Rivian Automotive Inc. (NASDAQ: RIVN) inches up in pre session on Thursday as the business is wagering it can maintain prices high for its initial lines of electric pickup trucks and sport-utility vehicles even as competition rises, its CEO said, a daring decision that may be essential if the startup hopes to earn a profit.
And one some see as risky, since Rivian products will soon face more rivals at a time when market leader Tesla Inc is slashing prices to spur demand in the face of souring consumer sentiment, and traditional automakers are tightening competition with lower-priced electric vehicle (EV) models.
Rivian soothed investor concerns this week by maintaining its 2023 production target and posting higher-than-expected quarterly revenue, in stark contrast to competitors Lucid Group, Fisker Inc, and Nikola Corp.
To meet customer demand in the near term, the Irvine, California-based startup said it would focus on rolling out higher-priced, feature-packed models of its R1S SUVs and R1T pickup trucks, raising the average selling price (ASP) while offering some lower-priced variants.
“We see customer demand for what we’re building,” said Rivian CEO R.J. Scaringe on Wednesday.
Rivian is confident in preserving costs in the face of rising competition, he says, adding that extra-large batteries, improved performance, and premium features would set the brand apart from competitors.
“Given the data that we have on customer behavior, the aggregate result that we see is a continued upward shift in ASPs,” he explained. “We will offer a lower priced variant, but not necessarily lower prices on what we are currently offering.”
Rivian does not disclose its average selling price, although the R1T starts at $73,000, while Ford Motor Company’s F150 Lightning electric truck starts around $60,000.
The R1S starts at $78,000, whereas Tesla’s Model Y starts at little over $47,000 and the more expensive Model X starts at around $97,000.
“These are flagship products,” Scaringe remarked of Rivian. “These are the products that are building our brand. They are not intended to sell millions of units.”
“Rivian needs to be careful not to increase its price tag too much while more established competitors are rapidly gaining momentum in the market,” said Orwa Mohamad, an analyst at financial research company Third Bridge.
Ford is now accepting orders for its F-150 Lightning, with plans to ramp up to 150,000 units per year by the end of this year, while Tesla is expected to begin mass production of its much-delayed Cybertruck next year.
Any immediate impact on Rivian’s demand would be difficult to assess because the business, like rival Lucid, has ceased publishing current orders, which has alarmed analysts.
