You may soon be able to lease a Rivian electric vehicle. Rivian’s CEO, RJ Scaringe, spoke about leasing and how it could unlock more price incentives for customers at Morgan Stanley’s 11th annual Laguna Conference.
Rivian has intentionally held off on leasing because of its confidence in its vehicle’s residual values, according to Scaringe.
Scaringe explained how the company finds the used marketplace as a “healthy check” of pricing. As he added, if vehicles are selling for more than our MSRP, that means there could be some pricing room. It could also mean demand is higher than supply.
Although it’s “frustrating,” some people are buying Rivian’s and selling them the next day to make a profit.
Is Rivian EV leasing coming soon?
However, prices after six months or 12 months of being sold are useful metrics to gauge the “sustained robustness of demand.” It’s also “very valuable for us to unlock leasing,” which Rivian does not offer yet.
Scaringe says Rivian’s market-leading residual values will lead to “exceptionally strong leasing packages.”
When asked about the Inflation Reduction Act’s (IRA) application, Rivian’s leader explained, “It works great for leasing.” He added, “$7,500 does work.”
Scaringe says this will create some interesting ways to access more price incentives for customers.
Rounding the corner
After crushing expectations in the second quarter, delivering 12,640 vehicles, Rivian’s CEO believes the company has “rounded the corner.”
Deliveries climbed by a massive 60% compared to the first three months of the year, while production expanded by 50%.
Perhaps, more importantly, Rivian’s gross profit per vehicle delivered improved by $35,000. Scaringe says the cost improvements are coming as the company utilizes its Normal, Ill factory more efficiently.
The EV maker has some exciting updates coming in the first half of 2024, including new features and cost-saving programs that will lay the foundation for its next-gen R2 series.
Scaringe believes the company has an advantage with vertical integration, especially regarding software and tech. By owning the hardware and software stack, Scaringe explained, they can provide a more holistic experience. The company can roll out features much more seamlessly.
For example, Rivian just rolled out a new OTA update that improves the ride quality in both the R1S and R1T across all drive modes.
Meanwhile, traditional automakers are limited to components from multiple third parties, making it hard to cross-leverage and update efficiently.
After the progress achieved over the past few months, Rivian raised its annual production guidance to 52,000, up 2,000 from its previous goal.
Scaringe also added that its site in Georgia, where its next-gen R2 series will be built, is close to having all grading complete. Early next year, the building will begin going up while the company will start filling it with equipment through the end of 2024.