Leasing NOT offered at pre price-hike prices for reservation holders

[MIG]

So you're "losing" something that you didn't even know existed when you decided to purchase the vehicle initially?

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[rivden22]

This makes total sense on Rivian's part. They set a residual based on what they think the car will be worth and by offering a discount on the car they are eliminating any possible upside. Its common with current car manufacturers, they often offer incentives for a purchase (like a 0% APR or rebate) that is different from that offered on lease. I am with Rivian here.

 

[SDH]

You know what else is a heck of a thing? Corporate finance and accounting. Too bad Rivian doesn't seem especially well versed.

I'm sure Rivian will get over it.

Jog on mate ...

 

[COdogman]

You know what else is a heck of a thing? Corporate finance and accounting. Too bad Rivian doesn't seem especially well versed.

I guess you will have to use your billions earned from being a finance expert to start your own EV manufacturer where you can offer leases and sales to everyone at the same terms because according to you there is no difference.

That will really show them where they have gone wrong.

 

[SFsoundguy]

My guide just confirmed - they even went back internally to make absolutely sure:

"I was able to confirm from our teams that, unfortunately, we do not offer leasing to those with pre-March pricing updates. I apologize for the inconvenience this may cause. "

So fucking stupid and frustrating. It's just math. If they're going to sell to me at e.g. $80k then they should lease to me at $80k. Obviously it would make the payment super low, like $500-600 applying the same $60k-ish residual value. But if they're already 'swallowing' an $80k sale, then an $80k lease is no different.

I hate when companies make arbitrary stupid decisions like this.

Where are you getting the 60k residual value number from? If they honor the pre-March price the residual would be on that number not the current price so it would be more like 36k

 

[ThumprMN]

Well…. I guess Rivian lost you as a customer. Maybe take a day to think things over before making a final decision and if this is truly a deal breaker, then it’s a deal breaker. At least you know your limits now that you understand Rivians limits.

 

[UnsungZero_OldTimeAdMan]

First... do you, or do you not, want to see Rivian survive and succeed?

Buying and leasing are two different business agreements between you and them. Why would you assume conditions for buying would carry over to leasing? Chalk it up to wishful thinking. At the end of the day, they are a for-profit business, not a non-profit. And, they are on a time table to reach profitability. What would YOU do, as a business owner, who is under investor pressure to reach profitability? Just as you would, as a business, they have to do what makes sense to their bottomline and financial future. Leasing under pre-3/1 pricing is not profitable to them—since there is no guarantee that you'd buy once lease is up and it would set them further back.

 

[carsly]

Shades of fact and misunderstanding abound in this thread.

I am not a lease accounting expert and I did not stay at a Holiday Inn Express last night.

Some truths, as I understand them:
1. Lease accounting and purchase accounting are different
2. From a manufacturer standpoint, these can look the same...

... IF, and only if, there is an external party managing the leasing transaction, holding the title and carrying the residual value risk

That's where most OEM's have captive finance arms who hold the titles and technically own the vehicles during the lease period. So some truth to the manufacturer being agnostic as it's a sale either way - a sale to an individual or a sale to a finance company. If Chase is handling leasing for Rivian then Chase is purchasing and owning the vehicles and leasing those assets to individuals. It may look like an individual is leasing/acquiring a vehicle from Rivian, but you are not - it's an agreement with the leasing company (who really don't care which vehicle you buy as long as you use them for the leasing agreement).

 

[golden_frog]

They are not allowing leasing of ANY pre-order at this time, pre or post price hike. You may still be able to lease at the lower price in the future when they open it up, or maybe not

 

[TexasCrane]

Or maybe it's because the math doesn't work. A lease at $80k is about a $500 payment. A purchase is $1xxx/mo.

Oh come on. I thought you were a finance guy…

 

[golden_frog]

Take the petty stuff back to the tesla board gents

 

[DuoRivians]

Again, you're missing the point: from Rivian's POV there's no difference. It's a sale at $80k-ish either way. That's it. Literally. No difference to them.

There’s a lessor company involved via Chase. It’s not the same arrangement.

 

[NineElectrics]

LOL. Please stay silent as opposed to revealing yourself a fool. I've worked for two decades doing sale leasebacks in all manner of asset classes. I understand deeply what a lease is, how they're accounted for, etc etc etc. For an auto manufacturer, a lease is not different than a sale.

Full stop.

Happy to cede the final word to you as an insistence upon it is a sure sign of a feeble mind and an even more feeble argument.

I don't think this is necessarily true. Tesla, for example, sells its lease obligations as bonds and gets cash for them (https://www.investopedia.com/news/tesla-raising-over-500m-debt-backed-vehicle-leases/), but only eventually. So, at least in Tesla's case, they are not receiving the cash up front. They didn't partner with a bank, presumably because all banks found it too risky to directly participate. Wise--with the recent price reductions by Tesla, the banks would have been totally f'd on these leases. Further, the value of those bonds is a function of the risk in the residual value, which is not zero. So a lease is riskier than a sale, so it must be worth less.

Also, the EV tax credit presumably isn't available to the leasing entity until they file their taxes. I don't know how that works. Maybe it's different for commercial entities, but it's possible they don't get that $7,500 immediately, either (and interest rates are high).

 

[djsider2]

OP also knows nothing about the deals that Rivian, the manufacturer, has negotiated with Chase (or whomever), on who will handle the car after the lease is up. Perhaps it's a liability on the manufacturer's books based on upcoming agreements to purchase the car back.

Without knowing this, I don't think you can say it'll be the "same" overall for Rivian.

 

[djsider2]

Also, why is there a pre-march reservation holder NOT part of the signed purchase agreement to get the 7500... This is a drop on the to-be purchaser, not Rivian.

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