Rivian is rolling back price hikes on pre-order vehicles following backlash from its customers: rivien ceo rj, scrange, apologized to customers. In a letter published thursday. I have made a lot of mistakes since starting rivian more than 12 years ago, but this one has been the most painful. I'm truly sorry skerent wrote.

Trust is hard to build and easy to break. Speaking with many of you over the last two days, i fully realize and acknowledge how upset many of you are. So if you don't know what this is all about, a review increase a hike of like 20 on all their vehicles right. So the base price of the r1t, for example, the truck - went up from 67, 500, 270, 9500 right so quite a bit of a hike.

Uh, the r1s, which is the suv, went from 70 thousand dollars to 84 and a half thousand and at the publishing of this video here my two orders right. I have the s the truck uh that one's uh, seventy three thousand, the large pack is included. The reason blue is 2500 bucks, the 2200 uh wheels are included, the interior, black mountain is included, and then the gear which is a tenth is 2600, so it's 7850. So that is price, the original price and it hasn't gone up, but the r1s, the suv.

That is the one that i am planning to keep when you look at the configuration here right. It looks like that right now, so explore package it's at 72.5 or 72 500. The quad motor is an extra 6 000. The large pack is an extra 6 000 glass year.

Wide is 1750 21 road wheels are included, the black mountain interior is included, and then the compact spare tire is 550, so that is a total of 86 800 right, and so that means that these have not rolled back. Ribbian has said that all that's going to roll back right, that he made a mistake and that anyone that have pre-ordered a vehicle us of before march 1st would get the original pricing well. It doesn't seem like that. Rollback has been applied to all of the pre-orders, because here is mine.

That starts at 72 500, when the r1s quad used to be 70 000 right. So this one's already five hundred dollars higher than originally was plus the quad motor adds another six thousand and the large pack adds another six thousand that not did not used to be the case. So that's twelve thousand fourteen thousand of increased price there, at least so. There are some estimates that up to 40 000 people, customers uh cancelled their orders overnight, basically just as soon as they found out about those price increases.

Now now this is unsubstantiated. I i read that somewhere and they didn't know right, but if, if any of that is anywhere remotely true, then that would explain the reason why uh rivian decided to undo these price hikes right, but there's still a lot of concerns, even though now uh they've said That the original prices they're gon na honor the original pricing right a lot of people, a lot of fans. A lot of customers have still they're still worrying about what this price, and this thing that they did might mean like, for example, did you know there was a lawsuit brought by a former rivian sales and marketing executive last fall shortly before the rivian ipo also raised Concerns about whether the company was pricing, his models too low. The suit alleges that la schwab, lara schwab, the former executive and plaintiff in the case raised the issue with other rivian executives and they eventually agreed vehicle prices would need to be increased uh post ipo.

It was clear that the vehicles were underpriced and each sale would result in a loss to the company said the complaint which is filed in november now rivien spokesman says that they dispute those things, but that former employee is standing by our statements in the lawsuit right. Uh, so the lawsuit is related to the fact that she got let go because she brought up those concerns that the company was going to lose money over the low pricing of these vehicles right, and so, if that's true, then that means that rivien stands to lose Money not only just not make money but lose money on the sale of at least this first 70 000 pre-orders right, and so that's bad news. For i mean it's good news for us: customers that are going to re receive a product for less than maybe a cost to build, but it's bad for investors right and the company at large, because then that means that they're not going to be making money. They're going to be losing money for every sale right that they've done until now, now any orders uh that were are made pre-orders that are made post march.

First, then, those get the new pricing scheme, and maybe those now will have enough margins there for the company to make money. But here's the other thing that is kind of worrisome. The fact that they did this and that they did not think that the customer base would feel betrayed uh the most loyal of their of their customer base. These are people that have put money down like in my example, i put money down three years ago to get this car and that we would be okay with the hike increase of like 20 percent just before receiving you know getting delivery of these vehicle.

How many decision makers advertian had to have this discussions before this thing happened and they've all like yeah? Let's do this, some people are gon na get mad. All i can speculate is that most of the pre-orders are not three years old enough. Twenty late, eight twenty eighteen uh 2019, but most of them are 20 20, 20, 21 right as time goes by more and more people know about the brand and the company, and so they're more people are putting their uh pre-orders, and so the people who are the Oldest uh restoration holders, it's just a tiny, tiny, uh portion of those right and so they're like well. If we piss those guys off well they're a small number of the total amount of pre-orders right, but they totally miss calculated because all i saw and everything that i saw online is people are complaining that even placed an order a few weeks ago or a few Months ago, right, uh pre-order people pre-order holders from this year, they're they're feeling the same betrayal.

That someone like me, for example, that has been waiting for three years felt right, and that was the case. So i think, because that's the the backlash was so great. I think that then they have to rethink this and say like okay, well, we'd, rather uh lose money in these first seven, eight thousand pre-orders than to lose the market share that they have gained up. Until this point, remember, 20 of this company is owned by amazon, and amazon is a company that for many many years, their first 10 years or something like that did not make any money right did not generate a profit.

What they were doing is they were gaining market share. That is that's one of the strategies that big companies have right, instead of gaining profits for the first few years. What they do is they gain market share because then, once you get market share, then the more investment money will come in and then that way you can then figure out how to make money in the future. Uh an example of a company that failed doing.

That was movie pass right. They wanted to gain market share, get us all into these little plans to watch movies for a flat fee, and then, once you know they had everybody hooked into this service, then they would figure out how to make money later now it didn't work at the end And so that is the risk here that if their strategy is to gain just market share at the cost of you know, losses right, financial losses that maybe rivien is not going to make it as a company and it's a legit concern. I think right, and so some people are maybe opting for maybe not reinstating their orders if they cancel right. Supposedly, if you cancel your order, you can go back and then you have that restating you get the same pricing and the same timing, so you won't lose your your place in line so they're, basically giving everything back that they took away on tuesday on thursday.

Now they're saying it's all back and so even then some people are saying like yeah. No, you know i'm not going to order now, i'm going to get some other things, and you know i don't know that might be too much. I think someone could be an opinion on that, but there are legitimate concerns like this one, for example right if you were maybe at some of these people were buying a car but also had bought stock right and so now, they're looking at uh as rivia, not Only uh as a product but they're also looking as an investment right. If you're looking at investment, then you you kind of gauge this in a different way and if you think that rivian might not survive because of their decisions right now, then you might not want to buy one of their cars and it's totally understandable.

Now, if you're watching this, and if you have a pre-order, what do you feel did? Are you going to uh still go through with your pre-order, or are you giving up on this company just because this kind of mistake and your opinion is too big and uh? Maybe they should have to pay the price for that. Let me know in the comments, but there you go all the people that were crying and then losing their minds on the online forums and on reddit. It seems like rivien at the very least, they are listening to their customers and they heard you loud and clear and they undid the price hikes they roll everything back, it's as if tuesday never happened. Alright, thank you for watching this video we'll see you guys on the next one.

Bye.