the new price but no longer a good value proposition and was mostly upset by the way the announcement went down. People new to Rivian won't know any of this history: they will just see a new awesome R1T or R1S on the street, look at the pricing, see it is competitive with similar vehicles and potentially pull the trigger.

 

[JeremyMKE]

Can I just say I told you so.

You absofuckinglutely can!

 

[Iwantatesla]

The drop indicated that the market thought this was a bad decision (Lucid and Tesla didn’t drop like this so it was company specific).

that was in regards to the comment about RIVN having 85b dollars

 

[HokieBird7980]

I'm glad that RJ is a man of his word and that as the founder/creator of Rivian, he understood that the trust many of us who saw this product at the LA Auto Show and put down our deposits see him and his vision as truly inspirational and that we by virtue of our deposits put trust in him to deliver. I truly understand the pressures on costs since 2018 and we have seen this play out over and over in other markets outside of automobiles. However, the realization by RJ that this is a movement and not a product shows that he is true to his vision of creating vehicles that are high quality that help protect the world from further climate changing effects. At the end of the day, I feel that RJ and team were pressured into making the price increase decision by the large scale investors and that as he admits, that was a mistake. I have always said that what has happened has happened and you can't undo what's done. However, learning from that experience and more importantly deciding on what to do going forward based on the experience learned makes one a better person. In this case, i think it makes him a better CEO as well. Thank you RJ for staying true to your brand and your loyal followers.

 

[CommodoreAmiga]

Others have hinted at it, but as part of rebuilding my trust, a head needs to roll for this. Someone advocated for and pushed the approach of immediate price increases. RJ signed off but he isn't going anywhere so he needs to kick someone else to the curb if he wants to show he's really learned a lesson.

I'll disagree with this.

I don't think a "head must roll" is always the answer. Often, when that is applied, the axe falls on someone who may not actually deserve it -- a scapegoat. We need to modify our culture to be more accepting of mistakes, so long as there is accountability when they occur.

Now, I think there may be an argument to be made that someone has been consistently making bad decisions -- then corrective action is warranted. I'm not saying that someone isn't deserving to move on... I'm simply saying that "there must be a firing" is not inherently the right move.

 

[SeaGeo]

@SeaGeo Will you be editing your signature??!! ?

I honestly don't know. That really damaged a lot of family trust about their decision making processes and how they'll treat customers going forward.

 

[paariv]

THIS!!! All they had to do was call 20 preorder holders.

My company has a small group that opt in to try new things and are on NDA - easy feedback and avoids mistakes like this.

Seriously. This feels like a purely economic decision that ignored expectations and fairness. They probably were thinking “we told people this was just an estimate so they’ll be disappointed but not overly so.” And modeled cancellations based on what their customer base can afford economically.

If they’d taken fairness into account - even just for LE orders, where minor config changes resulted in huge price swings based on where your color choices put you in the production queue - I think they could have pulled this off and held the line with an extra year of free RAN charging or the like as compensation.

Just a profoundly stupid, spreadsheet-driven process from top to bottom (even the reversal is a bit of an over correction, though I’ll take it). Heads should roll.

 

[mightypile]

I'm not sure that this was JUST business. RJ is a human, too. I suspect he cares A LOT about what people think about his company that he has built from the ground up. I doubt the backlash was easy for him from that standpoint.

But you're also right - if there was not a reasonable business reason to reverse this, it wouldn't have been reversed.

Totally agree. Every entrepreneur I've ever worked with has wanted to do something good and understood that financing and profitability are the means to that end. RJ has very difficult decisions to make, and few of them obvious, especially not this one. I'm mostly pleased with the outcome, but I empathize with him and the company knowing that for the coming year, at least, the company is probably spending $90k in price-inflated parts to build each of our $80k trucks. When the time comes for me to buy mine, I intend to send a personal note saying thank you for the gift. I really hope the parts prices normalize soon, batteries get better and cheaper, and Rivian can create and increase margins. That's the only way a business survives. Even non-profits have to balance the books and pay the bills eventually.

 

[Max]

for reference:

 

[STLBlues76]

You guys, before you get too excited about a discounted truck with instant equity, remember a ton of us were going to cancel because we couldn't afford the truck anymore. AND no one wanted to compromise for a lesser truck.

You think this logic won't apply to all other prospective buyers in the future?

Yesterday ICE trucks suddenly became compelling at half the cost. Now your sweeping yesterdays logic under the rug as of people are going to line up to pay 90k for a pickup truck.

I understand what you are saying here, but a lot of people on here could/can afford the increased price, but were pissed at how it was communicated. There will be plenty of demand at the increased price, and I believe the mea culpa will end up helping the brand attract more customers (especially as the more affordable iterations hit the streets in a few years). This goes a long way of showing the company wants to do what is right and build a meaningful brand, not just go by what is written in the contract.

 

[Bruins06]

Some people have already ordered other cars (supposedly). This is why you never let emotions dictate your actions... which, unfortunately, is kinda the theme of the entire world lately.

Those emotions led to cancelations, and it was those cancelations that most likely led Rivian to reverse its course

 

[DarcyL]

Holy Hannah such drama. I was going to pull the pin on a 2019 Audi Etron with only 15000 miles on it today! I guess I'll wait now.

 

[HJP1]

I did not cancel my order but was planning to as soon as I was contacted by a Rivian guide. My increase came to 14% and was not acceptable. As a preorder holder since 2019 and stock investor (Rivian down 6.5% this morning) I think R. J. made the right decision for the long term reputation of the company.

 

[silkyjohnson]

I'll probably reinstate mine

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