Rivian cancels price hikes on preorders following customer protests.

• On Tuesday, Rivian revealed a $12,000 hike in the cost of its quad-motor models.
• Originally, the increase would have applied to vehicles ordered before March 1.
• Rivian's CEO acknowledged the upset feelings of many individuals they spoke with over the past two days.

The plan to increase prices on vehicles that had already been ordered by customers was quickly abandoned.

RJ Scaringe, CEO of Rivian, admitted in a letter to stakeholders on Thursday that the price increases on Tuesday damaged the trust the company aimed to establish with its customers. He stated that the original prices will be honored for all preorders placed before March 1.

On Tuesday, Rivian announced that the prices of quad-motor versions of its electric R1T pickup and R1S SUV would increase by approximately $12,000, affecting both pending and new orders.

The plan led to an immediate outcry from customers.

Scaringe wrote, "I understand and accept how upset many of you were after speaking with them over the past two days."

The price increases were due to sharp increases in the costs of essential components, according to Scaringe.

In recent months, the costs of the components and materials used in building vehicles have increased significantly, leading to a rise in average new vehicle pricing across the U.S. of more than 30% since 2018, as Scaringe wrote.

To account for our build lead up times, we must plan production costs not only for the present but also for the future.

RBC Capital Markets analyst Joseph Spak praised Rivian's decision to roll back the price increase on existing orders, stating in a note on Thursday that the abrupt price increase on Tuesday was not a good way to build brand equity.

As of noon ET, Rivian's shares were experiencing a 3.1% decline in trading.