By on September 30, 2019

Rivian, the Michigan-based startup that aims to get electric pickups and SUVs into the hands of consumers starting late next year, may choose a controversial avenue to ownership.

The automaker’s CEO, RJ Scaringe, claims the automaker is seriously thinking about offering a subscription service when it begins rolling out vehicles from its Normal, Illinois assembly plant in 2020. Without a dealer network, Rivian’s plan was always to send vehicles directly to buyers, no doubt earning it the ire of dealer groups country-wide.

Speaking to private industry types at Cox Automotive’s HQ, Scaringe said he saw benefits to joining the growing list of automakers offering a range of vehicles for an all-encompassing fee.

“We talk about inflection points, and this is one that allows us to interact in different ways with the customer,” Scaringe said, as reported by Automotive News. “You may use one solution to get to and from the office during the week. But on the weekend, you may want a subscription program.”

Not counting the massive order for custom EV delivery vans earmarked for big-bucks investor Amazon, Rivian’s vehicle range will commence with two products: the R1T pickup and R1S SUV. Both vehicles will emerge with three battery pack options; the topmost affording buyers up to (or more than) 400 miles of range.

Subscription services, popularized by certain premium European brands, bundle monthly ownership costs into a single fee, but also allow subscribers to pick and choose which vehicle they drive at a given point in time. With two vehicles initially on offer, the choice afforded to Rivian fans will be small. Certainly, with no models starting below $69,000, and longer ranges requiring an outlay far greater than that, Rivian can consider itself a premium automaker, which might help the subscription idea go over easier.

Committing his company to a direct-sales model, Scaringe didn’t delve into how his company’s relationship with Cox, Ford, and Amazon might impact how vehicles get to consumers.

“If you look at the type of shareholders we’ve brought in, Amazon, Ford and Cox are all very strategic in supporting us in creating products but also in creating really sticking and powerful customer experiences,” he said.

“Cox is really an impressive company in its ability to deliver on robust customer processes, whether that’s service or thinking about the future of charging. There are a lot of aspects to the relationship that we’re excited about.”

[Image: Rivian]

Get the latest TTAC e-Newsletter!

Recommended

15 Comments on “Rivian to Go the Subscription Route?...”


  • avatar
    dukeisduke

    I really hope they change the front styling, and ditch the Little Orphan Annie headlights.

  • avatar
    Vulpine

    Honestly, direct to lease is probably the better route. Even the big players are moving away from subscriptions as they realize losses due to abusive subscribers.

    • 0 avatar
      Mnemic

      “Abusive subscribers”?

    • 0 avatar
      DenverMike

      Except in this case, putting the maximum number of butts in seats can be wildly beneficial. The MR2 (1st gen) went from ‘not even on my radar’, to ‘must have immediately’ after a short impromptu “spin”. We’re not talking everyday vehicles.

    • 0 avatar
      highdesertcat

      Vulpine, instead of leasing, I would prefer an outright buy.

      Leasing and subscriptions mean you marry the company, swap spit and take long hot showers with them.

      No thanks.

      • 0 avatar
        Vulpine

        @hdc: I’m not disagreeing with you; I prefer outright purchase myself. But many people are unwilling to pay gigantic auto notes at $1000/month and more over 8 years and a lease can save a couple hundred per month with no hit on depreciation at trade-in time (as long as you don’t go over miles or rat the thing out.) If you can afford to pay cash, you get the best of both sides as you have no ongoing payments and you’re never underwater at trade-in time.

        • 0 avatar
          highdesertcat

          Vulpine, I know several (old) people who ONLY Lease these days because it does have its benefits over purchasing outright, and they get to drive something brand-new every 3yrs or so.

          But the Leased vehicle is their long-distance traveler since they have other vehicles for running around locally.

          And a Rivian does have limited range when compared to a drive-around-the-clock ICE vehicle. Just gas up and go and ICE vehicle versus charge up an EV for 30 or more minutes and then hurry on to your next charging station for more idle time.

          My wife and I tried leasing (ONCE) to provide a car for her to show people real estate and homes, because she could write-off the lease as a business expense. It wasn’t for us.

          Since then we decided to only buy outright. And it also saves on insurance premiums since we take only the minimum coverage required by the State the vehicle is registered in.

      • 0 avatar
        dal20402

        What now? Leasing just means you pay a monthly bill and turn the car back in when the lease term is over. Oh, and you have to be a little more careful about dents and scratches, but on the other hand you don’t have to care about things like rustproofing or keeping the paint like glass. No smutty descriptions required.

        • 0 avatar
          highdesertcat

          dal20402, we leased (ONCE) but at the end of the lease we decided it wasn’t for us.

          I was considering a Rivian pickup truck for local running around, but only if I can afford to buy it outright.

          So let’s say that a Rivian would cost me $70K and a Tundra would cost me $45K. That price difference would buy a lot of gas, and charging the Rivian every day ain’t free – those electrons cost 17.6-cents per KWh in my area.

          There would have to be a major attitude adjustment on my part to want to take on an additional expensive Lease without residual or equity, where an outright buy would return to me some retained value in any kind of transaction.

          But I’ll cross that bridge when I come to it.

          • 0 avatar
            Vulpine

            @hdc: “So let’s say that a Rivian would cost me $70K and a Tundra would cost me $45K. That price difference would buy a lot of gas, and charging the Rivian every day ain’t free – those electrons cost 17.6-cents per KWh in my area.”

            The first point is certainly a legitimate complaint but the second one isn’t. What are your gasoline/diesel prices and what kind of MPG(e) are you looking at? The Rivian offers roughly 80MPG(e) which works out to less than ¼ the fuel cost per tank on average (maybe ⅓ to ½ in your area.) As I understand, energy rates in your area are also lower at night, so programming it to charge between 10pm and 6am when plugged into a Level 2 or lower charger could see your electron cost less than the 17.6¢/kWh you mention.

            I do agree with you about leasing, mind you. It might make the monthly payments lower but you don’t own the vehicle–you’re only renting it. On the other hand, a lease is a good way of learning whether a vehicle can work for you as desired without committing to the entire cost of the vehicle. I can also see a lease useful for older folks as being on a ‘fixed’ income they’re less likely to afford unexpected repairs, especially when such repairs can now cost in the thousands instead of mere hundreds of dollars.

  • avatar
    Glenn Mercer

    Preface: I have no idea if the subscription model will work, or not, for Rivian. But I think analogies to subscriptions in the digital realm are flawed here. (And those analogies are what a lot of VCs and Silicon Valley types rely on.) I can turn on or off a Spotify subscription, or switch from Song A to Song B, without really affecting Spotify’s economics. Also, the cost of a Spotify subscription includes the total cost of my listening. Now let’s look at cars:

    1. If I want to switch from my subscribed Taycan to a 911, Porsche has to hold physical inventory to allow me to make the swap. That costs money. Porsche may also have to prep the new car and move both vehicles. There is a cost to switching that the Spotify subscriber (or Spotify) does not have to pay.

    2. When I buy a car, incrementally I “see” only the marginal cost of financing it (the monthly loan or lease; and yes, fees and taxes). I don’t generally forecast out my expected service costs, or allocate the portion of my insurance bill that goes to the car. Let’s call this sum $500/month. When I subscribe to an all-inclusive subscription (“everything except gas”), those other costs are explicitly charged. Now we are at, say $700. I think this sticker shock will be an issue, even though the TRUE economics may be similar. It’s like my grandmother, who hated going to restaurants because she saw the cost of the meal as much higher than the ingredient cost, valuing her own cooking labor at zero.

    Of course, the Rivian customer may be a high-end well-off variety-seeker for which none of this will matter. Both issues are probably more of an issue in the mass market.

  • avatar
    indi500fan

    It would be nice to access an SUV most of the time and a pickup when needed. But when pickups are used for what pickups are used for, they often get beat up…that’s one factor to consider if these 100,000 dollar rigs come back in looking like Home Depot daily rentals.

    • 0 avatar
      DenverMike

      It’s no different than for Platinum/Titanium Editions. Just occasional industrial/offroad use and it’s the 2nd or 3rd owners that bang them around. Or after X years they’re rotated into the grind.

  • avatar
    Master Baiter

    All companies want to turn you into a subscriber.

    I bought a Sharp TV yesterday and I had to set up a Roku account to get the TV to do anything. Never mind that I have no intention of using Roku. I just want it to function as a dumb HDMI monitor.

    • 0 avatar
      Vulpine

      Simple fix. Go to the Roku website and cancel your account. The Sharp TV won’t know the difference and if it does, contact Sharp and demand a refund (and buy yourself a set that doesn’t force you to sign up for undesired services.)

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • ToddAtlasF1: “were they merely 7 decades ahead of their time?” No, they were five decades behind the...
  • Daniel J: Had a pair of BFGoodrich T/A Sports on my Grand prix and really liked them. We have a pair of Bridgestone...
  • theBrandler: I’m fairly certain the problem stems from how EPA test EVs. Every other EV tested by it has...
  • JimC2: The tread patterns on the Pirelli PZero and the Toyo Versado look positively fun in the snow (or frightening,...
  • ToddAtlasF1: If Porsche is using performance tires and alignment settings chosen for stability instead of low rolling...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States