The looming recession & your place in line for a Rivian [WARNING: NO POLITICS]

[Count Orlok]

On top of that, consider that most are being leased just in order for them to be "affordable".

I always advise to never lease unless you can take advantage of the biz wrote-off and never take out a car loan longer than 36 months; if you need more than 36 months to make it "affordable" you're buying too much car.

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[Acoustic71]

Economists have predicted 11 of the 3 most recent recessions.

Speaking as a former financial advisor, who retired and then went back to work in a "real" job: yeah, it's like that y'all.

 

[PAFDenver]

That $100 (obviously) adds $7200 cost to an already expensive vehicle, essentially negating the benefit of the fed rebate. My comfort with purchasing has nothing to do with my ability to make the payments and everything to do with the long term value proposition versus both ICE vehicles and other BEVs.

But many people will save that $100/mo or more on driving a BEV vs a ICE due to gas prices nearly doubling in the past year.

 

[Zoidz]

I always advise to never lease unless you can take advantage of the biz wrote-off and never take out a car loan longer than 36 months; if you need more than 36 months to make it "affordable" you're buying too much car.

Agree 100% on the leasing - private individuals should never lease. GM suckered so many people with their "Smart Lease" years ago when they first rolled it out.

Disagree regarding 36 months loan and buying too much car - that's too broad of a statement. One example is someone with 4 or 5 kids that needs reliable transportation and plans to keep the vehicle 7-10 years. A 7 seat van or SUV might stretch the budget at 36 months, but be affordable at 60 months. They are not buying too much car - they NEED 7 seats. Not everyone can fit the family in a RAV4 and feel safe and comfortable.

 

[Ngkgb]

Agree 100% on the leasing - private individuals should never lease. GM suckered so many people with their "Smart Lease" years ago when they first rolled it out.

Disagree regarding 36 months loan and buying too much car - that's too broad of a statement. One example is someone with 4 or 5 kids that needs reliable transportation and plans to keep the vehicle 7-10 years. A 7 seat van or SUV might stretch the budget at 36 months, but be affordable at 60 months. They are not buying too much car - they NEED 7 seats. Not everyone can fit the family in a RAV4 and feel safe and comfortable.

Why exactly are you guys recommending nobody lease? If you know what youre doing leasing can often times be a great option. Problem is people payment shop without knowing the correct numbers and get screwed. Many times there are incentive manufacturers we’re giving for leases and not for purchase.

Of course this was all before the shortage. Currently, leasing isn’t a viable option, but two years ago that wasn’t the case.

 

[Dark-Fx]

I always advise to never lease unless you can take advantage of the biz wrote-off and never take out a car loan longer than 36 months; if you need more than 36 months to make it "affordable" you're buying too much car.

I took a 60 month on my Polestar 2 because it was 0% APR. It wasn't to make it more affordable.

 

[yizzung]

But many people will save that $100/mo or more on driving a BEV vs a ICE due to gas prices nearly doubling in the past year.

Per my original note, there are cheaper ways to save $100/month than buying an $85,000 car. Anyone waffling over $100/month in either direction probably shouldn't buy a car that expensive...

Regardless, my intention was not to debate about who among us can afford one of these. It was instead to note that the economic outlook is far darker today than it was when Rivian started taking orders. As a result, some # of those originally optimistic orders are going to turn into cancellations. I'm taking the over.

This happens (is happening now) to home builders. And many homebuyers are in actual contracts where they have to walk away from deposits. Auto makers won't be immune and there's no downside to cancelling a totally refundable Rivian deposit.
https://www.cnbc.com/2022/05/17/hom...ear-low-on-declining-demand-rising-costs.html

I presume Rivian will have to address cancellations in their next earnings call. If I were an analyst, I'd certainly ask about it.

 

[R_1_T]

I took a 60 month on my Polestar 2 because it was 0% APR. It wasn't to make it more affordable.

If "free" money is on the table, take it every time. Did the same for my 2105 GC diesel.

 

[yizzung]

If "free" money is on the table, take it every time. Did the same for my 2105 GC diesel.

Free money is great right up until 40-year high inflation...

 

[R_1_T]

Free money is great right up until 40-year high inflation...

Not all free money is created equally.

Free money that feeds actual productivity (and real increase in GDP - both $ and unit volumes increasing) isn't nearly as inflationary as that injected into a stagnant economy that was shut down. Too much money fighting for an inadequate supply of goods at the moment.

The 0% car loans were typically offered in lieu of up front cash, so it's not exactly the same as the Fed rates being zero or negative (which impact investment markets directly).

 

[dleepnw]

Any chance Rivian is doing this on purpose.

totally possible. i think there may be some strategy in getting deliveries to folks who ordered post 3/1 price hike to try to offset the loss from pre 3/1 orders. and not only that but they probably calculated that some percentage of pre 3/1 orders would cancel seeing all this randomness with the orders. kinda shady tbh

 

[DuckTruck]

Masochist here

Well, at least that's better than being a sadist, you know, for those around you... ?

 

[Bilbo]

Gas prices will probably never come down . Interest rates certainly will not. The Fed waited too long and even seems surprised by the inflation. Are they that dumb or just blind or do they need/want the markets to drop. Housing prices in certain areas are beyond bubbly. Supply chain is worse every month.

My biggest fear is people and their role in our future. I have read many pieces and am paying special attention to attitudes. Part of Elon's outlook is after his email to call employees back to the actual job location. I think that 50 years ago there might be a soft lading because people were chomping at the bit after rough times. Now they don't seem to have that attitude. Many people are just spoiled.

I see at least another 33-50% haircut in the markets. I am 100% out of the stock and mutual fund markets for the first time in my 40+ years as an investor/401k work force member. AND if that creates it's own draft down, due to others HAVING to get out just to get by then we could face even bigger issues

Years of living in credit bubbles & our monetary printing policy has made people soft and less eager to work any job to get ahead and comfortable. We dug a deep hole that may be tough to get out of. Maybe it's time for a deep recession and attitudes towards working will be a big key.

 

[Count Orlok]

I took a 60 month on my Polestar 2 because it was 0% APR. It wasn't to make it more affordable.

I understand the math but for 99% of buyers doing so means being upside down day one. I'm okay with taking the 0% on a >36 month note if you have liquid assets to pay in full.

 

[Zoidz]

Why exactly are you guys recommending nobody lease? If you know what youre doing leasing can often times be a great option. Problem is people payment shop without knowing the correct numbers and get screwed. Many times there are incentive manufacturers we’re giving for leases and not for purchase.

Of course this was all before the shortage. Currently, leasing isn’t a viable option, but two years ago that wasn’t the case.

There's tons of articles online that explain and support this position. The biggest single factor is you have zero equity in a lease. When the lease is over, you have nothing and the dealer still owns the vehicle, and they profit by reselling the vehicle YOU paid to maintain. Other factors are excess mileage charges, and excess wear and tear charges. The only time leasing makes sense is if driving a new vehicle every three years is more important to you than the cost. I keep vehicles for 10-20 years. I get my money out of them.

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