RJ suggests Rivian leasing coming soon, unlocking $7,500 EV tax credit

[trumphair]

Leasing can make sense depending on the implied rate, residual etc.

I find this idea Rivian keeps spouting about their amazing resale values to be kind of silly. They have been high because of constrained supply but judging by R1T availably those days are ending (and will end sooner than later for the R1S as well). The depreciation curve on these is going to change dramatically.

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[Davethadog]

Check the used prices of vehicles. Nobody is making a profit on them anymore. This is an outdated take on the used value.

 

[SANZC02]

Check the used prices of vehicles. Nobody is making a profit on them anymore. This is an outdated take on the used value.

People are not making profits flipping but residual values are still decent. KBB has enough data to give R1S and R1T used values now, they are pretty healthy.

 

[MidnightRivian]

This is awesome news and as a shareholders, I totally approve this move.

Nothing bad can come out of leasing as an option. People can choose to use that option if it works for their needs or as a hedge to ensure they're not stuck with old tech.

I love being able to take advantage of the tax credits for folks who normally wouldn't qualify.

The best part is not having to pay tax on the full purchase price and just the lease amount for some States.

Hopefully the residual values are favorable thanks to limited supply and high demand.

 

[Davethadog]

People are not making profits flipping but residual values are still decent. KBB has enough data to give R1S and R1T used values now, they are pretty healthy.

The list prices of used vehicles are well below current MSRP. KBB is a trailing indicator that barely has any data to be of use.

 

[MidnightRivian]

Leasing can make sense depending on the implied rate, residual etc.

I find this idea Rivian keeps spouting about their amazing resale values to be kind of silly. They have been high because of constrained supply but judging by R1T availably those days are ending (and will end sooner than later for the R1S as well). The depreciation curve on these is going to change dramatically.

Check the used prices of vehicles. Nobody is making a profit on them anymore. This is an outdated take on the used value.

resale values look very good to me. One year of usage and you can sell the car for 9% less than current $92,000 MSRP

Cars and Bids has an additional 4.5% fee on top of the winning bid price. I will post up their most recent sales for reference and you can add the roughly $4,000 fee price on top.

Average of last 8 sales is $86,763 plus a fee of $3,904 = $90,667

When you look at the 5 most recent sales with less than 300 miles, the sale price is $88,400 plus a fee of $3,978 = $92,378.

MSRP is $92,000. Folks are selling to buyers for over MSRP for new models plus the sellers are probably pre-price hike customers who get tax credits and lower prices.

 

[SANZC02]

The list prices of used vehicles are well below current MSRP. KBB is a trailing indicator that barely has any data to be of use.

Not trying to argue here but where are you seeing the very low prices? Curious what you are seeing out there.

For instance on auto trader.com out of 78 listings, the lowest price is 69.9 k and it has 47k miles on it. out of those 78 listings only 5 vehicles listed under 75k, I’m not seeing the well below prices you are speaking of unless these are the numbers you are seeing and your expectations are totally different from mine when it comes to the used car market.

 

[yangpei]

I am definitely hoping Rivian offers leasing. This is one of the reasons I haven't confirmed my configuration (and received my R1S) sooner. My Defender 110 should be here in a few weeks and I plan on buying it. I would much rather lease the R1S as my work write-off. If Rivian doesn't offer leasing, I will likely cancel my R1S order.

 

[NineElectrics]

Actually, leasing EVs are a very good idea.

Given the state of battery technology and the nature of EVs (rolling laptops), as well as product improvements overall in a new EV companies, two to three year lease shields from owning an outdated or older generation vehicle.

Absolutely this. Leasing allows you to hedge your risk. If a next generation battery hits the market two years from now, or the Rivian battery turns out to decay faster than everyone thought, or develops a habit of spontaneously combusting, you could take a $10K loss on your Rivian’s resale value. Leasing protects you from that. And during the pandemic the call option in many leases was a financial boon, as scarcity drove up resale values.

Certainly some leases can be bad deals, but that’s not universally true.

 

[NineElectrics]

Typically new car manufacturers can’t find a lender willing to take the other side of the lease until there’s a history of resale data to reduce the risk. For a bank, leases are much riskier to offer than loans.

The statement that, “Rivian has intentionally held off on leasing because of its confidence in its vehicle’s residual values” is straight up bullshit. Rivian would offer leases now if they could. Soon, they will be able to, just like Tesla was eventually able to.

 

[SDH]

leasing is different to financing.

 

[Captain JB]

I leased a Chevy Volt for 9 years with three 3 year leases. The first was $225/month, the second was $275 per month and the last one was $285/month all with very little money down. The rates were so good because of the fed tax credit that is incorporated. There are manyreasons to lease. Mine were always having a new car with a warranty and virtually no maintenance costs including having oil changes included. Also, I had a ridiculous low monthly payment that was lower than my previous gas built per month. Rivian could do the same thing and make the payment lower by using the tax credit. Of special note: after my first lease expired thyes offered me to buy the Volt using the residual value of $26K. I said no thanks. While getting into my Uber to go home, they texted me and lowered the purchase price to $16K!! (the hybrids were not popular back then and they wanted to unload it I guess). I thought for 5 minutes about taking their great offer but ended up saying no. I just loved having a brand new car with no worries at all because of always having a warranty. Again, there are many reasons to lease and most of them are productive but with an EV or hybrid and the tax credits, it makes it even more productive.

 

[Donald Stanfield]

It amazes me the people who just don’t understand how leasing works and think it’s poor people getting a car they can’t afford.

Outside of the business case, many people who “finance” cars, only keep them 3 or 4 years. In that case, leasing is almost always the better way to go. Financing a car only makes sense if you keep it after the loan is over.

Cheapest is buying outright and flipping if you're doing every few years. Then lease then financing and flipping every few. In your scenario buying is still cheaper than leasing assuming you're a cash buyer.

 

[Redline]

Cheapest is buying outright and flipping if you're doing every few years. Then lease then financing and flipping every few. In your scenario buying is still cheaper than leasing assuming you're a cash buyer.

What?

This makes no sense.

There are also a million variables regarding each vehicle and its depreciation.

I

 

[Donald Stanfield]

What?

This makes no sense.

There are also a million variables regarding each vehicle and its depreciation.

I

How does it make no sense, it's basic math. Buying it outright with no fees then selling after a couple years is cheaper than leasing.

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