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Rivian, the US electric car maker known as the "killer of Tesla", recently ran into trouble after a sharp rise in the price of its electric car products sparked an outcry from consumers and its share price fell to a new low.

On the evening of March 1, local time, US President Joe Biden said in his first State of the Union address in the Capitol that controlling prices is a top priority and will urge lower prices for electric vehicles. However, Rivian, a US electric car manufacturer, announced on March 2nd that it had decided to raise the prices of pure electric pickup truck R1T and pure electric SUV R1S by 17% and 20% respectively due to shortage of semiconductors, rising material costs and inflation. After the price increase, the R1T starts at $79500, while the R1S starts at $84500.

On the same day, Tesla CEO Musk said on Twitter that the negative gross profit margin of Rivian, a US electric car maker, will be staggering. It also said that Tesla has created more than 50, 000 jobs in the United States in making electric cars, more than twice as much as GM and Ford combined.

The move immediately aroused a strong protest from car owners, because the price increase of Rivian not only affected consumers who booked cars later, but also had to "make up for the price difference" of car owners who had previously decided to do so, so customers who were dissatisfied with the price increase of Rivian cancelled their orders one after another. In the face of the loss of orders, Rivian has no choice but to announce that customers who book before the price increase will maintain the original price, and customers who cancel the order after the price increase will be allowed to resume the order with the original price, time and configuration. R.J. Scaringe, CEO of Rivian, issued a letter saying that the price increase "undermines the trust that Rivian hopes to build with customers" and that the company is trying to cope with the rising cost of parts and materials, but it is a mistake to apply the price increase to existing orders. However, Rivian declined to say how many orders were cancelled.

As the price increase triggered consumer dissatisfaction, Rivian shares continued to hit a new low. From March 1 to 4, Rivian shares fell 8.36%, 13.49%, 4.95% and 6.91%, respectively. Rivian shares closed at $47.39 on March 4, with a market capitalization of $42.7 billion, an all-time low.

Data show that Rivian is an American pure electric car manufacturer, founded in 2009, headquartered in Irvine, California. Founder RJ Scaringe graduated from the Rensselaer Institute of Technology in the United States, because he is also a car fan, and eventually received a doctorate in mechanical engineering from the Massachusetts Institute of Technology. After graduating in 2009, RJ Scaringe founded the Mainstream Motors car factory, which specializes in sports cars. In 2010, Mainstream Motors was renamed Rivian and transferred from sports cars to pure electric pickups. However, it was not until 2018 that Rivian launched pure electric pickup R1T and pure electric SUV R1S, in which pure electric pickup R1T was widely favored by the market, as the United States was very favored by pickups, so the market once thought that Rivian could compete with Tesla in its heyday, which is why Rivian is known as the "Tesla killer".

In addition, Amazon founder Bezos and Tesla CEO Musk are bitter enemies, perhaps because they see the development prospect of electric vehicles and can restrict Tesla's position, so Bezos invested in a number of automotive companies in 2019, including Rivian, and other institutions raised additional financing for Rivian. Rivian's popularity in the US market has also risen.

On November 1, 2021, Rivian was listed on NASDAQ with an offering price of $78. It rose to $119.46 in intraday trading and closed at $100.73, with a total market capitalization of $85.9 billion. On the same day, founder RJ Scaringe revealed in an interview that Rivian must grow rapidly to produce at least 1 million electric vehicles a year by 2030. Rivian's long-term plan is to build four assembly plants around the world, with a second plant in the United States in addition to the existing one in Normal, Illinois, and one in Europe and one in China.

Since then, Rivian's share price has soared, from $100.73 on November 1 to $172.01 on November 16, with its market capitalization rising from $85.9 billion on November 1 to $149.4 billion on November 16. As of November 16, Rivian's market capitalization is second only to Tesla's US $1.0592 trillion and Toyota's US $261.8 billion, surpassing Volkswagen and BMW to become the third car company in the world by market capitalization.

However, for the soaring share price of Rivian, Musk gave rational advice: "hope that Rivian can achieve mass production and positive cash flow, this is the real test that the company faces." Among the hundreds of car startups, Tesla is the only American car company that has achieved mass production and positive cash flow in the past century. "

Since November 16, Rivian shares have continued to pullback, in addition to the U. S. market environment, Rivian problems also began to break out. Rivian reported a net loss of $1.233 billion on revenue of $1 million in the third quarter of 2021, producing a total of 652 cars and delivering 386 R1 series electric vehicles as of December 15. After the announcement of the results, Rivian shares fell 5.33% on the same day and 10.26% the next day. After entering 2022, Rivian share price is also basically in a state of decline. As of the last trading day, Rivian shares closed at $47.39, with a market capitalization of $42.7 billion, an all-time low.

In fact, at this time when the stock price of Rivian fell, both the US market and the Chinese market lowered their expectations for new energy vehicles at the same time, so that the share prices of relevant car companies and raw materials companies fell one after another. Tesla, NIO, Xiaopeng, BYD and Ningde era all fell to varying degrees. NIO, for example, closed at $18.63 in the previous session, the lowest since Sept. 28, 2020, with a total market capitalization of $30.7 billion. Xiaopeng, for example, closed at HK $115.9 last day, falling below its offering price of HK $165m.

In fact, Rivian is not alone in facing cost pressures. after 2022, a number of new energy vehicle companies in China announced price increases, which are not only related to the decline of new energy subsidies, but also related to rising raw material prices and chip shortages. Earlier, Euler announced that Euler Black Cat and Euler White Cat would stop taking orders. as for the reasons for the suspension, Euler car CEO Dong Yudong said, "We have apportioned the cost to the extreme, but we are still losing money. The rise in raw material prices and subsidies have put black cats and white cats in a difficult position." Dong Yudong also revealed, "now every time a car is sold, it loses 10,000 yuan."

Under the influence of the decline of new energy subsidies and the sharp rise in the price of raw materials, more new energy vehicles are expected to announce higher prices in the future. However, even if the prices of a number of new energy products will rise, sales of new energy vehicles continue to soar. According to retail data released by the Federation of passengers, there were 343000 new energy passenger vehicles in China in January 2022, an increase of 129.2% over the same period last year. On March 5, Minister of Industry and Information Technology Xiao Yaqing also said in an interview that domestic sales of new energy vehicles were very good in the first two months of this year, both of which had more than doubled, and were expected to reach the expected target this year, which may well exceed the expected target.

According to the latest ranking of global auto companies' market capitalization, Tesla is still the number one car company in the world, while BYD fell to fourth place, inferior to Volkswagen at $36.99. Due to the continuous decline, Rivian currently ranks 11th in the world, while NIO, ideal and Xiaopeng barely enter the top 20, but the ranking is much lower than before.

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