The subscription era has begun.
Many industries have discovered that, rather than just selling you something once, a steady income of people always paying them is a great business model. We're expecting to see it more and more in the car industry, although it won't suit everyone. Lexus is already testing subscription programs while Porsche has recently expanded its Porsche Passport program, and now Rivian is thinking hard about the business model. Rivian has the luxury of being a start-up when it comes to consumer cars and, according to Automotive News, Rivian's CEO, RJ Scaringe spoke about the idea at a private industry event at Cox Automotive's HQ.
"We talk about inflection points, and this is one that allows us to interact in different ways with the customer," Scaringe said, "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."
Right out of the gate, Rivian has targetted its R1T pickup and R1S SUV at the leisure market. Offering a subscription with a choice between the vehicle for people going on outdoor adventures could prove to be a smart move within that context.
Rivian has also been clear about its intention to bypass the dealership system and deal directly with its customers. Currently, most states require automakers to directly sell cars through dealers, and this could be a way to bypass a lot of time in court. Also, with its models starting at just under $70,000, Rivian is aiming for a more affluent market which, like the European automakers pioneering subscription models, can afford the luxury of choice.
Rivian has developed important relationships with Cox Automotive and Ford, but it's the relationship with Amazon that may be where the key to its direct-sale and subscription model lay. We'll be watching with interest.