Rivian Automotive (NASDAQ:RIVN) He has done an excellent job making a name for himself. It has differentiated itself from younger electric vehicles (EVs) emerging companies and placed itself in a group that is expected to win in the long term in the electric vehicle industry.
Additionally, the company's R1S and R1T vehicles have won numerous awards from JD Power and Consumer Reports, among others, helping to build a strong brand and reputation for quality.
Now, the company is converting its used vehicles into another income stream.
New source of income
Rivian recently announced that it would launch a used vehicle sales program for its R1T pickup truck and R1S SUV, opening up a new avenue for revenue generation. This is especially useful as the company's deliveries are expected to remain stable in 2024.
As deliveries stall while the company works through its backlog, current orders, and the launch of its highly anticipated and more affordable R2 crossover, the company needs a way to generate more revenue. Starting a used vehicle line is the next logical step.
“It's almost mandatory if you want to be taken seriously,” said Ivan Drury, a senior analyst at Edmunds, according to Automotive News. “For consumers trying brands they've never had experience with, they want as many things as possible that inspire trust, and these programs speak to that.”
What does the movement do?
In addition to opening up a new revenue stream, this is the next logical step for a maturing brand, especially considering the company launched its leasing program about 10 months ago. As these vehicles arrive, the company found a way to turn them into more revenue. It is also a movement that tesla manufactured in 2015 when it began selling used Model S vehicles.
Price-sensitive customers may appreciate the move. For example, on Rivian's website, they offer a used R1T with an original sticker price of $87,000 that sells for a used price of $62,370. Another good news for Rivian is that used electric vehicles are highly sought after considering that the depreciation of a new electric vehicle is noticeably worse than that of hybrid or gasoline vehicles.
Additionally, used vehicle programs are known to increase profits, as retailers can raise the price of their vehicles above the market in exchange for consumer convenience. Customers are assured of detailed inspections and the remainder of the factory warranty. Drury even went so far as to say that “a used vehicle program benefits everyone except the competition.”
Used electric vehicles are now selling much faster than they were a year ago, proving that consumer demand exists at the right price. Unfortunately, the correct price is apparently lower than what many new electric vehicles can currently achieve.
what it all means
This decision to launch a used vehicle program is also vital when considering the upcoming R2 crossover, which could lead to many valuable trade-ins of its first-generation R1T and R1S as customers jump into the newer vehicle.
It's just a bit of good news at a time when deliveries are stalling for Rivian. While it hopes the R2 crossover will help boost sales, it is finding ways to generate new revenue and leverage its strong initial leasing and branding program.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Tesla. The Motley Fool has a disclosure policy.
Some good news for Rivian investors was originally published by The Motley Fool