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(Reuters) – Rivian Automotive Inc on Thursday rolled back price hikes on electric vehicles booked before March 1, days after facing backlash from customers following a 20% increase in prices.
Prices for preorders as of March 1 will roll back to the previous price and customers who canceled orders can reinstate them, Chief Executive RJ Scaringe said in a letter to clients.
Shares of the Irvine, California-based company were down over 6% in early trading.
The Amazon-backed company said on Tuesday it had increased selling prices of its vehicles by about 20% due to inflationary pressures and higher component costs.
Scaringe said costs of components and materials that go into building vehicles have risen considerably, for everything from semiconductors to sheet metal to seats. Average new vehicle pricing across the United States rose more than 30% since 2018, he said.
“As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries,” he wrote.
“We need to plan production costs not only for today, but also for the future.”
The price increase also invited comments from Elon Musk, chief executive of rival Tesla (NASDAQ:TSLA) 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.
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.
Scaringe said the price increases “broke the trust” the company worked to build with customers. Many users quickly took to social media earlier this week, saying the price increase was “betrayal” to Rivian’s early supporters.
“I’m back on with Rivian. Super sincere apology from RJ and they are making it all good,” Zach Jump-Start Marino, a Rivian customer who had previously canceled his reservation after a $15,000 price increase, said on his Facebook (NASDAQ:FB) page.
