Skeptical Of Rivian's Prices

[Trekkie]

Keep in mind TAM a isn’t just the service it’s every option you add etc. the kitchen, the tent, all that is categorized usually as a TAM. At least that’s how we did it with Intel servers in the 2000s. We did have an average unit revenue we tracked but there was always Addams over life of system

plus think about used sales, etc.

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[cc84]

I just hope pre-order holders get the advertised price, and then demand is high enough they raise prices. Keep that resale value high.

You and me both. At first I thought they might increase the price on current pre-order holders too, after the IPO, but I've backed off that somewhat. Originally, I felt the reason we haven't received deliveries to the General Public, is because they were going to raise the price on everyone after the IPO. I don't believe it now, since Ms. Schwab has come forward.

Rivian might increase prices after the IPO, but I don't think it looks good to still be taking reservations at the current price posted on their website. All of this while knowing they will increase prices, but holding off until after the IPO. To me, this would be very misleading especially to some investors, including forum members. Now that Ms. Schwab has made a claim of Rivian's intent to increase prices after the IPO, Rivian may choose to only increase their prices on future reservationist. I have no problem with that. I have confidence Rivian will do the right thing.

 

[Rivian_Hugh_III]

Here is the breakdown of the $67.9k potential lifetime revenue, as detailed in the S1.

What do you think "Resale" means? Surely the owner would get the revenue from a sale. My guess is that maybe most of the list gets charged *again* for a second owner? All but "Delivery" are feasible.

This actually gives me confidence. It is in RIVIAN's best interest to make a truck that will last, and last, and last. The longer it goes the more potential income they can get from secondary owners.

EDIT: Maybe RIVIAN is planning to resell vehicles themselves? I believe I heard that from the S-1... that they would purchase your vehicle for an enticing amount, then refurbish it and sell it again. It's genius actually. And precisely what dealerships are doing. Yet, in this case the proceeds would go straight to RIVIAN.

 

[3l3c7r1c]

Lyriq Debut edition is priced at 60K$, it has 100KWh battery, 300+ miles range with all the luxury features (massaging seats, active noise cancellation, premium audio, awesome interior and exterior lighting, super cruise as standard etc and solid warranty), only missing feature in Debut edition is AWD. Don't think Rivian under priced it by wider margin.

Since Tesla has great demand and they knew EV tax credit is coming Musk wanted to keep all the dollars instead of passing the savings to customers. So I wouldn't compare the pricing to Tesla Y. Feel currently Tesla products are over priced since customers are flocking to Tesla due to lack of solid competition.

Also, Rivian is new brand and not proven, pricing higher before establishing any credibility would alienate potential customers.

For sure Rivian will raise prices in near future as the demand picks up.

Lyriq is really price competitive! Super Cruise is possibly the best autonomous driving tech out there (I don't count a car is helping me in driving if I have to keep my hands on the wheel), and you expected to get a quality interior.

I don't see why Tesla is increasing price right now! They moved to LFP for standard range, which should save at least 15-20% on battery cost alone. With the volume production, their cost per unit should've come down as well. While I was shopping for car in 2019, I test drove model 3 (model Y wasn't available). And the interior quality, road noise were horrible. Even the audio quality was also just ok. I can't justify spending almost $50k on a car that I don't like to drive.

 

[freshpow]

What do you think "Resale" means? Surely the owner would get the revenue from a sale. My guess is that maybe most of the list gets charged *again* for a second owner? All but "Delivery" are feasible.

This actually gives me confidence. It is in RIVIAN's best interest to make a truck that will last, and last, and last. The longer it goes the more potential income they can get from secondary owners.

EDIT: Maybe RIVIAN is planning to resell vehicles themselves? I believe I heard that from the S-1... that they would purchase your vehicle for an enticing amount, then refurbish it and sell it again. It's genius actually. And precisely what dealerships are doing. Yet, in this case the proceeds would go straight to RIVIAN.

Exactly right. This is what they say in the S1 about resale assumptions:

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.

 

[nc10]

Exactly right. This is what they say in the S1 about resale assumptions:

Resale and Trade-In. We assume the LTR opportunity ...... based on a single sale in year six of the vehicle’s life.

Random comments...

I wonder if the subscription TAM assumes 6 years/vehicle also. If the first year is free, $5500 revenue would be almost $1000/year afterwards. I've seen in other threads that subs cost will be $550/year, but not sure the basis of that number. WIll be interesting to see what that actually gets us. I get that selling refurbs and financing are part of the total addressable market in theory, but I don't think its even theoretically possible that all buyers would go for a $8700 finance cost, or $1800 charging fee (in addition to the subscription fee), for example.

( I thought charging was included with the subscription, wonder why its listed separately here?)

If they assume all these trade in resale contribute to TAM, then I guess they also assume some of they initial new vehicle purchase revenue is lowered by the trade in price. I don't think its theoretically possible that everyone will trade/sell back to Rivian.

I wish there was more on projected market/sales growth, and margin potential.

The $1700 delivery fees, the subscription software, autonomous driving fees, finance costs, are sort of like price increases also, I don't think I expected all these costs when I preordered in 2019. (of course, some can say I should have expected...)

Since i will likely not take delivery until at least 3 years after a preorder, some new costs aren't surprising, though its less clear than I realized what my total cost of ownership will be.

 

[CommodoreAmiga]

I thought charging was included with the subscription, wonder why its listed separately here?

It's possible that Rivian has (or expects to negotiate) deals with some charging networks to receive a commission on charging. For example, if Rivian and a charging network negotiate a plug-and-charge arrangement where R1T owners can effectively "bill to" their Rivian account.

 

[R1T7777]

Lyriq is really price competitive! Super Cruise is possibly the best autonomous driving tech out there (I don't count a car is helping me in driving if I have to keep my hands on the wheel), and you expected to get a quality interior.

I don't see why Tesla is increasing price right now! They moved to LFP for standard range, which should save at least 15-20% on battery cost alone. With the volume production, their cost per unit should've come down as well. While I was shopping for car in 2019, I test drove model 3 (model Y wasn't available). And the interior quality, road noise were horrible. Even the audio quality was also just ok. I can't justify spending almost $50k on a car that I don't like to drive.

Tesla is getting $7500 tax incentives now. Someone purchasing a Tesla with delivery in 2022 will effectively pay less than someone in 2021. However, an R1T is only $10k more than a Model Y...which is nuts.

 

[Dbeglor]

It's possible that Rivian has (or expects to negotiate) deals with some charging networks to receive a commission on charging. For example, if Rivian and a charging network negotiate a plug-and-charge arrangement where R1T owners can effectively "bill to" their Rivian account.

Waypoint Chargers will generate revenue as it is open to all EVs. RAN will generate revenue from the Rivian owners who do not elect for the membership (and non Rivians if/when they open it in the future).

 

[Dbeglor]

Exactly right. This is what they say in the S1 about resale assumptions:

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.

Ahh, so confusing but accurate since they are just talking about revenue in this context. They will book revenue of $34,500, but they will also have a ~$30k expense buying the vehicle back/accepting as trade in.

 

[RIV206]

Tesla is getting $7500 tax incentives now.

I believe Tesla doesn't qualify for the tax incentive anymore

 

[bd5400]

I believe Tesla doesn't qualify for the tax incentive anymore

That is correct but the poster was probably referring to the new proposed legislation that removes the vehicle production cap and would re-qualify Tesla for the incentive.

 

[R1T7777]

I believe Tesla doesn't qualify for the tax incentive anymore

The do in the new legislation moving through congress. Not for the full $12,500 but for the $7500 they do.

 

[wicked2112]

I have said since the R1T and R1S prices were revealed that despite the vehicles being obviously quite expensive, they are actually a an amazing value when you consider what you're getting and what you're competing against. Unfortunately I am personally becoming less and less convinced that these advertised prices can actually be legit due to a few reasons:

GUT FEELING 1: No meaningful price adjustments conveyed despite significant inflation and supply chain disruption, huge increases at Tesla

GUT FEELING 2: Current Model Y Performance is $63K, 82 kwh, dual motor, fixed suspension. $68K R1T has 135 kwh, 4 motors, adaptive air suspension, and a much larger vehicle. Lucid's cheapest vehicle is ~$80K. New vehicles like EV6/Ioniq5, Mach-E are all easily pushing $60K+, despite being much smaller, simpler vehicles with much smaller battery capacity.

GUT FEELING 3: Comparable pricing to Ford Lightning (similarly equipped), despite Ford being able to leverage huge swaths of their existing F-150 production line and supply chain. Despite this, Ford will still only build 20K units in 2022 and will prob not make money on them.

FROM THE HORSES MOUTH: Exec from discrimination lawsuit claimed exactly this, that pricing structure isn't realistic and that Rivian's plan is to increase prices post-IPO

Obviously this is all speculation, but everything that sounds too good to be true always is. Tesla's cheapest vehicle with air suspension is $95K and that's a smaller vehicle with a smaller battery. I just don't see how a brand new company can sell an 800 HP EV truck that competes with Land Rover suspension and interior quality for what they're quoting.

Here's my question concerning this post, has anyone from Rivian specifically stated that a price change is coming??? Not based on what other companies are doing, but specifically what Rivian is doing?

 

[AndroidAppBundle]

Great points. I agree.

I have said since the R1T and R1S prices were revealed that despite the vehicles being obviously quite expensive, they are actually a an amazing value when you consider what you're getting and what you're competing against. Unfortunately I am personally becoming less and less convinced that these advertised prices can actually be legit due to a few reasons:

GUT FEELING 1: No meaningful price adjustments conveyed despite significant inflation and supply chain disruption, huge increases at Tesla

GUT FEELING 2: Current Model Y Performance is $63K, 82 kwh, dual motor, fixed suspension. $68K R1T has 135 kwh, 4 motors, adaptive air suspension, and a much larger vehicle. Lucid's cheapest vehicle is ~$80K. New vehicles like EV6/Ioniq5, Mach-E are all easily pushing $60K+, despite being much smaller, simpler vehicles with much smaller battery capacity.

GUT FEELING 3: Comparable pricing to Ford Lightning (similarly equipped), despite Ford being able to leverage huge swaths of their existing F-150 production line and supply chain. Despite this, Ford will still only build 20K units in 2022 and will prob not make money on them.

FROM THE HORSES MOUTH: Exec from discrimination lawsuit claimed exactly this, that pricing structure isn't realistic and that Rivian's plan is to increase prices post-IPO

Obviously this is all speculation, but everything that sounds too good to be true always is. Tesla's cheapest vehicle with air suspension is $95K and that's a smaller vehicle with a smaller battery. I just don't see how a brand new company can sell an 800 HP EV truck that competes with Land Rover suspension and interior quality for what they're quoting.

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