With interest rates rising, how many won’t be completing their R1 purchase?

[virgnia_rivian]

I used to think that way, but wait until you get to 8 figures...

The same goes for a good attorney ;-)

To the OP's original question, this is a forum of people who really want their R1, so it may not be the best group to ask. Also, it will depend on each potential buyer when they are asked to complete the sale to determine if its financially feasible at the time.

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[mabowden]

I'll be putting significantly more down payment then I originally intended which is really unfortunate, but here we are...

 

[SANZC02]

Wow this thread went off the rails quickly.

Anyone looking at a purchase of this vehicle has to be pretty deep into the middle class, you simply would never qualify for a loan otherwise.

We know that it is possible that some people may drop because of interest rate because they were stretching the limits of their comfort zone for the purchase, they shared that information when the price changed. A 2 or 3 point increase could simply move them out of that comfort zone.

It is more likely people may drop because of the recent huge drop in the markets. They simply may not want to pull the money out of the market at the current prices and choose to wait for a recovery. It may also have shifted their priorities on how they want to move forward.

I would hope anyone looking at this purchase is using disposal play money but it is up to them to decide what their risk tolerance is.

No matter how you look at this, it is all just one more huge headwind for Rivian. I think they are still OK for now but but in reality, they could not have launched at a worst time. I’m pulling for them but how many more challenges will they have to navigate; worst pandemic in more than a century, wide spread global supply chain issues, crazy global inflation, one of the fastest interest rate increases (by percentage), worker shortages, possible recession around the corner…. Don’t even want to think about being in the closest risk of a global war in more than 60 years…

“Ich bin [mir] nicht sicher, mit welchen Waffen der dritte Weltkrieg ausgetragen wird, aber im vierten Weltkrieg werden sie mit Stöcken und Steinen kämpfen”. Albert Einstein

Translation - “I am not sure with which weapons the third world war will be fought, but in the fourth world war they will fight with sticks and stones.”

I’m pulling for Rivian but praying for the world…

 

[Speedrye]

I'd planned on paying cash, but if I should not go through with my purchase, the economic downturn would only be a small consideration. Most of the other reasons are self-inflicted design/business choices.

 

[ohseedee]

At ~2% I was planning on financing most with a ~$20K down payment, then pay off in a couple years. Now I'm probably going to do 50/50 and payoff in a year. If rates go up by the time I buy, I might pay even more cash. As others have said, if interest rates were a consideration for me to buy, I shouldn't be buying. While I will be fine in my situation, I do feel a little bad about the idea buying such an expensive and unnecessary vehicle with the economy going south.

 

[Count Orlok]

FWIW, I'm paying cash.

 

[Donald Stanfield]

Agree. I think the majority (maybe 85%?) of the people who reserved Rivians are financially "astute" and will not be cancelling. Compare that to the CyberTruck, where teenagers asked mom or dad to put up $100 for reservation. IMO CybrTruck is going to see high cancellation rates.

The downpayment amount helped that along too. 100 dollars isn't a huge ask to put down for a spot in line. A Hundred bucks doesn't even get me a week's worth of groceries anymore. It's more like 3 days worth. A thousand is enough to weed out a lot of the dreamers and pretenders. You weren't going to park that kind of money, refundable or not, in limbo land unless you were seriously thinking of buying the car.

I think that's probably the biggest factor in whether or not people are going to drop out. The price change debacle is enough where plenty of people who could easily afford the increase wanted to drop out simply on principal. Here it's market forces raising interest rates and a recession. That doesn't make anyone angry at Rivian as it's not in their control and therefore doesn't diminish anyone's actual want of the truck.

 

[Donald Stanfield]

FWIW, I'm paying cash.

Then prepare for the easiest vehicle transaction of your life. I had my entire process done in 20ish minutes and that includes the phone call to my insurance company where I had to explain to the adjuster what a Rivian was.

 

[BigSkies]

I think a lot of people will be canceling, but won’t be admitting it online. Rates are continuing to rise, and I imagine a lot of the lending companies interest rate hedges are starting to expire.

I think the entire auto industry is in big trouble, as their entire business of the last few decades has been driven by higher purchase prices driven by longer loan terms and cheaper debt.

Higher interest rates will hit high priced vehicles the hardest, and the lower priced vehicles don’t have the margin to keep the manufacturers profitable. Of course, it’s going to take a year or so for this to flow through the supply chain.

It is interesting times indeed.

 

[trez63]

Wow. So I guess the only advantage of being a very early adopter may have been that I got locked in at 1.99% before the rates went up.
RIVIAN really needs to consider offering financing and lease options. Lease would have made a lot more sense for me personally (I know it’s not for everyone so let’s not start that discussion).

doesn’t Tesla offer their own financing? Doesn’t seem like it would be very hard to partner with a bank and negotiate better rates. At the very least it would streamline the process.

 

[Lil'Dave]

The vehicle we are trading in has lost 10K of theoretical value in the past few months. Used prices are on the way down. Rivian price stays the same. Then add in the possibility you don't get the tax credit along with higher interest rates. That is around a 20K swing (in what we pay). We are still planning on purchasing but it does make you think twice about it.

 

[moosetags]

As we have had four years to save up, we can now pay cash.

Brian

 

[mini2nut]

The vegan leather seats are an excellent snack and high in fiber...

I read somewhere that Rivian simulated 150k miles of wear on their vegan leather during durability testing.

 

[SoCal Rob]

Wow this thread went off the rails quickly.

Anyone looking at a purchase of this vehicle has to be pretty deep into the middle class, you simply would never qualify for a loan otherwise.

We know that it is possible that some people may drop because of interest rate because they were stretching the limits of their comfort zone for the purchase, they shared that information when the price changed. A 2 or 3 point increase could simply move them out of that comfort zone.

It is more likely people may drop because of the recent huge drop in the markets. They simply may not want to pull the money out of the market at the current prices and choose to wait for a recovery. It may also have shifted their priorities on how they want to move forward.

I would hope anyone looking at this purchase is using disposal play money but it is up to them to decide what their risk tolerance is.

No matter how you look at this, it is all just one more huge headwind for Rivian. I think they are still OK for now but but in reality, they could not have launched at a worst time. I’m pulling for them but how many more challenges will they have to navigate; worst pandemic in more than a century, wide spread global supply chain issues, crazy global inflation, one of the fastest interest rate increases (by percentage), worker shortages, possible recession around the corner…. Don’t even want to think about being in the closest risk of a global war in more than 60 years…

“Ich bin [mir] nicht sicher, mit welchen Waffen der dritte Weltkrieg ausgetragen wird, aber im vierten Weltkrieg werden sie mit Stöcken und Steinen kämpfen”. Albert Einstein

Translation - “I am not sure with which weapons the third world war will be fought, but in the fourth world war they will fight with sticks and stones.”

I’m pulling for Rivian but praying for the world…

I really, REALLY want Rivian to succeed but you raised a point I think people should consider: If it takes everything you have to buy your Rivian and the vehicle ends up an orphan, will you be screwed and unable to get something else?

In the past it was bad enough if a manufacturer went under, but today’s cars with incredible complexity, OTA updates to address bugs, and manufacturer-mediated services/apps are a totally different level of serviceability. Today’s cars don’t even have standardized replaceable lightbulbs so an orphan involved in a minor crash could be totaled. This possibility is one of the factors which factored into my estimate of the value of buying a Rivian as an early adopter.

 

[ravian]

To add to that I’d take any additional $ I didn’t put on a huge down payment and put it into some high growth stocks once it bottoms out and help pay for my car.

“Once it bottoms out”…..please let me know when you are sure it has bottomed out. I’ve been trying to figure this out for a long long time.

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