Rivian prices are on the rise. The stock is going down because investors are not happy.

font size

New electric car prices from electric truck maker

Rivian Cars

be Height To help the startup offset the higher costs. The trend of all car prices has been up in recent months, so a hike by another auto maker doesn’t seem like a surprise. Investors react with nervousness anyway.

Shares of Rivian (stock symbol: RIVN) fell more than 10%, at $55.54, in early trading Wednesday. The

Standard & Poor’s 500

And the

Dow Jones Industrial Average

They rose 0.5% and 0.7%, respectively.

Prices for some vehicles and trim levels have gone up as much as 20%, according to reports that have been sent to Rivian customers. Furthermore, price increases seem to affect Rivian buyers with existing bookings. Rivian did not immediately respond to a request for comment on pricing procedures.

Rivian R1T launch version still at $75,000, base R1T still listing at $67,500, Deutsche Bank analyst notes Emmanuel Rosner In a note Wednesday. “But many vehicle upgrades come at a significant premium over the basic options,” he added.

Even the reported price hike on Rivian prompted comment from

Tesla

(TSLA) CEO Elon Musk. He responded to a tweet about the increases saying “Rivian’s total negative.” [profit] The margin would be amazing.”

Most startups lose money early in their existence. Negative gross margins are no surprise, but Musk added in a separate tweet that building expensive trucks is relatively easy, while achieving affordability is difficult.

Tesla too price increase Several times in 2021. Its stock didn’t really react to what the price increase revealed, and Tesla Auto’s gross profit margins improved along with the pickup in 2021 deliveries.

The price increases were not limited to the electric vehicle space. The average deal price for any new car in the United States exceeded $47,000 in 2021, up more than $6,000 from 2020. Inflation is part of the story, as is lower vehicle inventory and vehicle mix.

A global shortage of semiconductors has restricted auto production, straining new auto stocks. The lack of chips has also led automakers to favor their more profitable products, which in the US tend to be big trucks and SUVs, according to a Benchmark analyst. Mike Ward. These vehicles carry higher sticker prices.

The price hike will be a topic for investors and analysts when Rivian reports its fourth-quarter numbers on March 10.

As trading begins Wednesday, Rivian stock is down about 40% year-to-date. Inflation, rising interest rates and the Russia-Ukrainian conflict have exhausted some investors’ desire to hold high-value growth stocks.

Rivian stock qualifies as one of those. Rivian’s market capitalization is $56 billion, about 19 times the estimated 2022 sales of $3 billion.

Write to Al Root at [email protected]