R1T Leasing Coming Later This Year

[Kuro-Rivian]

I expect Rivian to retain a decent amount of value over a 2 or three years lease term.

Will it? That is the big question! I think it will but I'm wrong all the time!

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[DuoRivians]

So what. Rivian isn't gonna have some way off market money factor. So we basically know everything about how a R1T lease might look EXCEPT the the residual. Rivian is gonna set that and god knows how they will figure that out. If the residual is set near market value....that's $7500 straight into the leasee's pocket they may or may not have gotten. If it's below market value...bonus...leasee get $7500 plus a bump from purchase resale as a trade for a higher lease payment, above market value by $7500 lower monthly but negates the $7500, yadda yadda yadda and so on and so forth.

So back to my ORIGINAL point. I would bet $'s to donuts the residual value is set to where a buy vs lease situation make the lease unattractive. We shall see.

Like I said, if you plan on buying the car ultimately, the residual doesn’t matter.

Assuming I buy the car at lease end, ignoring interest rates, mf:

Total purchase cost =
lease cost + purchase option price =
(msrp - $7500 - residual) + residual =
msrp - $7500

Edit: clarified the math

 

[Mark_AZR1T]

As many others have said, it will be a math equation. My take is this is an attempt to maintain current pricing as long as possible, before having to make a market price adjustment. I would imagine they were hoping to hold pricing until the R2 line is up (or the reworked line in Normal), but that won't happen.

 

[DuoRivians]

As many others have said, it will be a math equation. My take is this is an attempt to maintain current pricing as long as possible, before having to make a market price adjustment. I would imagine they were hoping to hold pricing until the R2 line is up (or the reworked line in Normal), but that won't happen.

100% disagree. As said on earnings, Rivian is releasing more trim options next year that’ll make the R1 accessible at a cheaper price. But this comes with lesser features.

They aren’t going to lower the msrp on existing builds, configs.

 

[Mark_AZR1T]

100% disagree. As said on earnings, Rivian is releasing more trim options next year that’ll make the R1 accessible at a cheaper price. But this comes with lesser features.

They aren’t going to lower the msrp on existing builds, configs.

You could be absolutely right. Do you think they will phase out the quad?

 

[DuoRivians]

You could be absolutely right. Do you think they will phase out the quad?

No

 

[Kuro-Rivian]

As many others have said, it will be a math equation. My take is this is an attempt to maintain current pricing as long as possible, before having to make a market price adjustment. I would imagine they were hoping to hold pricing until the R2 line is up (or the reworked line in Normal), but that won't happen.

Reading this and thinking a bit. I'm gonna reverse course on my initial prediction from an hour ago. Now I think Rivian will try to make an attractive lease package by setting residuals on the high end. Two reasons, to help maintain pricing and also push cars out the door. Higher residuals mean lower monthly payment and the $7500 helps buydown that amount. Frankly, most people are focused on monthly payment minimizing out of pocket. That's what gets people in cars. More likely Rivian isn't really trying to make $$ on financing....they rather use attractive leases to stimulate demand and ramp production.

 

[Yossarian]

Leasing could make a lot of sense given the rate of change in the EV market. In three years, we could, and likely will, see major hardware changes (e. g., improved battery technology, maybe even solid state) and other efficiency improvements in EV's. Not being locked in to older technology by having the ability to simply walk away from a last generation vehicle would be attractive to many.
Edit: correct typo

 

[Electrified Outdoors]

Leasing also brings in a steady stream of income for Rivian. It's better for them to subsidize the MF or residuals than to lower the MSRP which will lower resale and reduce revenue. IMO incentives are the better way to go in trying to boost sales vs a race to the bottom with MSRP.

The explore trims would be a good offer because they should also qualify for the tax credits. There are a lot of triggers Rivian can pull here.

 

[mini2nut]

I have never ‘owned’ a leased vehicle, so I don’t understand how leasing works including the pros & cons.

Can you guys please explain why I should consider leasing vs buying my future R1T?

Thanks much!

LEASING = RENTING

Leasing is what keeps Audi, BMW, Porsche, etc. in business here in the US.

 

[Supratachophobia]

You could be absolutely right. Do you think they will phase out the quad?

No

For Bosch motors? Absolutely.. They want to drop in the Enduros to the quad trim.

 

[Aag12]

Assuming Chase bank is the leasor, the residuals are set by a 3rd party called ALG. Now rivian can choose to enhance the residual, but this costs them money. Also, the money factor will be based on whatever market rate is plus some spread. Again, rivian can subsidize the rate, but doubt they will.

To the op saying the 7500 will be a net benefit. That's not necessarily true. They don't have to pass on the benefit, and also leases from chase can have high fees and costs. For example, as a lease holder they hold residual risk. For example if rivian goes bankrupt, the leasee just returns the car and chase is on stuck holding a low value car. We'll that risk ain't free. This risk is way higher on a startup ev.

Leases often don't work for people, but a few benefits are for business owners and consumer who don't want the residual risk...

Again like everyone says, gotta see the math. This ain't a slam dunk in all cases

 

[Yossarian]

LEASING = RENTING

Leasing is what keeps Audi, BMW, Porsche, etc. in business here in the US.

Not to nitpick, but there is a slight, but important, difference between leasing and renting, with that coming at the end of the transaction. In both cases, you are paying for the use of the vehicle for some time period. With a lease however, you generally have the right to purchase the vehicle at a specific, pre-agreed price at the end of term. That's of course not the case with a simple rental.

 

[Captain JB]

I leased a Chevy Volt for 3 consecutive leases for a total of 9 years. As alluded to above, the tax credit is incorporated in the lease price so I paid $225 for the first lease, then $275/month for the second and finally $285/month. I felt like I was being paid to drive it as I saved $300/month in gas from not driving my Jeep around town! During the pandemic when the supply chain was shattered, the price of used cars went up so I bought out the lease at the residual value for the first time. The market value (at that specific time) was about $5K more than the lease residual value. In the future no one will know the market value of the Rivians 3 years into the future but for sure the lease becomes attractive when that $7500 tax credit is amortized into the lease. The Volt was a fabulous car and I am not sure why they were not more popular. I sold the Volt and made about $4K on the price difference of the lease residual and the market value. JB

 

[Sfosro]

They absolutely said by the end of this year.

I have never ‘owned’ a leased vehicle, so I don’t understand how leasing works including the pros & cons.

Can you guys please explain why I should consider leasing vs buying my future R1T?I’ve leased various EVs since 2017. It’s a way to upgrade to new and better technologies as EVs are rapidly evolving. But if you are a good salesman it might be cheaper buy and sell and buy.

Thanks much!

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