The looming recession & your place in line for a Rivian [WARNING: NO POLITICS]

[zymolysis]

R1T, R1S, Cybertruck, Hummer EV, Range Rover Sport PHEV, Bronco Raptor, Ineos Grenadier. I will at most end up with two of these and possibly only one as the last two are more in the off-road toy category.

I don't have a delivery date in sight for a single one of them btw.....

I previously asked a question about the seven pre-orders, but see that you have answered it already. I thought you had seven Rivians on pre-order.

I also have multiple preorders for electric trucks (a Rivian R1T, a CyberTruck, a Lightning, an electric Silverado, and I think an Atlis). I'll only be buying one of those, so the decision on which to buy is heavily weighted toward the company that can deliver first (as long as I am happy with what I know about the vehicle when the time comes to put down money and get a loan). At this point, it looks like it will be Rivian, since I just received a delivery window of November/December 2022.

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[johnny2five]

There's tons of articles online that explain and support this position. The biggest single factor is you have zero equity in a lease. When the lease is over, you have nothing and the dealer still owns the vehicle, and they profit by reselling the vehicle YOU paid to maintain. Other factors are excess mileage charges, and excess wear and tear charges. The only time leasing makes sense is if driving a new vehicle every three years is more important to you than the cost. I keep vehicles for 10-20 years. I get my money out of them.

The second to last sentence is the key part. Need to disassociate lease vs buy from changing cars every few vs keeping a car for long time. Generally speaking, keeping cars longer will result in lower annual cost of ownership. But if one only wants to keep a car for 2-3 years, leasing could be the better option than buying depending on the numbers.

I personally enjoy changing cars every few years and I am willing to pay for this luxury the same way I might pay more for...[whatever hobby, intersest, etc. you're willing to spend more on]. But once I make the decision to switch cars every few years, I still consider both leasing and buying as leasing could often be the better financial move.

 

[johnny2five]

My first post.

I guess there was a misunderstanding about equity here. During your leasing period there's always a Payoff price (Buy it Now) option in the account that allows you to buy the car which changes/decreases every month.
Equity = (Market value of the car - Payoff price) If the market value is less than the payoff then you walk away from the car after end of lease. If the market value is high than the payoff price then you can sell it to any dealer or private party and pocket the equity. There can be some restrictions based on manufactures.

"Buy it out" depends on the depreciation set my the manufacturer and the deal you got when leasing the vehicle. I always negotiate the selling price of the car as if I'm buying and then calculate monthly lease payments based on Money Factor (MF or Interest rate) and depreciation (fixed by manufacturer).
Depreciation varies just not by the make but also by different models. You can be lucky sometimes depending on the success of a particular model down the line based on reviews and market demand. For example both my leased cars M5 Competition and X7 M50i are sitting on equity (6K for M5 and 14K for X7) because of demand right now. I can always break the lease by selling it to a third party and cash in the equity. "Buy it now" price will be paid to BMW financial services and the difference i.e. equity is paid to me. Its a different story all together if you're leasing from a third party.
Leased cars can be bought by the owner at any point of time if its advantageous or else get rid of it at end of the lease.
I hope this clears the confusion.

That's a good explanation. Covid and supply chain issues have thrown everything out of wack, but pre-Covid, BMWs were generally good to lease. It still varied by model (MF and residual set for the model for that particular month) and incentives, but generally speaking BMWs and Mercedes were better to lease than Porsche and Audis (for the German brands).

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