Why are there so many used Rivians available for sale?
Recent used Rivian sales on a popular auction site
Over the past few months I have been closely following the market for used Rivian SUVs and pick up trucks and I am starting to notice an interesting trend. Prices seem to be falling rapidly, and inventory is growing quickly. This raises a lot of questions, as the company did not start delivering any meaningful amount of cars until 2022. That means, people are getting out of their cars quickly and are willing to take a loss on the price they paid. Let's dive in a bit more:
June market update for used Rivians
With the Rivian R1T being out in the market for over a year, we are starting to see a trend of how these cars are holding their value. Initially the market was flooded with used cars that speculators were flipping for hefty profits, with some models being sold for over $140,000 on cars with MSRP in the $90K range, a huge 50% price premium to be the first on the block with a new car. 12 months later, with production ramping up and wait times cut down to 4-16 weeks according to Rivian’s site, used prices have come down to the low $80,000 range. Looking at “brand new” 2023 models that went on sale earlier this year, they are already depreciated down around $7,000 - or the value of the federal tax credit for an electric car. It is likely that the depreciation trend will continue for the 2022 and 2023 models.
Price trend for used Rivians
What does this tell me about Rivian?
I think this raises a big concern about the quality of the car and how much drivers like it. If you look at the listings, about 10% are selling the car at or just above MSRP, hoping to make a profit from a car with under 100 miles and capitalize on people who do not want to wait for their car to be delivered. The remaining 90% of the market includes a lot of options with under 3,000 miles, leading me to suspect that drivers are looking to swap their cars. One interesting observation was, a lot of the cars are for sale from dealerships, there were a few repeating brands such as Porsche, Chevy, Toyota and GMC. This leads me to believe that Rivians are getting traded in for traditional luxury truck options from the likes of GMC, more capable offroaders like the TRD models from Toyota, or just classic luxury SUVs and cars from Porsche that fall into a similar price range.
What is in store for the used Rivian market?
Rivian still has a long waitlist to receive new cars, you cannot just go into a dealership and get one. When the car first came out, there were frequent cases of cars being sold on auction sites for 20-30% above MSRP to people who did not want to wait. It looks like that trend is collapsing as fewer cars are asking for over MSRP and most recent auction sales point to most cars going below MSRP. As the company keeps ramping up production, I can see the used car market continuing to grow and for people to start seeing typical discounts on used cars similar to competitors, with the car losing 40-50% of its value over the course of 3 years.
Will a similar effect happen for other electric trucks?
Right now it is hard to tell how used electric pickup truck prices will behave as we are still dealing with a very small sample size. In the case of the Ford F-150 Lightning, there are almost no cars being sold above MSRP - a trend we saw when the Rivian first came out. My estimation is the F-150 Lightning will follow a pretty standard depreciation model, especially since the car is priced significantly lower than the Rivian and is going to be more available. The Hummer EV still fetches a big premium over MSRP on auction sites as production has been extremely limited. I see the Hummer EV market being very small and limited to sellers who bought the car new solely for the purpose of flipping it right away for a profit. Until production scales up in the Q3 of 2023 it is hard to imagine used Hummer EVs will present any value.