Leasing Program Potentially Boosts Demand
Leasing programs may not typically generate immense excitement, considering they account for approximately 20% of new vehicle sales. However, when it comes to luxury or high-priced vehicles, leasing plays a significant role. For example, luxury brands such as BMW, Audi, and General Motors’ Chevrolet heavily rely on leasing, with figures exceeding 70% in some cases.
This is especially relevant for Rivian, whose customers have expressed interest in a leasing program for purchasing vehicles starting at around $78,000. Implementing a leasing option could tap into an incremental customer base, potentially increasing demand. Even a slight boost in sales from leasing could fill the company’s growing production capacity or replenish its backlog of orders.
Savvy investors should closely follow Rivian’s new leasing program, initially available for the R1T with eventual expansion to the R1S SUV. Initially, the program will only be offered in 14 states known for their favorable Rivian customer demographics. While immediate demand may not soar due to leasing, it’s not unfathomable for leasing to incrementally drive sales by 10% or more throughout 2024, leading to a potential stock rally.
New Partnership and Sales Opportunities
Cast your mind back to 2019, when Rivian and Amazon forged a deal to supply the e-commerce giant with over 100,000 electric delivery vans. While preserving Rivian’s partnership with Amazon and ensuring a steady flow of orders remains desirable, the good news for investors lies in the agreement’s exclusivity coming to an end.
Originally, the exclusivity clause was envisioned until all 100,000 electric vans were delivered by 2030, granting Amazon priority access to the green fleet. However, this timeline has been accelerated, creating opportunities for Rivian to establish relationships with multiple commercial operators. With a particular focus on last-mile retail deliveries, securing additional large-scale fleet contracts could significantly enhance Rivian’s long-term outlook.
The announcement of a new fleet deal, even if it’s just a handful of vehicles, would inject optimism into Rivian’s future and potentially trigger a rally in its stock price.
Despite encountering some obstacles along the way, Rivian is building momentum as we enter 2024. If either of these potential catalysts gains significant traction next year, it could provide a substantial boost to the company’s stock price, which has declined by approximately 80% since its initial public offering.