Predicting Rivian R1T Depreciation

[r1s-owner]

For whatever it is worth, Rivian is projecting a 5 year resale/trade in value in the range of $34,500 for their business model.

Wouldn't this be what Rivian (or rather Cox) is willing to offer in cash for a 5-6 year old R1 series vehicle? Specifically since it mentions things like reconditioning etc the actual resale value would be higher. That is how I read this statement.

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[Tatnai]

Wouldn't this be what Rivian (or rather Cox) is willing to offer in cash for a 5-6 year old R1 series vehicle? Specifically since it mentions things like reconditioning etc the actual resale value would be higher. That is how I read this statement.

That's how I read it too.

 

[Aroohoo]

Wouldn't this be what Rivian (or rather Cox) is willing to offer in cash for a 5-6 year old R1 series vehicle? Specifically since it mentions things like reconditioning etc the actual resale value would be higher. That is how I read this statement.

Given that this whole section of the S1 is dedicated to future revenue associated with post initial sales activity, the figure should be the gross cash they expect to get from reselling. The intent of Rivian providing this is to give its investors an idea to its future revenues.

The full statement from the S1 (bold emphasis added):

Resale and Trade-In. We assume the LTR opportunity from resale and trade-in to be $34,500 per consumer vehicle and $19,800 per commercial vehicle, based on a single sale in year six of the vehicle’s life. We determine the residual value based on third-party depreciation data for EVs and add a reconditioning gross up and resale margin.

The way the sentence is worded, at least grammatically, implies that the $34,500 is inclusive of the margins they expect to make on the resale and any plus up they have to do to make the vehicle sellable. If you want what Rivian is wiling to pay for a used vehicle, you'd have to take the depreciated cost and subtract their margins and reconditioning cost.

So, out of that estimated $34,500 from total revenue Rivian hopes to realize on a trade in, they might buy the car for $30,000, spend $1,000 getting it ready to sell, and hope to make $3,500 in profit.

Think of it as when you look at Kelly Blue Book prices for used cars. You get a Private market and a Trade in price. The trade in price is lower than private market because the dealer likely has to invest some money to make the car sellable and they also have their margins they need to make. The price the dealer would try to sell the car at would be around the Private Market price.

 

[Blg3404]

Treat yourself sir! Life is short…I wouldn’t wait 4-5 years to enjoy this vehicle. Just my two cents. Full disclosure however, this is my midlife crisis vehicle. ?

I second this entire statement lol

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