A bit of good news for Rivian investors

Rivian Automotive (RIVN 3.85%) he has done an excellent job of making a name for himself. It stood out among the youngest electric vehicle (EV) start-ups and placed itself in a group expected to win in the long term in the EV industry.

In addition, 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 name and reputation for quality.

Now the company is turning its used vehicles into another revenue stream.

A new revenue stream

Rivian recently announced that it will launch a sales program for the R1T truck and R1S SUV, which will open a new avenue for revenue generation. This is especially helpful as the company’s shipments are expected to remain flat in 2024.

Data source: Rivian. Chart by author.

As deliveries stall while the company works through backlog, current orders and the launch of a highly anticipated and more affordable R2 crossover, the company needs a way to generate more revenue. Starting a used vehicle range is the next logical step.

“It’s almost mandatory if you want to be taken seriously,” Ivan Drury, a senior analyst at Edmunds, said in a statement Auto News. “For consumers testing the waters on brands they’ve never had experience with, you want as many things as possible that inspire confidence, and these programs speak to that.”

What does movement do?

Besides opening up a new revenue stream, it’s the next logical step for a maturing brand, especially considering the company launched its leasing program about 10 months ago. As these vehicles come in, the company has found a way to turn them back into more revenue. It is also a movement that adze made in 2015 when it started selling used Model S vehicles.

Price-sensitive customers might appreciate the move. For example, on Rivian’s website, it offers a pre-owned R1T with an original sticker price of $87,000, selling for $62,370 pre-owned. Better news for Rivian is that second-hand EVs are in demand, given that the depreciation of a new EV is noticeably worse than it is for petrol or hybrid vehicles.

Additionally, pre-owned programs are known to boost profits as retailers can price their vehicles above market in exchange for consumer convenience. Customers are assured of detailed inspections and receive what is left of the factory warranty. Drury went so far as to say that “a pre-owned program benefits everyone except your competition.”

Used electric vehicles are now selling much faster than they were a year ago, showing that consumer demand exists at the right price. Unfortunately, the right price is apparently lower than many new electric vehicles can currently achieve.

What does it all mean?

This move to launch a used program is also vital when considering the upcoming R2 crossover, which could lead to many valuable trade-ins of the first-gen R1T and R1S as customers step into the newer vehicle .

It’s just a little bit of good news at a time when shipments are stagnant for Rivian. While it waits for the R2 crossover to help boost sales, it’s finding ways to generate new revenue and take advantage of its strong branding and leasing program.