Reportedly, Rivian Automotive (NASDAQ:RIVN) plans to discontinue the automaker’s lowest-priced options for its R1T model pickup truck and R1S SUV. Consequently, some customers who pre-ordered these vehicle models are likely to cancel their orders. Today’s investors don’t seem to like this news very much, as they’re selling their RIVN stock shares.
For customers looking to purchase a Rivian R1T pickup truck, the entry price will effectively be $5,500 higher now. If they pre-ordered the $67,500 Explore package, now they have two choices: They can upgrade to the $73,000 Adventure package, or they can simply cancel their pre-order.
Along with that, Rivian will eliminate the lower-priced version of its R1S SUV. Prior to March 2, this vehicle model cost $70,000. Since March 2, Rivian raised its price to $72,500. With this latest move, the lower-priced version of Rivian’s R1S SUV will now have a starting price of $78,000.
Why would Rivian do this? According to the company, by discontinuing these two lower-priced purchase options, Rivian is “able to streamline [its] operations, simplify [its] supply chain and ramp production.”
What’s Happening with RIVN Stock?
Rivian can talk about streamlining operations and so on, but today’s traders aren’t buying what Rivian’s selling. Immediately after the opening bell rang, RIVN stock dropped 4%.
Investors are probably in a pessimistic mood because, undoubtedly, Rivian’s customers will cancel at least some of the aforementioned pre-orders. That’s a whole lot of lost revenue, but it’s also going to be a source of frustration and Rivian could lose some potential customers.
Additionally, Rivian’s explanation for discontinuing the lower-priced Explore package might not have put traders in a good mood. Here’s what Rivian said about that:
“The Explore Package was designed as our entry option and it was our expectation that a large number of customers would choose it. To date, only a small percentage of customers have chosen this configuration, with the vast majority selecting the Adventure trim.”
In other words, there wasn’t much demand for Rivian’s Explore package. Or at least, that’s how some investors are going to interpret the statement.
Going forward, it will be interesting to see if Rivian can grow its revenue through sales of pricier vehicle options. In the meantime, don’t expect RIVN stock to soar today — and don’t expect to buy a low-priced Rivian SUV or pickup truck anytime soon.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
