Car buyers looking to get behind the wheel of a Rivian truck or SUV now have an additional option: leasing. This new development comes as a bit of a surprise, considering that Rivian Automotive is still a startup company. However, the availability of leasing is expected to boost demand for their vehicles and potentially indicate improvements in production.
According to the company, "We launched the newest way for customers to get behind the wheel of a Rivian with the introduction of leasing for the first time." This leasing program has been rolled out in California, New York, Florida, and Texas. With Rivian's leasing program, customers can experience the adventure of owning a Rivian vehicle with added flexibility.
This news opens up a new avenue in the automotive market for Rivian, aligning with the fact that approximately 20% of new cars are leased. While buyers have the option to purchase cars outright or take out loans, leasing remains a popular choice. In a typical loan scenario, buyers borrow the necessary funds and make monthly payments over a period of 48 to 72 months. Once the loan is fully repaid, the buyer becomes the sole owner of the vehicle.
On the other hand, leasing involves agreeing to a monthly payment plan for a specific duration. However, at the end of the lease term, the buyer does not own the car unless they decide to make an additional payment to purchase it. In most cases, the leasing company takes back the vehicle and handles its subsequent sale.
Overall, the introduction of leasing for Rivian vehicles provides potential buyers with more options and expands the market reach of this innovative electric vehicle manufacturer. Whether customers choose to lease or buy outright, Rivian continues to make waves in the industry with its cutting-edge offerings.
Lower Monthly Payments with Leasing Option
In the automotive industry, leasing offers an alternative to purchasing a vehicle outright. Rather than financing the entire cost of the car, buyers only finance the difference between the new price and the projected end-of-lease value. This arrangement translates to lower monthly payments, making it an attractive option for many consumers.
Boosting Demand for Rivian
Considering the leasing option, individuals who prefer leasing over buying may find Rivian appealing. While this adds a small increase in demand, Rivian has not struggled with demand thus far. For those interested in reserving an R1S SUV, the website indicates that delivery is expected in 2024.
Addressing Production Challenges
Rivian's main challenge has been scaling up production. However, progress has been made on this front. In the third quarter, Rivian achieved a record production of 16,304 units, surpassing the 13,992 units produced in the second quarter of 2023. Anticipated production for 2023 stands at approximately 54,000 units, a significant rise from the 24,300 produced in 2022.
Delivery Projections and Stock Performance
Market analysts predict that Rivian will deliver around 69,000 units in 2024, aligning with its production numbers. However, despite these positive projections, Rivian stock remains stagnant. In early trading on Tuesday, shares were down 1% at $16.50, while the S&P 500 and Nasdaq Composite experienced a slight decrease of roughly 0.2%.
Over the past year, Rivian shares have declined by approximately 43%. This drop can be attributed to rising interest rates and concerns surrounding the demand for electric vehicles (EVs), particularly for EV startups that have yet to generate profits.
Future Profit Expectations
Despite Wall Street's conservative estimates, full-year profitability for Rivian is not expected for several years. Investors are cautiously monitoring the company's progress before foreseeing a turnaround in financial performance.
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