Rivian mulling leasing options to unlock $7,500 tax credit
American electric vehicle (EV) maker Rivian Incorporated seems poised for a transformative shift as it wants its battery-powered passenger vehicles to qualify for the full $7,500 Inflation Reduction Act (IRA) tax credit.
In a recent interview, Rivian CEO RJ Scaringe said that it is was frustrating for the company to see that some R1T and R1S owners sell their EVs just one month after purchasing them to make a profit. He explained that the company didn’t offer leasing options for the R1T and R1S because it was confident that the two vehicles would have good residual values. But that led to situations where some owners sold their vehicles after just one month to make a profit. Essentially, selling a slightly used R1T or R1S could fetch a higher price/amount than a brand-new one, a situation that is frustrating for the company.
Currently, the manufacturer doesn’t offer leasing and none of its passenger EVs qualify for the full $7,500 IRA tax credit. Thus, in response to the unexpected market dynamics, the California-headquartered EV maker is now gearing up to introduce leasing options for its vehicles. While a specific timeline for this initiative has not yet been confirmed, the top executive has reiterated the company's eagerness to make leasing options available. Scaringe indicated that Rivian’s industry-leading residual values have the potential for exceptionally attractive leasing packages.
The availability of the leasing options will be of a great significance as it will allow customers to fully capitalize on the US federal government’s generous $7,500 tax credit that is available on lease agreements. At present, the R1T and R1S buyers can only access a partial $3,750 tax credit, subject to the condition that the EV’s manufacturer's suggested retail price (MSRP) falls below $80,000.
Speaking about the application of the IRA tax credit, CEO Scaringe emphasized the two EV’s suitability for leasing, asserting that the aforementioned federal tax credit would be a compelling incentive for prospective lessees.
Speaking about the leasing options, Rivian's visionary leader also conveyed his optimistic outlook regarding the upcoming R2 platform, which has specifically bee designed to serve as the foundation for a range of compact, battery-powered vehicle. R2 platform-based Rivian EVs will be produced at a new manufacturing facility in Georgia. Grading process at this second manufacturing facility is nearing completion, with construction slated to commence in the first quarter of 2024.
2023 Rivian R1S Video review by Car Confections