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The price debacle seems more like a coup than a business decision. Is RJ still in charge, or was he pushed aside by the board? Serious question... Note the email came from "Team Rivian" and not from RJ, like you would expect.
The pricing change is a change in business model, moving to a Lucid-type model where you can get away with low volume / high price goods and still please the wall street types. But that's significantly different than the way the company was pitched for the IPO and indeed since the beginning of the company. The target demographic has changed drastically now that the vehicles have crossed the psychological threshold of $100,000.
Specifically, for luxury goods, price doesn't have much connection to cost of production - a $1000 bottle of wine doesn't cost 100 times more to produce than a $10 bottle of wine, for example. Choose your own example if you don't like mine - the point is that pricing doesn't necessarily have anything at all to do with cost, and that's especially true in the case of luxury goods. In Rivian's case, the vehicles aren't costing 20% more to produce today than they did a year ago when they made their last (small) price adjustment. Especially when you consider they already have many of the materials already on hand for the production. (And $1750 extra for white? How is that attributable to "inflation"?)
To me it almost seems like a way to goose the value for a sell-off. Even if they lose half the pre-orders, they can drastically increase the profit margin, and the valuation numbers will then make more sense. This seems like a hostile takeover move rather than a long-term strategy for success.
The pricing change is a change in business model, moving to a Lucid-type model where you can get away with low volume / high price goods and still please the wall street types. But that's significantly different than the way the company was pitched for the IPO and indeed since the beginning of the company. The target demographic has changed drastically now that the vehicles have crossed the psychological threshold of $100,000.
Specifically, for luxury goods, price doesn't have much connection to cost of production - a $1000 bottle of wine doesn't cost 100 times more to produce than a $10 bottle of wine, for example. Choose your own example if you don't like mine - the point is that pricing doesn't necessarily have anything at all to do with cost, and that's especially true in the case of luxury goods. In Rivian's case, the vehicles aren't costing 20% more to produce today than they did a year ago when they made their last (small) price adjustment. Especially when you consider they already have many of the materials already on hand for the production. (And $1750 extra for white? How is that attributable to "inflation"?)
To me it almost seems like a way to goose the value for a sell-off. Even if they lose half the pre-orders, they can drastically increase the profit margin, and the valuation numbers will then make more sense. This seems like a hostile takeover move rather than a long-term strategy for success.