After beating first-quarter earnings expectations and demonstrating an ability to continue to lower operating costs, Rivian seems determined not to cave in to cutting prices.
CEO RJ Scaringe made his position clear on the earnings call earlier this week, saying that the company's "flagship" pricing isn't going anywhere. Scaringe said Rivian is betting it can keep prices high for the R1S SUV and R1T truck even when competition swells. That's a bold move, but it may be necessary if the EV startup wants to turn a profit.
It's also a risky move, since Rivian will soon face increased competition at a time when Tesla is cutting prices to spur demand and traditional automakers are launching lower-priced EVs.
Undeterred by these developments, Scaringe said Rivian will continue to focus on rolling out higher-priced, feature-packed models of the R1S and R1T to meet customer demand in the near term. This will result in a higher average selling price (ASP) even as Rivian is offering some lower-priced variants.
"We see demand from customers for what we're building," Rivian CEO RJ Scaringe told Reuters, adding that the company is confident of maintaining prices in the face of growing competition. According to him, the extra-large batteries, better performance, and premium features will help distinguish Rivian from rivals.
"Given the data that we have on customer behavior, the aggregate result we see is a continued upward shift in ASPs. We will offer a lower priced variant, but not necessarily lower prices on the things we're offering today."
While Rivian would not disclose its ASP, the R1T starts at $73,000 while the R1S starts at $78,000. However, fully loaded top-spec models can easily top $100,000. "These are flagship products. These are the products that are building our brand. They're not meant to sell hundreds of thousands of units," Scaringe said.
Earlier this week, Rivian reaffirmed its goal to build 50,000 vehicles this year. Extending the pricing plan and driving costs down are essential elements in the company's goal of turning a gross profit in 2024 for the first time.
The executive said Rivian expects to address a mass market with its upcoming R2 family of smaller vehicles that are now targeted to launch in 2026 rather than 2025 as initially announced.