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Rivian's pricing problem... how do they solve it?

Zeusy Zeus

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The flippers are a short term problem. If it gets the vehicle out there, great, but not that many are really flipping as there isn't any money left in it.

Long term their issue is they need to get the price down. A product like this will get a lot more buyers at 70k.
That’s what the enduro motor and new battery packs are for. Not to mention dual motor setups.
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I am one of the pre orders. I Can't Can't wait to get mine and you won't see me flipping it. I am guessing I am not at all alone.
I'm a May 2020 pre-order and also looking forward to eventual delivery; I can confirm that you definitely are not alone in your plans to hold on to your Rivian. My modest goal now is to be the recipient of the last Launch Edition to roll off the Rivian line.
 
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defcon888

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Flipping R1T for profit is long gone
Absolutely agree. When we got out Toyota RAV4 Prime 2 years ago, people were getting them and flipping them for $5k+ the next day. Last year we were thinking of selling our RAV4 Prime to get a Tacoma truck (we didn't). We bought it brand new off the lot taxes and license, and extended warranty for $50k. When we checked into selling it last year (with 20k miles on it), we would have got $52k for it.

I do think it sucks that someone gets an R1T, S on a Monday and sells it on a Tuesday. I know that sometimes there is a valid reason to do it, but to flip it to someone desperate to get one I think is wrong.
 

junkanoo

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I am curious to see what happens when all the current pre-price hike preorders are delivered. The number of people taking delivery, taking the $7500 and selling for $20k more than they paid and pocketing $~$20-30k) has to be killing Rivian's future order banks. How can Rivian keep the order books full if the "flipper/used" market is stuffed with R1S? My point is.. if someone wanted an R1S today (and didn't already have an order)... they would simply go buy a "used" one for $90-$98k and park it in their driveway Why wait? Rivian lost that sale. There is not much reason for someone to get on the wait list today because the "used" market has tons of supply without the wait. To make things even more challanging... I expect the "used" market prices will continue down a bit. So if in six months you can buy a "used" R1S for $85k (that seller is still making good $$$), why would I sign up to buy from Rivian at $95k? Is Rivian going to have a very difficult time selling a new $95k R1S? Maybe the lower spec/priced models help them get out of this mess?

My local Fiat/Dodge dealer has basically turned into a used Rivian dealer with at times 6-7 R1S and another 5 R1Ts sitting on their lot... and they last about 2 days. We stopped by to test drive one (closer than the SC) and they basically have a Rivian sales specialist that knew all the ins and outs of the car (seriously felt like he has worked over at the SC before coming to this dealer).
Get your logic, but I believe it is flawed. There are finite number of pre-price hike reservations. If they would have canceled their reservations instead of flipping the vehicles it would still lead to the same number of overall vehicles being purchased/produced.

Sure Rivian is losing out on the ~$15K premium they could get for it now, but again, there are a finite number of pre-price hike reservations...so, how many do you think are really being flipped? 1K? 5K? At 5K, we are talking $75M in total lost revenue...nothing to sneeze at, but not the number that is going to make them go under either.
KWeimer711 is dead on.

Rivian didn't lose any "sale." It's analogous to Taylor Swift tickets. Yes, you could say that she should have priced tickets higher, thus pocketing more cash, rather than that cash profit going to secondary sellers, but she didn't lose the sale. The used market for vehicles happens whether it's one day or 40 years. Ford, Mercedes, you name it, can't control the market for their used vehicles or their pricing. Said another way, Ford can't control who decides to buy their used vehicles, all they can do is make a new car purchase as enticing as they can.

If RJ had simply decided to raise pre-order pricing based on consumer inflationary averages rather than the large increases he initially asked for, Rivian would be in a smaller ditch of losses. But, that ship has sailed.

Rivian will succeed or fail in the market based on consumer demand, pure and simple.

Regardless, flippers of pre-order vehicles don't hurt Rivian sales. Those vehicles were already sold. What Rivian will be able to sell new cars for going forward is a completely different issue.
 
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Goose

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KWeimer711 is dead on.

Rivian doesn't lose any "sale." It's analogous to Taylor Swift tickets. Yes, you could say that she should have priced tickets higher, thus pocketing more cash, rather than that cash profit going to secondary sellers, but she didn't lose the sale. The used market for vehicles happens whether it's one day or 40 years. Ford, Mercedes, you name it, can't control the market for their used vehicles or their pricing. Said another way, Ford can't control who decides to buy their used vehicles, all they can do is make a new car purchase as enticing as they can.

If RJ had simply decided to raise pre-order pricing based on consumer inflationary averages rather than the large increases he initially asked for, Rivian would be in a smaller ditch of losses. But, that ship has sailed.

Rivian will succeed or fail in the market based on consumer demand, pure and simple.

Regardless, flippers of pre-order vehicles don't hurt Rivian sales. Those vehicles were already sold. What Rivian will be able to sell new cars for going forward is a completely different issue.
This is wrong. T-Swift has a limited number of seats to sell during her tour, Rivian does not have a limited production run of vehicles.

When a flipper sells a truck to someone Rivian is missing out on a sale, it's simple. The flipper probably had no intention of keeping the vehicle, they just wanted to rake in some money because that's what the world is ruled by these days, money.

The R1 vehicles are 100% worth the money they are demanding for them, it's not even a question. With that said, Rivian does need to offer a lower trim dual motor option in the low 60's to bring in a much larger crowd. Most truck buyers are not affluent tech people .
 

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junkanoo

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This is wrong. T-Swift has a limited number of seats to sell during her tour, Rivian does not have a limited production run of vehicles.
No, that is wrong. Tay-Tay can add on more tour dates any time she wants thus selling more tickets. Rivian is compacity constrained, limited to (their estimate) of selling 50,000 vehicles this year.

When a flipper sells a truck to someone Rivian is missing out on a sale, it's simple. The flipper probably had no intention of keeping the vehicle, they just wanted to rake in some money because that's what the world is ruled by these days, money.
The flipper is selling a vehicle that Rivian already sold. They didn't "miss out on a sale." What a flipper sells the vehicle for or a scalper sells a Tay-Tay ticket for doesn't change that fact.
 

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No, that is wrong. Tay-Tay can add on more tour dates any time she wants thus selling more tickets. Rivian is compacity constrained, limited to (their estimate) of selling 50,000 vehicles this year.



The flipper is selling a vehicle that Rivian already sold. They didn't "miss out on a sale." What a flipper sells the vehicle for or a scalper sells a Tay-Tay ticket for doesn't change that fact.
Person A and B want Rivian's. Person A purchases a truck first while person B is waiting. Person A drives it 5 miles and says to themselves "I'm going to pocket the tax credit and upcharge someone $20K". Person A then sells their truck to person B. Rather than Rivian making 2 sales, they end up selling 1 truck a the pre-March pricing.

This same thing happens to Ford with the Raptor series Broncos and Trucks.
 

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Person A and B want Rivian's. Person A purchases a truck first while person B is waiting. Person A drives it 5 miles and says to themselves "I'm going to pocket the tax credit and upcharge someone $20K". Person A then sells their truck to person B. Rather than Rivian making 2 sales, they end up selling 1 truck a the pre-March pricing.

This same thing happens to Ford with the Raptor series Broncos and Trucks.
I think the missed logic here is person A does not want the truck, they want the money.

Between the 2 people one person ends up with a truck, person B. If not for the opportunity for the flip, person A would not have purchased the vehicle so there is still only 1 sale here for Rivian. If person A did want a truck and decides to buy one later then there is still 2 sales for Rivian.
 

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There are hundreds of Broncos sitting in the parking lot of a closed Ford facility it Belleville, MI (can be seen from I94). I wonder if they are waiting on a supply constrained part.
 

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Flippers are a really small percentage... Rivian is not worry about it.
 

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I think the days of flipping the R1T are largely gone. I just bought one a couple weeks ago at below current MSRP from a "flipper" ($74k - plus auction fee but that doesn't go to the seller - for quad motor w/ large battery pack, wall charger & manual tonneau) with only 70 miles on it. He would have gotten the $7500 tax credit, but I don't qualify for it anyway. Maybe he made a few thousand including the credit but I saved $20k+ over the one I had on order, though I didn't get my #1 color choices.

I drove it around 75 miles on the beach this weekend down where only the Jeeps go. It won't be a pavement pounder. ;) Nav said I was in the middle of the river where it meets the Gulf, but I was on a sandbar. :cool:

Rivian R1T R1S Rivian's pricing problem... how do they solve it? IMG-7867.JPG
 
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KWeimer711

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I think the missed logic here is person A does not want the truck, they want the money.

Between the 2 people one person ends up with a truck, person B. If not for the opportunity for the flip, person A would not have purchased the vehicle so there is still only 1 sale here for Rivian. If person A did want a truck and decides to buy one later then there is still 2 sales for Rivian.
Exactly right...Person A either never wanted the car and was always going to flip, or changed their mind at some point in the process and decided to purchase it to flip. Either way, that vehicle was only going to be sold by Rivian once...either to Person A who flips it to Person B, or to Person B after Person A canceled their reservation.

Now are there some people who purchased it, drove it for a bit and then decided they didnt like it/couldnt afford the payment/was worth it more for them to sell and get something else? Sure...but you are talking about (A) a very small amount of vehicles (prob in the 100's) and (B) just the way the resale market works for any car (and there are far more people who would prefer a vehicle straight from the manufacturer knowing it was "new" and the warranty was fully valid.
 

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Exactly right...Person A either never wanted the car and was always going to flip, or changed their mind at some point in the process and decided to purchase it to flip. Either way, that vehicle was only going to be sold by Rivian once...either to Person A who flips it to Person B, or to Person B after Person A canceled their reservation.

Now are there some people who purchased it, drove it for a bit and then decided they didnt like it/couldnt afford the payment/was worth it more for them to sell and get something else? Sure...but you are talking about (A) a very small amount of vehicles (prob in the 100's) and (B) just the way the resale market works for any car (and there are far more people who would prefer a vehicle straight from the manufacturer knowing it was "new" and the warranty was fully valid.
ya'll are probably right. My replies are most likely clouded because I can't stand scalpers and flippers.
 

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As soon as the Dual Motors hit with their silver accents and less power, the quad motors will start to see some value appreciation I think and move back up towards post March MSRP. All of the current reseller data is based on only one model available. Dual Motors launching now cost the same or more than pre hike quads. It will be interesting to watch.
 

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ya'll are probably right. My replies are most likely clouded because I can't stand scalpers and flippers.
I am not a fan either but blame goes to both sides here. If there was no market there would be no flippers.

Really not much different than the crazy ADMs the dealers do on certain models, if people would not pay it the dealers would not do it.
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