10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission File Number: 001-38073

CARVANA CO.

(Exact name of registrant as specified in its charter)

Delaware			81-4549921
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
300 E. Rio Salado Parkway	Tempe	Arizona	85281
(Address of principal executive offices)			(Zip Code)

(480) 719-8809

(Registrant's telephone number, including area code)

1930 W. Rio Salado Parkway Tempe Arizona 85281

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, Par Value $0.001 Per Share	CVNA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes  ☒No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of October 31, 2022, the registrant had 105,947,745 shares of Class A common stock outstanding and 82,900,276 shares of Class B common stock outstanding.

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	2
	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	58
Item 4.	Controls and Procedures	58
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and par values)

	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	316	$	403
Restricted cash	161		233
Accounts receivable, net	359		206
Finance receivables held for sale, net	485		356
Vehicle inventory	2,577		3,149
Beneficial interests in securitizations	350		382
Other current assets, including $5 and $12, respectively, due from related parties	221		163
Total current assets	4,469		4,892
Property and equipment, net	3,326		1,560
Operating lease right-of-use assets, including $14 and $17, respectively, from leases with related parties	689		369
Intangible assets, net	76		4
Goodwill	847		9
Other assets, including $1 and $7, respectively, due from related parties	214		181
Total assets	$	9,621	$	7,015
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities, including $19 and $27, respectively, due to related parties	$	1,009	$	656
Short-term revolving facilities	575		2,053
Current portion of long-term debt	213		152
Other current liabilities, including $4 and $3, respectively, from leases with related parties	81		29
Total current liabilities	1,878		2,890
Long-term debt, excluding current portion	6,616		3,208
Operating lease liabilities, excluding current portion, including $10 and $13, respectively, from leases with related parties	669		361
Other liabilities	84		31
Total liabilities	9,247		6,490
Commitments and contingencies (Note 17)
Stockholders' equity:
Preferred stock, $0.01 par value - 50,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Class A common stock, $0.001 par value - 500,000 shares authorized; 105,932 and 89,930 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	—		—
Class B common stock, $0.001 par value - 125,000 shares authorized; 82,900 shares issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Additional paid-in capital	1,544		795
Accumulated deficit	(1,270)		(489)
Total stockholders' equity attributable to Carvana Co.	274		306
Non-controlling interests	100		219
Total stockholders' equity	374		525
Total liabilities & stockholders' equity	$	9,621	$	7,015

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Sales and operating revenues:
Retail vehicle sales, net	$	2,492	$	2,650	$	8,186	$	6,954
Wholesale sales and revenues, including $6, $15, $27 and $37, respectively, from related parties	697		552		1,976		1,349
Other sales and revenues, including $39, $52, $137 and $143, respectively, from related parties	197		278		605		758
Net sales and operating revenues	3,386		3,480		10,767		9,061
Cost of sales, including $2, $17, $20 and $21, respectively, to related parties	3,027		2,957		9,714		7,648
Gross profit	359		523		1,053		1,413
Selling, general and administrative expenses, including $7, $7, $20 and $19, respectively, to related parties	656		546		2,104		1,413
Interest expense	153		48		333		121
Other (income) expense, net	58		(3)		68		(16)
Net loss before income taxes	(508)		(68)		(1,452)		(105)
Income tax provision	—		—		1		—
Net loss	(508)		(68)		(1,453)		(105)
Net loss attributable to non-controlling interests	(225)		(36)		(672)		(59)
Net loss attributable to Carvana Co.	$	(283)	$	(32)	$	(781)	$	(46)
Net loss per share of Class A common stock, basic and diluted	$	(2.67)	$	(0.38)	$	(7.88)	$	(0.56)
Weighted-average shares of Class A common stock, basic and diluted (1)	105,857		84,779		99,134		81,427

(1) Weighted-average shares of Class A common stock outstanding have been adjusted for unvested restricted stock awards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In millions, except number of shares, which are reflected in thousands)

	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interests		Total Stockholders' Equity
Balance, December 31, 2020	76,512	$	—	95,592	$	—	$	742	$	(354)	$	414	$	802
Net loss	—	—		—	—		—		(36)		(46)		(82)
Exchanges of LLC Units	3,247	—		(3,073)	—		12		—		(12)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		225		—		—		225
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(225)		—		—		(225)
Issuance of Class A common stock to settle vested restricted stock units	62	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(2)	—		—	—		(9)		—		—		(9)
Options exercised	15	—		—	—		—		—		—		—
Equity-based compensation	—	—		—	—		10		—		—		10
Balance, March 31, 2021	79,834	$	—	92,519	$	—	$	755	$	(390)	$	356	$	721
Net income	—	—		—	—		—		22		23		45
Exchanges of LLC Units	3,189	—		(3,118)	—		12		—		(12)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		217		—		—		217
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(217)		—		—		(217)
Issuance of Class A common stock to settle vested restricted stock units	59	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(2)	—		—	—		(8)		—		—		(8)
Options exercised	26	—		—	—		1		—		—		1
Equity-based compensation	—	—		—	—		11		—		—		11
Balance, June 30, 2021	83,106	$	—	89,401	$	—	$	771	$	(368)	$	367	$	770

3

Net loss	—	—		—	—		—		(32)		(36)		(68)
Exchanges of LLC Units	2,400	—		(2,201)	—		8		—		(8)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		199		—		—		199
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(199)		—		—		(199)
Issuance of Class A common stock to settle vested restricted stock units	42	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(1)	—		—	—		(8)		—		—		(8)
Options exercised	22	—		—	—		—		—		—		—
Equity-based compensation	—	—		—	—		14		—		—		14
Balance, September 30, 2021	85,569	$	—	87,200	$	—	$	785	$	(400)	$	323	$	708

4

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - (Continued)

(Unaudited)

(In millions, except number of shares, which are reflected in thousands)

	Class A Common Stock			Class B Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interests		Total Stockholders' Equity
Balance, December 31, 2021	89,930	$	—	82,900	$	—	$	795	$	(489)	$	219	$	525
Net loss	—	—		—	—		—		(260)		(246)		(506)
Exchanges of LLC Units	27	—		—	—		1		—		(1)		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		1		—		—		1
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(1)		—		—		(1)
Contribution of Class A common stock from related party	(97)	—		—	—		—		—		—		—
Issuance of Class A common stock to settle vested restricted stock units	139	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	—	—		—	—		(12)		—		—		(12)
Options exercised	63	—		—	—		2		—		—		2
Equity-based compensation	—	—		—	—		43		—		—		43
Balance, March 31, 2022	90,062	$	—	82,900	$	—	$	829	$	(749)	$	(28)	$	52
Net loss	—	—		—	—		—		(238)		(201)		(439)
Issuances of Class A common stock, net of underwriters' discounts and commissions and offering expenses	15,625	—		—	—		1,227		—		—		1,227
Adjustment to non-controlling interests related to equity offerings	—	—		—	—		(554)		—		554		—
Exchanges of LLC Units	19	—		—	—		—		—		—		—
Establishment of deferred tax assets related to increases in tax basis in Carvana Group	—	—		—	—		21		—		—		21
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group	—	—		—	—		(21)		—		—		(21)
Contribution of Class A common stock from related party	(2)	—		—	—		—		—		—		—
Issuance of Class A common stock to settle vested restricted stock units	48	—		—	—		—		—		—		—
Issuance of Class A common stock under ESPP	27	—		—	—		1		—		—		1
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	—	—		—	—		5		—		—		5
Options exercised	10	—		—	—		—		—		—		—
Equity-based compensation	—	—		—	—		18		—		—		18
Balance, June 30, 2022	105,789	$	—	82,900	$	—	$	1,526	$	(987)	$	325	$	864
Net loss	—	—		—	—		—		(283)		(225)		(508)

5

Contribution of Class A common stock from related party	(14)	—		—	—		—		—		—		—
Issuance of Class A common stock as restricted stock awards and to settle vested restricted stock units	142	—		—	—		—		—		—		—
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	—	—		—	—		(1)		—		—		(1)
Options exercised	15	—		—	—		1		—		—		1
Equity-based compensation	—	—		—	—		18		—		—		18
Balance, September 30, 2022	105,932	$	—	82,900	$	—	$	1,544	$	(1,270)	$	100	$	374

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

CARVANA CO. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

	Nine Months Ended September 30,
	2022		2021
Cash Flows from Operating Activities:
Net loss	$	(1,453)	$	(105)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	179		72
Equity-based compensation expense	57		28
Loss on disposal of property and equipment	3		1
Provision for bad debt and valuation allowance	11		16
Amortization and write-off of debt issuance costs	20		8
Unrealized loss on warrants to acquire Root's Class A common stock	77		—
Unrealized loss (gain) on beneficial interests in securitization	1		(6)
Changes in finance receivable related assets:
Originations of finance receivables	(5,690)		(5,315)
Proceeds from sale of finance receivables, net	5,628		5,375
Gain on loan sales	(361)		(528)
Principal payments received on finance receivables held for sale	146		136
Other changes in assets and liabilities:
Vehicle inventory	638		(1,230)
Accounts receivable	40		(111)
Other assets	(75)		(86)
Accounts payable and accrued liabilities	155		319
Operating lease right-of-use assets	(132)		(117)
Operating lease liabilities	178		121
Other liabilities	(7)		—
Net cash used in operating activities	(585)		(1,422)
Cash Flows from Investing Activities:
Purchases of property and equipment	(451)		(390)
Payments for acquisitions, net of cash acquired	(2,189)		—
Principal payments received on and proceeds from sale of beneficial interests	72		38
Net cash used in investing activities	(2,568)		(352)
Cash Flows from Financing Activities:
Proceeds from short-term revolving facilities	10,596		8,733
Payments on short-term revolving facilities	(12,074)		(8,318)
Proceeds from issuance of long-term debt	3,435		1,525
Payments on long-term debt	(111)		(46)
Payments of debt issuance costs	(75)		(21)
Net proceeds from issuance of Class A common stock	1,227		—
Proceeds from equity-based compensation plans	4		1
Tax withholdings related to restricted stock units and awards	(8)		(25)
Net cash provided by financing activities	2,994		1,849
Net (decrease) increase in cash, cash equivalents and restricted cash	(159)		75
Cash, cash equivalents and restricted cash at beginning of period	636		329
Cash, cash equivalents and restricted cash at end of period	$	477	$	404

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BUSINESS ORGANIZATION

Description of Business

Carvana Co. and its wholly-owned subsidiary Carvana Co. Sub LLC (collectively, "Carvana Co."), together with its consolidated subsidiaries (the "Company"), is the leading e-commerce platform for buying and selling used cars. The Company is transforming the used car sales experience by giving consumers what they want — a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Using the website, customers can complete all phases of a used vehicle purchase transaction, including financing their purchase, trading in their current vehicle, and purchasing complementary products such as vehicle service contracts ("VSC"), auto insurance, and GAP waiver coverage. Each element of the Company's business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

Organization

Carvana Co. is a holding company that was formed as a Delaware corporation on November 29, 2016 for the purpose of completing its initial public offering ("IPO") and related transactions in order to operate the business of Carvana Group, LLC and its subsidiaries (collectively, "Carvana Group"). Substantially all of the Company’s assets and liabilities represent the assets and liabilities of Carvana Group, except the Company's Senior Notes (as defined in Note 10 — Debt Instruments) which were issued by Carvana Co. and guaranteed by its and Carvana Group's existing domestic restricted subsidiaries.

In accordance with Carvana Group LLC's amended and restated limited liability company agreement (the "LLC Agreement"), Carvana Co. is the sole manager of Carvana Group and conducts, directs and exercises full control over the activities of Carvana Group. There are two classes of common ownership interests in Carvana Group, Class A common units (the "Class A Units") and Class B common units (the "Class B Units"). As further discussed in Note 11 — Stockholders' Equity, the Class A Units and Class B Units (collectively, the "LLC Units") do not hold voting rights, which results in Carvana Group being considered a variable interest entity ("VIE"). Due to Carvana Co.'s power to control and its significant economic interest in Carvana Group, it is considered the primary beneficiary of the VIE and the Company consolidates the financial results of Carvana Group. As of September 30, 2022, Carvana Co. owned approximately 55.7% of Carvana Group and the LLC Unitholders (as defined in Note 11 — Stockholders' Equity) owned the remaining 44.3%.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company's most recent Annual Report on Form 10-K filed on February 24, 2022.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of September 30, 2022, results of operations and changes in stockholder's equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

As discussed in Note 1 — Business Organization, Carvana Group is considered a VIE and Carvana Co. consolidates its financial results due to the determination that it is the primary beneficiary.

8

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Liquidity

Since inception, the Company has incurred losses, and expects to incur additional losses in the future as it continues to build inspection and reconditioning centers ("IRCs") and vending machines, serve more of the U.S. population, and enhance technology and software. In the second quarter of 2022, the Company completed an equity offering of 15.6 million shares of Class A common stock for net proceeds of $1.2 billion and issued a total of $3.275 billion in aggregate principal amount of 10.25% senior unsecured notes due 2030 (the "2030 Notes"). The Company used a portion of the net proceeds from the Class A common stock offering for general corporate purposes and to pay any costs, fees and expenses incurred by it in connection with the offering. The Company used the net proceeds from the issuance and sale of the 2030 Notes (a) to finance the $2.2 billion acquisition of the U.S. physical auction business of ADESA, Inc. ("ADESA") and other ancillary transactions in connection therewith, and to pay related fees and expenses in connection therewith and (b) for working capital, capital expenditures and other general corporate purposes. In March 2022, the Company's forward flow partner committed to purchase a total of $5.0 billion of the Company's finance receivables through March 2023, and such facility had $1.9 billion of unused capacity as of September 30, 2022. In addition, the Company has a $2.2 billion floor plan facility effective through September 22, 2023, and $2.0 billion thereafter through March 22, 2024. Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement issuance date.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Adoption of New Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 instead of being recorded at fair value. The Company early adopted ASU 2021-08 in the second quarter of 2022 and it did not have a material effect on its condensed consolidated financial statements as there were no business combinations affected by the retrospective application to January 1, 2022.

NOTE 3 — BUSINESS COMBINATIONS

Acquisition of ADESA U.S. Physical Auction Business

On May 9, 2022, the Company completed its previously announced acquisition of 100% of the equity interests in the U.S. physical auction business of ADESA from KAR Auction Services, Inc. for approximately $2.2 billion in cash. Proceeds from the issuance and sale of the 2030 Notes were used to fund the acquisition. The acquisition included 56 auction sites throughout the U.S. with 6.5 million square feet of buildings on more than 4,000 acres of land, significantly expanding the Company's infrastructure and enhancing its customer offering by facilitating a broader selection of vehicles and faster delivery times.

9

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes the preliminary allocation of the purchase price consideration to identifiable assets acquired and liabilities assumed as of September 30, 2022:

	Preliminary Purchase Price Allocation
	(in millions)
Assets Acquired
Current assets	$	208
Property and equipment	1,281
Operating lease right-of-use assets	188
Intangible assets	79
Other assets	1
Total Assets Acquired	1,757
Liabilities Assumed
Current liabilities	233
Operating lease liabilities	167
Total Liabilities Assumed	400
Net Assets Acquired	1,357
Purchase price consideration	2,195
Goodwill	$	838

Identifiable intangible assets acquired consist of the following:

	Fair Value		Useful Life
Customer relationships	$	50	10 years
Developed technology	$	29	3 years

Preliminary measurements of fair value are subject to change during the measurement period based on the Company's continuing review of matters related to the acquisition and could be material. The Company expects to complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

Customer relationships were valued using the multi-period excess earnings method of the income approach. Developed technology was valued using the replacement cost method of the cost approach. Significant assumptions used in the valuations were revenues and attrition rate and are classified as Level 3 due to the lack of observable market data. No residual values were assigned to the customer relationships and developed technology intangible assets and they are amortized on an economic useful life basis commensurate with future anticipated cash flows and straight line, respectively. As of September 30, 2022, the remaining weighted-average amortization period for the intangible assets acquired was approximately 6.8 years.

Real property was valued using market comparable transactions of the market approach, for which the key assumption is the similarity of the acquired property to market comparable transactions. Personal property was valued using the replacement cost method of the cost approach, for which the key assumptions are the costs of similar personal property in new condition and economic obsolescence rates.

The acquisition resulted in the recognition of $838 million of goodwill, which is deductible for tax purposes and represents the future economic benefits expected to arise from anticipated synergies and intangible assets that do not qualify for separate recognition, including an assembled workforce, non-contractual relationships and other agreements.

10

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

For the three and nine months ended September 30, 2022, the Company recognized $193 million and $301 million, respectively, of wholesale sales and revenues, $180 million and $283 million, respectively, of cost of sales, and a net loss of $36 million and $57 million, respectively, from ADESA operations, which includes $31 million and $51 million, respectively, of depreciation and amortization, including acquired intangible assets amortization expense of $6 million and $10 million, respectively.

The following unaudited pro forma combined results of operations information for the three and nine months ended September 30, 2022 and 2021 have been prepared as if the ADESA acquisition occurred on January 1, 2021:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Revenues	$	3,386	$	3,685	$	11,066	$	9,721
Net loss	(508)		(144)		(1,583)		(312)
Net loss attributable to non-controlling interests	(225)		(68)		(703)		(153)
Net loss attributable to Carvana Co.	$	(283)	$	(76)	$	(880)	$	(159)
Net loss per share of Class A common stock - basic and diluted	$	(2.67)	$	(0.76)	$	(8.32)	$	(1.64)
Weighted-average shares of Class A common stock - basic and diluted	105,857		100,404		105,774		97,076

The unaudited pro forma combined results of operations information reflect the following pro forma adjustments:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	Increase/(Decrease) (in millions)
Interest expense	$	—	$	86	$	123	$	259
Lease expense	—		(3)		5		(13)
Depreciation and amortization expense	—		—		13		(4)
Intercompany revenues and cost of sales	—		$	(5)	$	(7)	$	(15)

The unaudited pro forma combined results of operations information is provided for informational purposes only and is not necessarily intended to represent the results that would have been achieved had the ADESA acquisition been consummated on January 1, 2021 or indicative of the results that may be achieved in the future.

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CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

NOTE 4 — PROPERTY AND EQUIPMENT, NET

The following table summarizes property and equipment, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Land and site improvements	$	1,357	$	303
Buildings and improvements	1,231		643
Transportation fleet	658		347
Software	229		169
Furniture, fixtures and equipment	172		97
Total property and equipment excluding construction in progress	3,647		1,559
Less: accumulated depreciation and amortization on property and equipment	(488)		(294)
Property and equipment excluding construction in progress, net	3,159		1,265
Construction in progress	167		295
Property and equipment, net	$	3,326	$	1,560

Depreciation and amortization expense on property and equipment was $100 million and $33 million for the three months ended September 30, 2022 and 2021, respectively, of which $51 million and $27 million were recorded to selling, general and administrative expense, respectively, $13 million and $6 million were capitalized to vehicle inventory, respectively, and $36 million and $6 million were recorded to cost of sales, respectively, including $13 million and $6 million previously capitalized to vehicle inventory.

Depreciation and amortization expense on property and equipment was $238 million and $91 million for the nine months ended September 30, 2022 and 2021, respectively, of which $132 million and $72 million were recorded to selling, general and administrative expense, respectively, $34 million and $19 million were capitalized to vehicle inventory, respectively, and $72 million and $17 million were recorded to cost of sales, respectively, including $31 million and $17 million previously capitalized to vehicle inventory, respectively.

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS, NET

The following table summarizes goodwill and intangible assets, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Intangible assets:
Customer relationships	$	50	$	—
Developed technology	41		9
Non-compete agreements	1		1
Intangible assets, acquired cost	92		10
Less: accumulated amortization	(16)		(6)
Intangible assets, net	$	76	$	4
Goodwill	$	847	$	9

12

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Amortization expense was $6 million and less than $1 million during the three months ended September 30, 2022 and 2021, respectively, and $10 million and $1 million during the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 6.3 years. The anticipated annual amortization expense to be recognized in future years as of September 30, 2022, is as follows:

	Expected Future Amortization
	(in millions)
Remainder of 2022	$	6
2023	18
2024	18
2025	14
2026	7
Thereafter	13
Total	$	76

NOTE 6 — ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The following table summarizes accounts payable and other accrued liabilities as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Accounts payable, including $19 and $27, respectively, due to related parties	$	292	$	141
Accrued compensation and benefits	78		45
Sales taxes and vehicle licenses and fees	85		102
Accrued interest expense	191		42
Reserve for returns and cancellations	58		44
Accrued property and equipment	32		85
Customer deposits	33		34
Accrued advertising costs	18		40
Other accrued liabilities	222		123
Total accounts payable and accrued liabilities	$	1,009	$	656

NOTE 7 — RELATED PARTY TRANSACTIONS

Lease Agreements

In November 2014, the Company and DriveTime Automotive Group (together with its consolidated affiliates, collectively, “DriveTime”), a related party of the Company due to Ernest Garcia II, Ernest Garcia III, and entities controlled by one or both of them (collectively the "Garcia Parties") controlling and owning substantially all of the interests in DriveTime, entered into a lease agreement that governs the Company’s access to and utilization of temporary storage, reconditioning, offices and parking space at various DriveTime facilities (the "DriveTime Lease Agreement"). The DriveTime Lease Agreement was most recently amended in December 2018. Lease duration varies by location, with the hub locations having cancellable terms, provided 60 days' prior written notice is given, expiring between 2023 and 2026. The Company has the right to exercise up to two

13

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

consecutive one-year renewal options at up to ten of these hub locations, less the number of locations renewed under the DriveTime Hub Lease Agreement described below.

In March 2017, the Company and DriveTime entered into a lease agreement that governs the Company's access to and utilization of office and parking space at various DriveTime facilities (the "DriveTime Hub Lease Agreement"). The DriveTime Hub Lease Agreement was most recently amended in July 2021. Lease expiration varies by location with most having cancellable terms, provided 60 days' prior written notice is given, expiring between 2022 and 2023 and the Company having the right to exercise up to two consecutive one-year renewal options at up to ten of these locations, less the number of locations renewed under the DriveTime Lease Agreement described above.

The DriveTime Lease Agreement and the DriveTime Hub Lease Agreement both have non-cancellable lease terms of less than twelve months with rights to terminate at the Company's election with 60 days' prior written notice and extension options as described above. At non-reconditioning locations, it is not reasonably certain that the Company will exercise its options to extend the leases or abstain from exercising its termination rights within these lease agreements to create a lease term greater than one year and therefore the Company accounts for them as short-term leases. For these locations, the Company makes variable monthly lease payments based on its pro rata utilization of space at each facility plus a pro rata share of each facility’s actual insurance costs and real estate taxes. Management has determined that the costs allocated to the Company are based on a reasonable methodology. The DriveTime Lease Agreement includes the Blue Mound and Delanco IRCs. At both of these locations, the Company expects to extend the lease terms beyond twelve months, therefore those locations are not considered short-term leases. The Company occupies all of the space at these IRCs and makes monthly lease payments based on DriveTime's actual rent expense. In addition, the Company is responsible for the actual insurance costs and real estate taxes at these IRC locations.

At all locations, the Company is additionally responsible for paying for any tenant improvements it requires to conduct its operations. Management has determined that the costs allocated to the Company are based on a reasonable methodology.

In February 2017, the Company entered into a lease agreement with DriveTime for sole occupancy of a fully operational IRC in Winder, Georgia. The lease has an initial term of eight years, subject to the Company's ability to exercise three renewal options of five years each.

In November 2018, the Company entered into a sublease agreement from DriveTime of a fully operational IRC near Cleveland, Ohio. The lease had an initial term of three years, subject to the Company's ability to exercise three renewal options of five years each. In July 2021, the Company exercised the first renewal option to extend through October 2026 and agreed to assume the lease from DriveTime effective October 1, 2021.

Expenses related to these operating lease agreements are allocated based on usage to inventory and selling, general and administrative expenses in the accompanying unaudited condensed consolidated balance sheets and statements of operations. Costs allocated to inventory are recognized as cost of sales when the inventory is sold. Total costs related to these operating lease agreements, including those noted above, were $1 million during each of the three months ended September 30, 2022 and 2021, and $3 million and $4 million during the nine months ended September 30, 2022 and 2021, respectively, allocated between inventory and selling, general and administrative expenses.

In February 2019, the Company entered into an agreement to assume a lease of an IRC near Nashville, Tennessee that DriveTime leased from an unrelated landlord. While the Company solely occupies the IRC, DriveTime is not fully released from the lease obligations by the landlord. The lease expires in October 2023, subject to the ability to exercise three renewal options of five years each.

Office Leases

In September 2016, the Company entered into a lease for office space in Tempe, Arizona. In connection with that lease, the Company entered into a sublease with DriveTime for the use of another floor in the same building. The lease and sublease each have a term of 83 months, subject to the right to exercise three five-year extension options. Pursuant to the sublease, the Company will pay the rent equal to the amounts due under DriveTime's master lease directly to DriveTime's landlord. The rent expense incurred related to this first floor sublease was less than $1 million during each of the three months ended September 30, 2022 and 2021, and $1 million during each of the nine months ended September 30, 2022 and 2021.

14

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

In December 2019, Verde Investments, Inc. ("Verde"), a related party of the Company due to the Garcia Parties controlling and owning substantially all of the interests in Verde, purchased an office building in Tempe, Arizona that the Company leased from an unrelated landlord prior to Verde's purchase. In connection with the purchase, Verde assumed that lease. The lease has an initial term of ten years, subject to the right to exercise two five-year extension options. The rent expense incurred under the lease with Verde was less than $1 million during each of the three months ended September 30, 2022 and 2021, and $1 million during each of the nine months ended September 30, 2022 and 2021.

Wholesale Sales and Revenues

DriveTime purchases wholesale vehicles from the Company through competitive online auctions that are managed by an unrelated third party and through the Company's wholesale marketplace platform. The Company recognized $6 million and $15 million of wholesale sales and revenues from DriveTime during the three months ended September 30, 2022 and 2021, respectively, and $27 million and $37 million during the nine months ended September 30, 2022 and 2021, respectively.

Retail Vehicle Acquisitions and Reconditioning

During the second quarter of 2021, the Company began acquiring reconditioned retail vehicles from DriveTime. The purchase price of each vehicle was equal to the wholesale price of the vehicle plus a fee for transportation and reconditioning services. In addition, DriveTime performs reconditioning services for the Company at DriveTime reconditioning centers. As of September 30, 2022, $2 million related to vehicles and reconditioning services were included in vehicle inventory in the accompanying unaudited condensed consolidated balance sheets. The Company also recognized $1 million and $17 million of cost of goods sold during the three months ended September 30, 2022 and 2021, respectively, and $19 million during each of the nine months ended September 30, 2022 and 2021.

Master Dealer Agreement

In December 2016, the Company entered into a master dealer agreement with DriveTime (the "Master Dealer Agreement"), pursuant to which the Company may sell VSCs to customers purchasing a vehicle from the Company. The Company earns a commission on each VSC sold to its customers, and DriveTime is obligated by and subsequently administers the VSCs. The Company collects the retail purchase price of the VSCs from its customers and remits the purchase price net of commission to DriveTime. During the three months ended September 30, 2022 and 2021, the Company recognized $42 million and $47 million, respectively, and during the nine months ended September 30, 2022 and 2021, the Company recognized $138 million and $130 million, respectively of commissions earned on VSCs sold to its customers and administered by DriveTime, net of a reserve for estimated contract cancellations. The commission earned on the sale of these VSCs is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations. In November 2018, the Company amended the Master Dealer Agreement to allow the Company to receive payments for excess reserves based on the performance of the VSCs versus the reserves held by the VSC administrator, once a required claims period for such VSCs has passed. In August 2020 and April 2021, the Company and DriveTime amended the Master Dealer Agreement to adjust excess reserve payment calculations and timing and the scope of DriveTime's after-sale administration services, respectively. The Company recognized expense of $3 million and income of $5 million during the three months ended September 30, 2022 and 2021, respectively, and expense of $1 million and income of $13 million during the nine months ended September 30, 2022 and 2021, respectively, related to payments for excess reserves to which it expects to be entitled, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

Beginning in 2017, DriveTime also administers the Company's limited warranty provided to all customers and a portion of the Company's GAP waiver coverage under the Master Dealer Agreement. The Company pays a per-vehicle fee to DriveTime to administer the limited warranty included with every purchase and prior to the first quarter of 2020 paid a per-contract fee to DriveTime to administer a portion of the GAP waiver coverage it sells to its customers. Since the first quarter of 2020, the Company's GAP waiver coverage sales have been administered by an unrelated party. The Company incurred $5 million during each of the three months ended September 30, 2022 and 2021, and approximately $14 million and $11 million during the nine months ended September 30, 2022 and 2021, respectively, related to the administration of limited warranty and GAP waiver coverage.

15

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Servicing and Administrative Fees

DriveTime provides servicing and administrative functions associated with the Company's finance receivables. The Company incurred expenses of $3 million and $2 million during the three months ended September 30, 2022 and 2021, respectively, and approximately $7 million and $5 million during the nine months ended September 30, 2022 and 2021, respectively, related to these services.

Aircraft Time Sharing Agreement

The Company entered into an agreement to share usage of two aircraft owned by Verde and operated by DriveTime on October 22, 2015, and the agreement was subsequently amended in 2017. Pursuant to the agreement, the Company agreed to reimburse DriveTime for actual expenses for each of its flights. The original agreement was for 12 months, with perpetual 12-month automatic renewals. Either the Company or DriveTime can terminate the agreement with 30 days’ prior written notice. The Company reimbursed DriveTime less than $1 million and $1 million during the three and nine months ended and September 30, 2022, respectively, and less than $1 million during each of the three and nine months ended September 30, 2021 under this agreement.

Shared Services Agreement with DriveTime

In November 2014, the Company and DriveTime entered into a shared services agreement whereby DriveTime provided certain accounting and tax, legal and compliance, information technology, telecommunications, benefits, insurance, real estate, equipment, corporate communications, software and production, and other services primarily to facilitate the transition of these services to the Company on a standalone basis (the "Shared Services Agreement"). The Shared Services Agreement was most recently amended and restated in February 2021 and operates on a year-to-year basis, with the Company having the right to terminate any or all services with 30 days' prior written notice and DriveTime having the right to terminate any or all services with 90 days' prior written notice. Charges allocated to the Company are based on the Company’s actual use of the specific services detailed in the Shared Services Agreement. The Company incurred less than $1 million in expenses related to the Shared Services Agreement during each of the three and nine months ended September 30, 2022 and 2021.

Accounts Payable Due to Related Party

As of September 30, 2022 and December 31, 2021, $19 million and $27 million, respectively, was due to related parties primarily related to the agreements mentioned above, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

Contributions of Class A Common Shares From Ernest Garcia III

On January 5, 2022, in recognition of the Company selling its 1 millionth vehicle in Q4 2021, the Company's CEO, Ernest Garcia III ("Mr. Garcia"), committed to giving then-current employees 23 shares of Class A common stock from his personal shareholdings once employees reach their two-year employment anniversary ("CEO Milestone Gift" or "Gift"). As a result and during the three months ended March 31, 2022, the Company granted 23 restricted stock units ("RSUs") to each current employee, which vest after they complete their second year of employment, for a total of 435,035 RSUs granted during the period. For every gift that vests, and pursuant to a contribution agreement (the "Contribution Agreement") entered into by and between the Company and Mr. Garcia on February 22, 2022, Mr. Garcia will contribute to the Company, at the end of each fiscal quarter, the number of shares of Class A common stock, granted pursuant to the CEO Milestone Gift, that have vested during such quarter. The shares contributed shall be shares of Class A common stock that Mr. Garcia individually owns, at no charge. The contribution is intended to fund RSU awards to certain employees of the Company upon their satisfying the applicable employment tenure requirements. During the three and nine months ended September 30, 2022, 14,099 and 113,206 RSUs, respectively, vested and were contributed by Mr. Garcia. Although the Company does not expect Mr. Garcia to incur any tax obligations related to the contribution, the Company has agreed to indemnify Mr. Garcia from any such obligations that may arise.

NOTE 8 — FINANCE RECEIVABLE SALE AGREEMENTS

The Company originates loans for its customers and sells them to partners and investors pursuant to finance receivable sale agreements. Historically, the Company has sold loans through two types of arrangements: forward flow agreements, including a

16

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

master purchase and sale agreement and master transfer agreements, and fixed pool loan sales, including securitization transactions.

Master Purchase and Sale Agreement

In December 2016, the Company entered into a master purchase and sale agreement (the "Master Purchase and Sale Agreement" or "MPSA") with Ally Bank and Ally Financial Inc. (collectively the "Ally Parties"). Pursuant to the MPSA, the Company sells finance receivables meeting certain underwriting criteria under a committed forward flow arrangement without recourse to the Company for their post-sale performance. Throughout 2021 and 2022, the Company and the Ally Parties have amended the MPSA to, among other things and subject to the terms of the agreement, broaden the set of finance receivables covered by the MPSA and provide additional flexibility in the timing of sales of finance receivables. In March 2021, the Ally Parties committed to purchase up to a maximum of $4.0 billion of principal balances of finance receivables through March 2022. On each of March 17, 2022 and March 22, 2022, the Ally Parties amended the MPSA to, in aggregate, extend the scheduled commitment termination date to March 21, 2023 and increase the Ally Parties' commitment to purchase finance receivables to $5.0 billion, an increase of $1.0 billion from the previous commitment. Finally, on November 1, 2022, the Company amended and restated the MPSA to, among other things, consolidate and reflect the several previously executed amendments to the MPSA facility and streamline the funding mechanics associated with the sale of finance receivables to the Ally Parties.

During the three months ended September 30, 2022 and 2021, the Company sold $1.3 billion and $594 million, respectively, in principal balances of finance receivables under the MPSA. During the nine months ended September 30, 2022 and 2021, the Company sold $3.1 billion and $1.7 billion, respectively, in principal balances of finance receivables under the MPSA and had $1.9 billion of unused capacity as of September 30, 2022.

Securitization Transactions

The Company sponsors and establishes securitization trusts to purchase finance receivables from the Company. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that the Company sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables. The net proceeds from the sales are the fair value of the assets obtained as part of the transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with the Risk Retention Rules, as further discussed in Note 9 — Securitizations and Variable Interest Entities.

During the three months ended September 30, 2022 and 2021, the Company sold $364 million and $1.5 billion, respectively, in principal balances of finance receivables through securitization transactions. During the nine months ended September 30, 2022 and 2021, the Company sold approximately $2.4 billion and $3.4 billion, respectively, in principal balances of finance receivables through securitization transactions.

Gain on Loan Sales

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $126 million and $191 million during the three months ended September 30, 2022 and 2021, respectively, and $361 million and $529 million during the nine months ended September 30, 2022 and 2021, respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

NOTE 9 — SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

As noted in Note 8 — Finance Receivable Sale Agreements, the Company sponsors and establishes securitization trusts to purchase finance receivables from the Company. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that the Company sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables. The net proceeds from the sales are the fair value of the assets obtained as part of the transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with Regulation RR of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Risk Retention Rules"). The beneficial interests retained by the Company include, but are not limited to, rated notes and certificates of the securitization trusts. The holders of the certificates issued by the securitization trusts have rights to cash flows only after the holders of the notes issued by the securitization trusts have received

17

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

their contractual cash flows. The securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company are subject principally to the credit and prepayment risk stemming from the underlying finance receivables.

The securitization trusts established in connection with asset-backed securitization transactions are VIEs. For each VIE that the Company establishes in its role as sponsor of securitization transactions, it performs an analysis to determine whether or not it is the primary beneficiary of the VIE. The Company’s continuing involvement with the VIEs consists of retaining a portion of the securities issued by the VIEs and performing ministerial duties as the trust administrator. As of September 30, 2022, the Company is not the primary beneficiary of these securitization trusts because its retained interests in the VIEs do not have exposures to losses or benefits that could potentially be significant to the VIEs. As such, the Company does not consolidate the securitization trusts.

The assets the Company retains in the unconsolidated VIEs are presented as beneficial interests in securitizations on the accompanying unaudited condensed consolidated balance sheets, which as of September 30, 2022 and December 31, 2021 were $350 million and $382 million, respectively. The Company held no other assets or liabilities related to its involvement with unconsolidated VIEs as of September 30, 2022 and December 31, 2021.

The following table summarizes the carrying value and total exposure to losses of its assets related to unconsolidated VIEs with which the Company has continuing involvement, but is not the primary beneficiary at September 30, 2022 and December 31, 2021. Total exposure represents the estimated loss the Company would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero. The Company believes the possibility of this is remote. As such, the total exposure presented below is not an indication of the Company's expected losses.

	September 30, 2022				December 31, 2021
	Carrying Value		Total Exposure		Carrying Value		Total Exposure
	(in millions)
Rated notes	$	283	$	283	$	282	$	282
Certificates and other assets	67		67		100		100
Total unconsolidated VIEs	$	350	$	350	$	382	$	382

The beneficial interests in securitizations are considered securities available for sale subject to restrictions on transfer pursuant to the Company’s obligations as a sponsor under the Risk Retention Rules. As described in Note 10 — Debt Instruments, the Company has entered into secured borrowing facilities through which it finances certain of these retained beneficial interests in securitizations. These securities are interests in securitization trusts, thus there are no contractual maturities. The amortized cost and fair value of securities available for sale as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Rated notes	$	298	$	283	$	282	$	282
Certificates and other assets	45		67		93		100
Total securities available for sale	$	343	$	350	$	375	$	382

18

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

NOTE 10 — DEBT INSTRUMENTS

Debt instruments, excluding finance leases, which are discussed in Note 16 — Leases, as of September 30, 2022 and December 31, 2021 consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Asset-based financing:
Floor plan facilities	$	575	$	1,877
Finance receivable facilities	—		176
Financing of beneficial interest in securitizations	298		282
Notes payable	4		10
Real estate financing	486		447
Total asset-based financing	1,363		2,792
Senior notes	5,725		2,450
Total debt	7,088		5,242
Less: current portion	(687)		(2,154)
Less: unamortized debt issuance costs (1)	(85)		(34)
Total included in long-term debt, net	$	6,316	$	3,054

(1) The unamortized debt issuance costs related to long-term debt are presented as a reduction of the carrying amount of the

corresponding liabilities on the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs related to revolving debt arrangements are presented within other assets on the accompanying condensed consolidated balance sheets and not included here.

Short-Term Revolving Facilities

Floor Plan Facilities

The Company previously entered into a floor plan facility with a lender to finance its vehicle inventory (the "Original Floor Plan Facility"), which was secured by Carvana LLC's vehicle inventory, general intangibles, accounts receivable, and finance receivables. The Original Floor Plan Facility was amended at various times and effective September 22, 2022, the Company amended and restated the facility (the "12-Month Floor Plan Facility") to extend the maturity date to September 22, 2023 with a line of credit of $2.2 billion and tie the interest rate to a prime rate plus 1.00%.

On September 22, 2022, the Company also entered into a separate floor plan facility (the "18-Month Floor Plan Facility", and together with the 12-Month Floor Plan Facility, the "Floor Plan Facilities") with a lender. The line of credit under the 18-Month Floor Plan Facility is $2.0 billion, which becomes available following the maturity and repayment of the 12-Month Floor Plan Facility, and its maturity date is March 22, 2024. The interest rate under the 18-Month Floor Plan Facility is tied to a prime rate plus 1.00%.

Under the Floor Plan Facilities, repayment of amounts drawn for the purchase of a vehicle should generally be made within several days after selling or otherwise disposing of the vehicle. Outstanding balances related to vehicles held in inventory for more than 150 days require monthly principal payments equal to 10% of the original principal amount of that vehicle until the remaining outstanding balance is the lesser of (i) 50% of the original principal amount or (ii) 50% of the wholesale value. Prepayments may be made without incurring a premium or penalty. Additionally, the Company is permitted to make prepayments to the lender to be held as principal payments under the Floor Plan Facilities and subsequently reborrow such

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CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

amounts. The Floor Plan Facilities also require monthly interest payments and that at least 12.5% of the total principal amount owed to the lender is held as restricted cash.

The Company is also required to pay the lender an availability fee based on the average unused capacity during the prior calendar quarter under the Floor Plan Facilities.

As of September 30, 2022, the Company had $575 million outstanding under the 12-Month Floor Plan Facility, unused capacity of $1.6 billion, and held $72 million in restricted cash related to this facility. As of September 30, 2022, the Company had no amount outstanding under the 18-Month Floor Plan Facility, unused capacity of $2 billion, which becomes available following the maturity and repayment of the 12-Month Floor Plan Facility, and held no amount in restricted cash related to this facility. During the three months ended September 30, 2022, the Company's effective interest rate on the 12-Month Floor Plan Facility was approximately 4.53%.

As of December 31, 2021, the Company had $1.9 billion outstanding under the Original Floor Plan Facility, unused capacity of $373 million, and held $141 million in restricted cash related to this facility. For the year ended December 31, 2021, the Company's effective interest rate on the Original Floor Plan Facility was approximately 2.55%.

Active Finance Receivable Facilities

The Company has various short-term revolving credit facilities to fund certain automotive finance receivables originated by the Company prior to selling them, which are typically secured by the finance receivables pledged to them (the "Finance Receivable Facilities").

In January 2020, the Company entered into an agreement pursuant to which a lender agreed to provide a revolving credit facility, which was subsequently increased to $500 million, to fund certain automotive finance receivables originated by the Company. In June 2021, the Company amended its agreement to, among other things, extend the maturity date to January 24, 2023.

In February 2020, the Company entered into an agreement pursuant to which a second lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. In December 2021, the Company amended its agreement to, among other things, increase the line of credit to $600 million, and extend the maturity date to December 8, 2023.

On April 30, 2021, the Company entered into an agreement pursuant to which a third lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. In December 2021, the Company amended its agreement to, among other things, increase this line of credit to $600 million. In September 2022, the Company amended its agreement to extend the maturity date to March 30, 2024.

On October 15, 2021, the Company entered into an agreement pursuant to which a fourth lender agreed to provide a $350 million revolving credit facility to fund certain automotive finance receivables originated by the Company. The Company can draw upon this facility until April 15, 2023.

On March 18, 2022, the Company entered into an agreement pursuant to which a fifth lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. The Company can draw upon this facility until September 18, 2023.

The Finance Receivable Facilities require that any undistributed amounts collected on the pledged finance receivables be held as restricted cash. The Finance Receivable Facilities require monthly payments of interest and fees based on usage and unused facility amounts. The Finance Receivable Facilities self-amortize from the end of the draw period until maturity, offer full prepayment rights, and have no credit sublimits or aging restrictions, subject to negotiated concentration limits. The subsidiaries that entered into these Finance Receivable Facilities are each wholly-owned, special purpose entities whose assets are not available to the general creditors of the Company. As of September 30, 2022 and December 31, 2021, the Company had zero and $176 million, respectively, outstanding under these Finance Receivable Facilities, unused capacity of $2.6 billion and $1.9 billion, respectively, and held $41 million and $67 million, respectively, in restricted cash related to these Finance Receivable Facilities. During the three months ended September 30, 2022, the Company's effective interest rate on these

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(Unaudited)

Finance Receivable Facilities was approximately 4.33%. For the year ended December 31, 2021, the Company's effective interest rate on these Finance Receivable Facilities was approximately 1.64%.

Long-Term Debt

Senior Unsecured Notes

The Company has issued various tranches of senior unsecured notes (collectively, the "Senior Notes") each under a separate indenture (collectively, the "Indentures"), as further described below.

The following table summarizes components of the Company's senior unsecured notes:

	September 30, 2022		December 31, 2021		Interest Rate
	(in millions, except percentages)
2025 Senior Unsecured Notes due October 1, 2025 ("2025 Notes")	$	500	$	500	5.625	%
2027 Senior Unsecured Notes due April 15, 2027 ("2027 Notes")	600		600		5.500	%
2028 Senior Unsecured Notes due October 1, 2028 ("2028 Notes")	600		600		5.875	%
2029 Senior Unsecured Notes due September 1, 2029 ("2029 Notes")	750		750		4.875	%
2030 Senior Unsecured Notes due May 1, 2030 ("2030 Notes")	3,275		—		10.250	%
Total principal amount	5,725		2,450
Less: unamortized debt issuance cost	(79)		(28)
Total debt	$	5,646	$	2,422

Each of the 2025 Notes, the 2027 Notes, the 2028 Notes and the 2029 Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S. Bank National Association, as trustee. The 2030 Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The interest on each of the Senior Notes is payable semi-annually, beginning on April 1, 2021 for the 2025 Notes and 2028 Notes, October 15, 2021 for the 2027 Notes, March 1, 2022 for the 2029 Notes, and November 1, 2022 for the 2030 Notes. The Senior Notes mature as specified in the table above unless earlier repurchased or redeemed and are guaranteed by the Company's existing domestic restricted subsidiaries (other than the subsidiaries formed for inventory, finance receivables, securitization facilities, or immaterial subsidiaries).

The Company may redeem some or all of each issuance of Senior Notes at redemption prices set forth in each respective indenture, plus any accrued and unpaid interest to the redemption date. Prior to those redemption dates, the Company may redeem up to 35% of the aggregate principal amount at a redemption price equal to 100% plus the respective interest rate specified in the table above, together with accrued and unpaid interest to, but not including, the date of redemption, with the net cash proceeds of certain equity offerings. With respect to the 2030 Notes, the Company may, at its option, redeem in the aggregate of up to 10% of the original aggregate principal amount of the 2030 Notes during the period from, and including, May 1, 2025 to, but excluding May 1, 2027, at a redemption price equal to 105.125% of the 2030 Notes to be redeemed, plus accrued and unpaid interest thereon to the relevant redemption rate. In addition, the Company may, at its option, redeem some or all of the Senior Notes prior to its redemption date, by paying a make-whole premium plus any accrued and unpaid interest to, but not including, the redemption date. If the Company experiences certain change of control events, it must make an offer to purchase all of the Senior Notes at 101% of the principal amount thereof, plus any accrued and unpaid interest, to the repurchase date.

The Indentures contain restrictive covenants that limit the ability of the Company and certain of its subsidiaries to, among other things and subject to certain exceptions, incur additional debt or issue preferred stock, create new liens, make intercompany payments, pay dividends and make other distributions in respect of the Company's capital stock, redeem or repurchase the Company’s capital stock or prepay subordinated indebtedness, make certain investments or certain other restricted payments, guarantee indebtedness, designate unrestricted subsidiaries, sell certain kinds of assets, enter into certain types of transactions with affiliates, and effect mergers or consolidations. Certain of these covenants will be suspended if any of the Senior Notes are assigned an investment grade rating from any two of Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, and Fitch Ratings, Inc., and there is no continuing default.

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(Unaudited)

Notes Payable

The Company has entered into promissory note and disbursement agreements to finance certain equipment for its transportation fleet and building improvements. The assets financed with the proceeds from these notes serve as the collateral for each note and certain security agreements related to these assets have cross collateralization and cross default provisions with respect to one another. Each note has a fixed annual interest rate, a two- to five-year term and requires monthly payments. As of September 30, 2022 and December 31, 2021, the outstanding principal of these notes had a weighted-average interest rate of 7.0% and 6.4%, respectively, and totaled $4 million and $10 million, respectively, net of unamortized debt issuance costs, of which $2 million and $7 million as of September 30, 2022 and December 31, 2021, respectively, was due within the next twelve months and is included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Real Estate Financing

The Company finances certain purchases and construction of its property and equipment through various sale and leaseback transactions. As of September 30, 2022, none of these transactions have qualified for sale accounting due to meeting the criteria for finance leases, or forms of continuing involvement, such as repurchase options or renewal periods that extend the lease for substantially all of the asset's remaining useful life, and are therefore accounted for as financing transactions. These arrangements require monthly payments and have initial terms of 20 to 25 years. Some of the agreements are subject to renewal options of up to 25 years and some are subject to base rent increases throughout the term. As of September 30, 2022 and December 31, 2021, the outstanding liability associated with these sale and leaseback arrangements, net of unamortized debt issuance costs, was $483 million and $444 million, respectively, and was included in long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Financing of Beneficial Interests in Securitizations

As discussed in Note 9 — Securitizations and Variable Interest Entities, the Company has retained certain beneficial interests in securitizations pursuant to the Company’s obligations as a sponsor under the Risk Retention Rules. Beginning in June 2019, the Company entered into secured borrowing facilities through which it finances certain retained beneficial interests in securitizations whereby the Company sells such interests and agrees to repurchase them for their fair value at a stated time of repurchase.

As of September 30, 2022 and December 31, 2021, the Company has pledged $298 million and $282 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from July 2024 to September 2029. The securitization trusts distribute payments related to the Company's pledged beneficial interests in securitizations directly to the lenders, which reduces the beneficial interests in securitizations and the related debt balance. Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral, the repurchase price of the pledged collateral will be increased by the amount of the decline.

The outstanding balance of these facilities, net of unamortized debt issuance costs, was $295 million and $279 million as of September 30, 2022 and December 31, 2021, respectively, of which $109 million and $93 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2022, the Company was in compliance with all debt covenants.

NOTE 11 — STOCKHOLDERS' EQUITY

Organizational Transactions

Carvana Co.'s amended and restated certificate of incorporation, among other things, authorizes (i) 50 million shares of Preferred Stock, par value $0.01 per share, (ii) 500 million shares of Class A common stock, par value $0.001 per share, and (iii) 125 million shares of Class B common stock, par value $0.001 per share. Each share of Class A common stock generally entitles its holder to one vote on all matters to be voted on by stockholders. Each share of Class B common stock held by the

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(Unaudited)

Garcia Parties generally entitles its holder to ten votes on all matters to be voted on by stockholders, for so long as the Garcia Parties maintain direct or indirect beneficial ownership of at least 25% of the outstanding shares of Carvana Co.'s Class A common stock, determined on an as-exchanged basis, assuming that all of the Class A Units and Class B Units were exchanged for Class A common stock. All other shares of Class B common stock generally entitle their holders to one vote per share on all matters to be voted on by stockholders. Holders of Class B common stock are not entitled to receive dividends and would not be entitled to receive any distributions upon the liquidation, dissolution or winding down of the Company. Holders of Class A and Class B common stock vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by applicable law.

Carvana Group's amended and restated LLC Agreement provides for two classes of common ownership interests in Carvana Group: (i) Class A Units and (ii) Class B Units (together, the "LLC Units"). Carvana Co. is required to, at all times, maintain (i) a four-to-five ratio between the number of shares of Class A common stock issued and outstanding by Carvana Co. and the number of Class A Units owned by Carvana Co. (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities and subject to adjustment as set forth in the exchange agreement (the "Exchange Agreement") further discussed below, and taking into account Carvana Co. Sub, LLC's 0.1% ownership interest in Carvana, LLC) and (ii) a four-to-five ratio between the number of shares of Class B common stock owned by the original holders of LLC units prior to the IPO (the "Original LLC Unitholders") and the number of Class A Units owned by the Original LLC Unitholders. The Company may issue shares of Class B common stock only to the extent necessary to maintain these ratios. Shares of Class B common stock are transferable only if an Original LLC Unitholder elects to exchange them, together with 1.25 times as many LLC Units, for consideration from the Company. Such consideration from the Company can be, at the Company’s election, either shares of Class A common stock or cash.

As of September 30, 2022 and December 31, 2021, there were 236 million and 216 million Class A Units, and 2 million and 3 million Class B Units, respectively, (as adjusted for the participation thresholds and closing price of Class A common stock on September 30, 2022 and December 31, 2021), issued and outstanding. As discussed in Note 13 — Equity-Based Compensation, Class B Units were issued under the Company’s LLC Equity Incentive Plan (the "LLC Equity Incentive Plan") and are subject to a participation threshold, and are earned over the requisite service period.

Equity Offerings

On April 26, 2022, the Company completed a public offering of 15.625 million shares of its Class A common stock for total net proceeds of $1.2 billion, after deducting underwriting discounts and offering expenses. The Garcia Parties purchased an aggregate of 5.4 million shares of the Class A common stock offered at the public offering price. The Company used the net proceeds to purchase 19.5 million newly-issued LLC Units in Carvana Group.

Exchange Agreement

Carvana Co. and the Original LLC Unitholders together with any holders of LLC Units issued subsequent to the IPO (together, the "LLC Unitholders") entered into an Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to (i) conversion ratio adjustments for stock splits, stock dividends, reclassifications and similar transactions, (ii) vesting for certain LLC Units, and (iii) the respective participation threshold for Class B Units. To the extent such owners also hold Class B common stock, they are required to deliver to Carvana Co. a number of shares of Class B common stock equal to the number of shares of Class A common stock being exchanged for. Any shares of Class B common stock so delivered are canceled. The number of exchangeable Class B Units is determined based on the value of Carvana Co.'s Class A common stock and the applicable participation threshold.

During the three months ended September 30, 2022 and 2021, certain LLC Unitholders exchanged zero and 3 million LLC Units and zero and 2 million shares of Class B common stock for zero and 3 million newly-issued shares of Class A common stock, respectively. During the nine months ended September 30, 2022 and 2021, certain LLC Unitholders exchanged less than 1 million and 11 million LLC Units and zero and 8 million shares of Class B common stock for less than 1 million and 9 million newly-issued shares of Class A common stock, respectively. Simultaneously, and in connection with these exchanges, Carvana Co. received zero and 3 million LLC Units during the three months ended September 30, 2022 and 2021, respectively, and less than 1 million and 11 million LLC Units during the nine months ended September 30, 2022 and 2021, respectively, increasing its total ownership interest in Carvana Group, and canceled the exchanged shares of Class B common stock.

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(Unaudited)

Class A Non-Convertible Preferred Units

On October 2, 2018, Carvana Group, LLC amended its LLC Agreement to create a class of non-convertible preferred units (the "Class A Non-Convertible Preferred Units"), effective September 21, 2018. The Class A Non-Convertible Preferred Units were created in connection with Carvana Co.'s issuance of its Senior Notes, as discussed further and defined in Note 10 — Debt Instruments. On October 2, 2020, Carvana Group, LLC amended and restated its LLC Agreement to, among other things, authorize the issuance of 1.1 million Class A Non-Convertible Preferred Units to be sold to Carvana Co. in connection with the issuance of its 2025 and 2028 Notes and authorize the issuance of additional Class A Non-Convertible Preferred Units, in each case in consideration for the capital contribution made or deemed to have been made by Carvana Co. of the net proceeds of senior unsecured notes issuances. On March 29, 2021, Carvana Group, LLC issued 0.6 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2027 Notes. On August 16, 2021, Carvana Group LLC issued 0.8 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2029 Notes. On May 6, 2022, Carvana Group LLC issued 3.3 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2030 Notes. Carvana Co. used its net proceeds from the 2023 Notes (which have since been repurchased), the 2025 and 2028 Notes, the 2027 Notes, the 2029 Notes and the 2030 Notes, to purchase 0.6 million, 1.1 million, 0.6 million, 0.8 million, and 3.3 million, respectively, of Class A Non-Convertible Preferred Units.

When Carvana Co. makes payments on the Senior Notes, Carvana Group makes an equal cash distribution, as necessary, to the Class A Non-Convertible Preferred Units. For each $1,000 principal amount of Senior Notes that Carvana Co. repays or otherwise retires, one Class A Non-Convertible Preferred Unit is canceled and retired.

NOTE 12 — NON-CONTROLLING INTERESTS

As discussed in Note 1 — Business Organization, Carvana Co. consolidates the financial results of Carvana Group and reports a non-controlling interest related to the portion of Carvana Group owned by the LLC Unitholders. Changes in the ownership interest in Carvana Group while Carvana Co. retains its controlling interest will be accounted for as equity transactions. Exchanges of LLC Units result in a change in ownership and reduce the amount recorded as non-controlling interests and increase additional paid-in capital.

Upon the issuance of shares of Class A common stock by Carvana Co. related to the Company’s equity compensation plans such as the exercise of options, issuance of restricted or non-restricted stock, payment of bonuses in stock or settlement of stock appreciation rights in stock, Carvana Group is required to issue to Carvana Co. a number of Class A Units equal to 1.25 times the number of shares of Class A common stock being issued in connection with the exercise of such options or issuance of other types of equity compensation, subject to adjustment for stock splits, stock dividends, reclassifications and similar transactions. Activity related to the Company's equity compensation plans may result in a change in ownership which will impact the amount recorded as non-controlling interest and additional paid-in capital.

The non-controlling interest related to the Class B Units is determined based on the respective participation thresholds and the share price of Class A common stock on an as-converted basis. To the extent that the number of as-converted Class B Units change or Class B Units are forfeited, the resulting difference in ownership will be accounted for as equity transactions adjusting the non-controlling interest and additional paid-in capital.

During the nine months ended September 30, 2022 and 2021, the total adjustments related to exchanges of LLC Units were a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of $1 million and $32 million, respectively, which have been included in exchanges of LLC Units in the accompanying unaudited condensed consolidated statements of stockholders' equity. During the nine months ended September 30, 2022, Carvana Co. utilized its net proceeds from its equity offering to purchase LLC Units, which resulted in adjustments to increase non-controlling interests and to decrease additional paid-in capital by $554 million, which have been included in adjustment to non-controlling interests related to equity offerings in the accompanying unaudited condensed consolidated statements of stockholders' equity.

As of September 30, 2022, Carvana Co. owned approximately 55.7% of Carvana Group with the LLC Unitholders owning the remaining 44.3%. The net loss attributable to the non-controlling interests on the accompanying unaudited condensed consolidated statements of operations represents the portion of the net loss attributable to the economic interest in Carvana Group held by the non-controlling LLC Unitholders calculated based on the weighted average non-controlling interests' ownership during the periods presented.

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CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Transfers from (to) non-controlling interests:
Decrease as a result of issuances of Class A common stock	$	(554)	$	—
Increase as a result of exchanges of LLC Units	1		32
Total transfers from (to) non-controlling interests	$	(553)	$	32

NOTE 13 — EQUITY-BASED COMPENSATION

Equity-based compensation is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures. A summary of equity-based compensation recognized during the three and nine months ended September 30, 2022 and 2021 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Restricted Stock Units and Awards excluding those granted in relation to the CEO Milestone Gift	$	12	$	11	$	29	$	26
Restricted Stock Units granted in relation to the CEO Milestone Gift	3		—		40		—
Options	3		3		10		8
Class A Units	—		—		—		1
Total equity-based compensation	18		14		79		35
Equity-based compensation capitalized to property and equipment	(3)		(3)		(7)		(6)
Equity-based compensation capitalized to inventory	(1)		(1)		(16)		(1)
Equity-based compensation, net of capitalized amounts	$	14	$	10	$	56	$	28

As of September 30, 2022, the total unrecognized compensation related to outstanding equity awards was $167 million, which the Company expects to recognize over a weighted-average period of approximately 3.0 years. Total unrecognized equity-based compensation will be adjusted for actual forfeitures.

2017 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan"). Under the 2017 Incentive Plan, 14 million shares of Class A common stock were initially available for issuance, which the Company may grant as stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors, officers and consultants. The majority of equity granted by the Company, other than equity granted in relation to the CEO Milestone Gift, vests over four year periods based on continued employment with the Company. As of September 30, 2022, approximately 7 million shares remain available for future equity-based award grants under this plan.

Employee Stock Purchase Plan

In May 2021, the Company adopted an employee stock purchase plan (the "ESPP"). On July 1, 2021, the ESPP went into effect. The ESPP allows substantially all employees, excluding members of senior management, to acquire shares of the Company’s Class A common stock through payroll deductions over six-month offering periods, commencing on January 1 and July 1 of each year. The per share purchase price is equal to 90% of the fair market value of a share of the Company’s Class A common stock on the last day of the offering period. Participant purchases are limited to maximums that may vary between

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CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

$10,000 and $25,000 of stock per calendar year. The Company is authorized to grant up to 0.5 million shares of Class A common stock under the ESPP.

As of September 30, 2022, the Company issued 27,462 shares of Class A common stock and 470,044 shares remained available for future issuance. During the three and nine months ended September 30, 2022, the Company incurred less than $1 million of equity-based compensation expense related to the ESPP.

Class A Units

During 2018, the Company granted certain employees Class A Units with service-based vesting over two- to four-year periods and a grant-date fair value of $18.58 per Class A Unit. The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting.

Class B Units

In March 2015, Carvana Group adopted the LLC Equity Incentive Plan. Under the LLC Equity Incentive Plan, Carvana Group could grant Class B Units to eligible employees, non-employee officers, consultants and directors with service-based vesting, typically four- to five-years. In connection with the completion of the IPO, Carvana Group discontinued the grant of new awards under the LLC Equity Incentive Plan, however the LLC Equity Incentive Plan will continue in connection with administration of existing awards that remain outstanding. Grantees may receive shares of the Company's Class A common stock in exchange for their Class B Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting and the respective participation threshold for Class B Units. Class B Units do not expire. There were no Class B Units issued during the three and nine months ended September 30, 2022 or 2021. As of September 30, 2022, outstanding Class B Units had participation thresholds between $0.00 to $12.00. During the three and nine months ended September 30, 2022 and 2021, the Company incurred less than $1 million of equity-based compensation expense related to the Class B Units.

NOTE 14 — NET LOSS PER SHARE

Basic and diluted net loss per share is computed by dividing the net loss attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive shares. For all periods presented, potentially dilutive shares are excluded from diluted net loss per share because they have an anti-dilutive impact. Therefore, basic and diluted net loss per share attributable to Class A common stockholders are the same for all periods presented. Net loss for all periods presented is attributable only to Class A common stockholders, due to no activity related to convertible preferred stock during those periods.

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CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table presents the calculation of basic and diluted net loss per share during the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except number of shares, which are reflected in thousands, and per share amounts)
Numerator:
Net loss	$	(508)	$	(68)	$	(1,453)	$	(105)
Net loss attributable to non-controlling interests	(225)		(36)		(672)		(59)
Net loss attributable to Carvana Co. Class A common stockholders, basic and diluted	$	(283)	$	(32)	$	(781)	$	(46)
Denominator:
Weighted-average shares of Class A common stock outstanding	105,878		84,815		99,141		81,468
Nonvested weighted-average restricted stock awards	(21)		(36)		(7)		(41)
Weighted-average shares of Class A common stock, basic and diluted	105,857		84,779		99,134		81,427
Net loss per share of Class A common stock, basic and diluted	$	(2.67)	$	(0.38)	$	(7.88)	$	(0.56)

Shares of Class B common stock do not share in the losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted net loss per share of Class B common stock under the two-class method has not been presented.

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted net loss per share of Class A common stock for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	(in thousands)
Options (1)	1,265	1,101	1,265	1,101
Restricted Stock Units and Awards (1)	826	688	826	710
Class A Units (2)	82,963	87,912	82,963	91,060
Class B Units (2)	1,580	2,150	1,580	2,271

_________________________

(1) Represents number of instruments outstanding at the end of the period that were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

(2) Represents the weighted-average as-converted LLC units that were evaluated under the if-converted method for potentially dilutive effects and were determined to be anti-dilutive.

NOTE 15 — INCOME TAXES

As described in Note 1 — Business Organization and Note 11 — Stockholders' Equity, as a result of the IPO, Carvana Co. began consolidating the financial results of Carvana Group. Carvana Group is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Carvana Group is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., based on its economic interest held in Carvana Group. Carvana Co. was formed on November 29, 2016 and did not engage in any operations prior to the IPO. Carvana Co. is taxed as a

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(Unaudited)

corporation and is subject to U.S. federal, state, and local income taxes with respect to its allocable share of any taxable income or loss of Carvana Group, as well as any stand-alone income or loss generated by Carvana Co.

As described in Note 11 — Stockholders' Equity, the Company did not acquire any LLC units during the three months ended September 30, 2022. The Company acquired 3 million LLC Units during the three months ended September 30, 2021. The Company acquired less than 1 million and 11 million LLC Units during the nine months ended September 30, 2022 and 2021, respectively, in connection with exchanges with LLC Unitholders. During the three months ended September 30, 2022, the Company did not record a gross deferred tax asset. During the three months ended September 30, 2021, the Company recorded a gross deferred tax asset of $199 million. During the nine months ended September 30, 2022, and 2021, the Company recorded a gross deferred tax asset of $1 million and $641 million, respectively, associated with the basis difference in its investment in Carvana Group related to the acquisition of these LLC Units which is reflected as an increase to additional paid-in capital in the accompanying unaudited condensed consolidated statements of stockholders' equity.

As described in Note 11 — Stockholders' Equity, during the nine months ended September 30, 2022, the Company issued 15.625 million shares of its Class A common stock and received net proceeds from the offering of $1.2 billion. The Company utilized the proceeds to purchase 19.5 million newly issued Class A units in Carvana Group. The Company recognized a gross deferred tax asset of $20 million from the offering, associated with a portion of the basis difference resulting from this purchase of Carvana Group units, which is reflected as an increase to addition paid-in capital in the accompanying unaudited condensed consolidated statements of stockholders’ equity.

As described in Note 5 — Goodwill and Intangible Assets, Net, the Company acquired various intangible assets in connection with the acquisition of Car360 in 2018. As a result, the Company recognized a deferred tax liability of $2 million which is reflected within other liabilities in the accompanying unaudited condensed consolidated balance sheets. The deferred tax liability will be amortized over five to seven years and less than $1 million was amortized during each of the nine months ended September 30, 2022 and 2021.

During the nine months ended September 30, 2022, management performed an assessment of the recoverability of deferred tax assets. Management determined, based on the accounting standards applicable to such assessment, that there was sufficient evidence as a result of the Company’s cumulative losses to conclude it was more likely than not that its deferred tax assets would not be realized and has recorded a full valuation allowance against its deferred tax assets. In the event that management was to determine that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be made which would reduce the provision for income taxes.

The Company recognizes uncertain income tax positions when it is more-likely-than-not the position will be sustained upon examination. As of September 30, 2022 and December 31, 2021, the Company has not identified any uncertain tax positions and has not recognized any related reserves.

The Company's effective tax rate for the three months ended September 30, 2022 and 2021 was an expense of 0.1% and 0.3%, respectively, and for the nine months ended September 30, 2022 and 2021 was an expense of 0.1% and 0.2%, respectively, related to its wholly-owned subsidiaries.

Tax Receivable Agreement

Carvana Co. expects to obtain an increase in its share of the tax basis in the net assets of Carvana Group when LLC Units are exchanged by the LLC Unitholders and other qualifying transactions. As described in Note 11 — Stockholders' Equity, each change in outstanding shares of Class A common stock results in a corresponding increase or decrease in Carvana Co.'s ownership of LLC Units. The Company intends to treat any exchanges of LLC Units as direct purchases of LLC interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that Carvana Co. would otherwise pay in the future to various taxing authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the IPO, the Company entered into a Tax Receivable Agreement ("TRA"). Under the TRA, the Company generally will be required to pay to the Original LLC Unitholders 85% of the amount of cash savings, if any, in U.S. federal, state or local tax that the Company actually realizes directly or indirectly (or are deemed to realize in certain circumstances) as a result of (i) certain tax attributes created as a result of any sales or exchanges (as determined for U.S. federal income tax purposes) to or with the Company of their interests in Carvana Group for shares of Carvana Co.'s Class A

28

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

common stock or cash, including any basis adjustment relating to the assets of Carvana Group and (ii) tax benefits attributable to payments made under the TRA (including imputed interest). The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

If the Internal Revenue Service or a state or local taxing authority challenges the tax basis adjustments that give rise to payments under the TRA and the tax basis adjustments are subsequently disallowed, the recipients of payments under the agreement will not reimburse the Company for any payments the Company previously made to them. Any such disallowance would be taken into account in determining future payments under the TRA and would, therefore, reduce the amount of any such future payments. Nevertheless, if the claimed tax benefits from the tax basis adjustments are disallowed, the Company’s payments under the TRA could exceed its actual tax savings, and the Company may not be able to recoup payments under the TRA that were calculated on the assumption that the disallowed tax savings were available.

The TRA provides that if (i) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, (ii) there is a material breach of any material obligations under the TRA; or (iii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any LLC Units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination.

As of September 30, 2022, the Company has concluded based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized; therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such deferred tax assets. As of September 30, 2022, the total unrecorded TRA liability is $1.6 billion. If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations.

NOTE 16 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of September 30, 2022, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, IRCs, storage, parking and corporate offices. The initial terms expire at various dates between 2022 and 2038. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

Refer to Note 7 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in long-term debt on the accompanying unaudited condensed consolidated balance sheets.

29

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Lease Costs and Activity

The Company's lease costs and activity during the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets	$	27	$	11	$	68	$	26
Interest obligations under finance leases	5		2		13		5
Total finance lease costs	$	32	$	13	$	81	$	31
Operating leases:
Fixed lease costs to non-related parties	$	26	$	14	$	78	$	35
Fixed lease costs to related parties	1		1		3		4
Variable short-term lease costs to related parties	—		1		—		1
Total operating lease costs	$	27	$	16	$	81	$	40
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties					$	56	$	23
Operating lease liabilities to related parties					$	4	$	4
Interest payments on finance lease liabilities					$	13	$	5
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities					$	106	$	35

30

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of September 30, 2022:

			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total
	(in millions)
Remainder of 2022	$	32	$	1	$	25	$	26	$	58
2023	117		5		106		111		228
2024	105		3		114		117		222
2025	91		2		115		117		208
2026	71		2		112		114		185
Thereafter	32		4		510		514		546
Total minimum lease payments	448		17		982		999		1,447
Less: amount representing interest	(47)		(3)		(266)		(269)		(316)
Total lease liabilities	$	401	$	14	$	716	$	730	$	1,131

_________________________

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of September 30, 2022 and December 31, 2021, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of September 30, 2022 and 2021 were as follows, excluding short-term operating leases:

	As of September 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	8.6		9.2
Finance leases	4.3		4.4
Weighted-average discount rate
Operating leases	7.1	%	7.5	%
Finance leases	5.6	%	5.4	%

NOTE 17 — COMMITMENTS AND CONTINGENCIES

Accrued Limited Warranty

As part of its retail strategy, the Company provides a 100-day or 4,189-mile limited warranty to customers to repair certain broken or defective components of each retail vehicle sold. As such, the Company accrues for such repairs based on actual claims incurred to-date and repair reserves based on historical trends. The liability was $21 million and $16 million as of September 30, 2022 and December 31, 2021, respectively, and is included in accounts payable and other accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

31

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Purchase Obligations

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $174 million in aggregate over the next seven years, as of September 30, 2022. These purchase obligations are recorded as liabilities when the services are rendered.

Legal Matters

From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. The Company is currently involved in matters related to, among other topics, its title and registration process, including requests for information from government agencies, class actions and shareholder derivative lawsuits. The Company believes the claims in these matters are not material or are without merit and intends to defend the matters vigorously. The Company also continues to work closely with government agencies to respond to their requests for information. It is not possible to determine the probability of loss or estimate damages, if any, for any of the above matters, and therefore, the Company has not established reserves for any of these proceedings. If the Company determines that a loss is both probable and reasonably estimable, the Company will record a liability, and, if the liability is material, disclose the amount of the liability reserved. If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on the Company's business, results of operations, financial condition or cash flows.

Future litigation may be necessary to defend the Company and its partners by determining the scope, enforceability and validity of third party proprietary rights or to establish its proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

NOTE 18 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company holds certain assets that are required to be measured at fair value on a recurring basis, and beneficial interests in securitizations for which it elected the fair value option. A description of the fair value hierarchy and the Company's methodologies are included in Note 2 — Summary of Significant Accounting Policies in its most recent Annual Report on Form 10-K.

32

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following tables are a summary of fair value measurements and hierarchy level at September 30, 2022 and December 31, 2021:

	September 30, 2022
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	139	$	139	$	—	$	—
Beneficial interests in securitizations	350		—		—		350

	December 31, 2021
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	154	$	154	$	—	$	—
Beneficial interests in securitizations	382		—		—		382

_________________________

(1) Consists of highly liquid investments with original maturities of three months or less and classified in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2022 and December 31, 2021, the Company has purchase price adjustment receivables of $41 million and $34 million, respectively, which are carried at fair value and classified as other assets in the accompanying consolidated balance sheets. Under the MPSA, the purchaser will make future cash payments to the Company based on the performance of the finance receivables sold. The fair value of the purchase price adjustment receivables are determined based on the extent to which the Company’s estimated performance of the underlying finance receivables exceeds a mutually agreed upon performance threshold of the underlying finance receivables as of measurement dates specified in the MPSA. The Company develops its estimate of future cumulative losses based on the historical performance of finance receivables it originated with similar characteristics as well as general macro-economic trends. The Company then utilizes a discounted cash flow model to calculate the present value of the expected future payment amounts. Due to the lack of observable market data these receivables are classified as Level 3. The adjustments to the fair value of the purchase price adjustment receivables were a gain of $5 million and $3 million during the three months ended September 30, 2022 and 2021, respectively, and a gain of $11 million and $17 million during the nine months ended September 30, 2022 and 2021, respectively, and are reflected in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

Beneficial Interests in Securitizations

Beneficial interests in securitizations include notes and certificates of the securitization trusts, the same securities as issued to other investors as described in Note 9 — Securitizations and Variable Interest Entities. Beneficial interests in securitizations are initially treated as Level 2 assets when the securitization transaction occurs in close proximity to the end of the period and there is a lack of observable changes in the economic inputs. When the securitization transaction does not occur in close proximity to the end of the period and there have been observable changes in the economic inputs, beneficial interests in securitizations are classified as Level 3.

The Company's beneficial interests in securitizations include rated notes and certificates and other assets, all of which are classified as Level 3 due to the lack of observable market data. The Company determines the fair value of its rated notes based on non-binding broker quotes. The non-binding broker quotes are based on models that consider the prevailing interest rates, recent market transactions, and current business conditions. The Company determines the fair value of its certificates and other assets using a combination of non-binding market quotes and internally developed discounted cash flow models. The discounted cash flow models use discount rates based on prevailing interest rates and the characteristics of the specific instruments. As of September 30, 2022 and December 31, 2021, the discount rates were 4.7% to 10.0% and 1.1% to 10.0%, respectively. Significant increases or decreases in the inputs to the models could result in a significantly higher or lower fair value measurement. The Company elected the fair value option on its beneficial interests in securitizations, which allows it to

33

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

recognize changes in the fair value of these assets in the period the fair value changes. Changes in the fair value of the beneficial interests in securitizations are reflected in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

For beneficial interests in securitizations measured at fair value on a recurring basis, the Company's transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period on a quarterly basis. There were no transfers into or out of Level 3 during the three and nine months ended September 30, 2022 or 2021.

In December 2021, the Company began selling certain of its beneficial interests in securitizations that meet the criteria for sale set forth in the Risk Retention Rules. For the three and nine months ended September 30, 2022, the Company sold beneficial interests in securitizations for a purchase price totaling $40 million and $43 million, respectively.

The following table presents additional information about Level 3 beneficial interests in securitizations measured at fair value on a recurring basis for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Opening Balance	$	401	$	239	$	382	$	131
Received in securitization transactions	24		33		148		170
Cash receipts	(44)		(27)		(136)		(60)
Change in fair value	9		2		(1)		6
Sales of beneficial interests	(40)		—		(43)		—
Ending Balance	$	350	$	247	$	350	$	247

Fair Value of Financial Instruments

The carrying amounts of restricted cash, accounts receivable, accounts payable and accrued liabilities, and accounts payable to related party approximate fair value due to their respective short-term maturities. The carrying value of the short-term revolving facilities were determined to approximate fair value due to their short-term duration and variable interest rates that approximate prevailing interest rates as of each reporting period. The carrying value of notes payable and sale leasebacks were determined to approximate fair value as each of the transactions were entered into at prevailing interest rates during each respective period and they have not materially changed as of or during the periods ended September 30, 2022 and December 31, 2021. The carrying value of the financing of beneficial interests in securitizations was determined to approximate fair value because in the event of a decline in the fair value of the pledged collateral of the financing, the repurchase price of the pledged collateral will be increased by the amount of the decline.

The fair value of the Senior Notes, which are not carried at fair value on the accompanying unaudited condensed consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices for the identical liability. The fair value of the Senior Notes as of September 30, 2022 and December 31, 2021 was as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value, net of unamortized debt issuance costs	$	5,646	$	2,422
Fair value	3,465		2,411

The fair value of finance receivables, which are not carried at fair value on the accompanying unaudited condensed consolidated balance sheets, was determined utilizing the estimated sales price based on the historical experience of the

34

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Company. Such fair value measurement of the finance receivables, net is considered Level 2 under the fair value hierarchy. The carrying value and fair value of the finance receivables as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value	$	485	$	356
Fair value	520		392

Investment in Equity Securities

During October 2021, the Company purchased Series A convertible preferred shares in Root, Inc. ("Root"), an equity security that does not have a readily determinable fair value. The Company elected to measure this investment using a measurement alternative pursuant to the accounting standards and recorded the investment at its cost of $126 million which will subsequently be adjusted for observable price changes. The Company considered all relevant transactions since the date of its investment and has not recorded any impairments or upward or downward adjustments to the carrying amount of its investment in Root, as there have not been changes in the observable price of its equity interest through September 30, 2022. On August 12, 2022, Root effected a reverse stock split of its Class A common stock and Class B common stock at a ratio of 18:1, whereby each 18 shares of Root’s Class A common stock and Class B common stock were automatically combined into one share of Class A common stock or Class B common stock, respectively (the “Reverse Stock Split”). The shares of Root's Class A common stock issuable to the Company on the conversion of the Series A convertible preferred shares were adjusted proportionally.

Also in October 2021, the Company entered into a commercial agreement with Root, under which the Root auto insurance products were to be embedded into the Company's e-commerce platform. In accordance with the provisions of the commercial agreement, the Company received eight tranches of warrants to purchase shares of Root's Class A common stock (the "Warrants"). On September 1, 2022, the integrated auto insurance solution, which embedded into the Company's e-commerce platform (the "Integrated Platform"), was completed. One tranche of the Warrants, consisting of 2.4 million shares, as adjusted pursuant to the Reverse Stock Split, became exercisable upon completion of the Integrated Platform, and is considered a derivative instrument. The other tranches vest based on insurance product sales through the Integrated Platform and are considered a derivative instrument. The Company used a Monte Carlo simulation to estimate the fair value of these Warrants, which are classified as Level 3. At contract inception, the Company recognized an asset of $30 million for the Warrants and deferred revenue, classified in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets. During the three months ended September 30, 2022, the Company determined it was probable that the volume of insurance products required to earn the Warrants would be achieved and recorded an additional $75 million of Warrants and deferred revenue based on the contract inception date fair value as determined by the Monte Carlo simulation. The Warrants and deferred revenue are classified in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets.

The following table presents changes in the Company's Level 3 Warrants measured at fair value:

	2022
	(in millions)
Balance at December 31, 2021	$	6
Warrants to acquire Root's Class A common stock	75
Total unrealized loss (1)	(77)
Balance at September 30, 2022	$	4

(1) The Company recognized the decrease in fair value in relation to the Warrants to acquire Root's Class A common stock through other expense (income), net in the accompanying consolidated statements of operations. The Company recognized a

35

CARVANA CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

decrease in fair value of $72 million and $77 million during the three and nine months ended September 30, 2022, respectively. No amounts were recorded during the three and nine months ended September 30, 2021.

Derivative Instruments

As of September 30, 2022 and December 31, 2021, the Company had no other outstanding derivative instruments.

NOTE 19 — SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes supplemental cash flow information for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Supplemental cash flow information:
Cash payments for interest	$	178	$	82
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	43	$	74
Property and equipment acquired under finance leases	$	300	$	81
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	371	$	139
Warrants to acquire Root's Class A common stock	$	75	$	—
Equity-based compensation expense capitalized to property and equipment	$	6	$	6
Fair value of beneficial interests received in securitization transactions	$	148	$	235
Reductions of beneficial interests in securitizations and associated long-term debt	$	105	$	22

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the accompanying unaudited condensed consolidated statements of cash flows for all periods presented:

	September 30, 2022		December 31, 2021		September 30, 2021
	(in millions)
Cash and cash equivalents	$	316	$	403	$	297
Restricted cash (1)	161		233		107
Total cash, cash equivalents and restricted cash	$	477	$	636	$	404

_________________________

(1) Amounts included in restricted cash primarily represent the deposits required under the Company's short-term revolving facilities. Refer to Note 10 — Debt Instruments for additional information. Remaining restricted cash represents certain cash held for corporate insurance purposes.

36

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Unless the context requires otherwise, references in this report to "Carvana," the "Company," "we," "us," and "our" refer to Carvana Co. and its consolidated subsidiaries. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our most recent Annual Report filed on Form 10-K, as well as our consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Form 10-Q.

Overview

Carvana is the leading e-commerce platform for buying and selling used cars. We are transforming the used car buying and selling experience by giving consumers what they want - a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Each element of our business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

Our business combines a comprehensive online sales experience with a vertically integrated supply chain that allows us to sell high-quality vehicles to our customers transparently and efficiently at a low price. Using our website, customers can complete all phases of a retail vehicle purchase transaction. Specifically, our online sales experience allows customers to:

•Purchase a retail vehicle.    As of September 30, 2022, we listed approximately 71,300 total retail units on our website, where customers can select and purchase a vehicle, including arranging financing and signing contracts, directly from their desktop or mobile device. Selling vehicles to retail customers is the primary driver of our business. Selling retail vehicles generates revenue equal to the selling price of the vehicle, less an allowance for returns, and also enables multiple additional revenue streams, including vehicle service contracts ("VSCs"), GAP waiver coverage, other ancillary products, and trade-ins.

•Finance their purchase.    Customers can pay for their Carvana vehicle using cash, financing from other parties such as banks or credit unions, or financing with us using our proprietary loan origination platform. Customers who choose to apply for our in-house financing fill out a short prequalification form, select from a range of financing terms we provide and, if approved, apply the financing to their purchase in our online checkout process. We generally seek to sell the loans we originate to financing partners or pursuant to a securitization transaction and, in each case, we generally earn a premium upon sale.

•Protect their purchase.    Customers have the option to protect their vehicle with a VSC as part of our online checkout process. VSCs provide customers with insurance against certain mechanical repairs after the expiration of their vehicle’s original manufacturer warranty. We earn a fee for selling VSCs on behalf of DriveTime, who is the obligor under these VSCs. We generally have no contractual liability to customers for claims under these agreements. We also offer GAP waiver coverage to customers in most states in which we operate. We have also partnered with Root, Inc. ("Root") to offer an integrated auto insurance solution, through which customers in most states may conveniently access auto insurance directly from the Carvana e-commerce platform.

•Sell us their car.    We allow our customers to trade-in a vehicle and apply the trade-in value to their purchase, or to sell us a vehicle independent of a purchase. Using our digital appraisal tool, customers can receive a firm offer for their vehicle nearly instantaneously from our site simply by answering a few questions about the vehicle condition and features. We generate trade-in offers using a proprietary valuation algorithm supported by extensive used vehicle market and customer-behavior data. When customers accept our offer, they can schedule a time to have the vehicle picked up at their home or elsewhere within one of our markets and receive payment, eliminating the need to visit a dealership or negotiate a private sale. We take their vehicles into inventory and sell them either at auction as a wholesale sale or through our website as a retail sale. Vehicles sold at auction typically do not meet the quality or condition standards required to be included in retail inventory displayed for sale on our website.

To enable a seamless customer experience, we have built a vertically-integrated used vehicle supply chain, supported by proprietary software systems and data.

•Vehicle acquisition.    We primarily acquire our used vehicle inventory directly from customers when they trade in or sell us their vehicles and through the large and liquid national used-car auction market. Acquiring directly from

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customers eliminates auction fees and provides more diverse vehicles. The remainder of our inventory is acquired from vehicle finance and leasing companies, rental car companies, and other suppliers. We use proprietary algorithms to determine which cars to bid on at auction and how much to bid. Our software sifts through over 100,000 vehicles per day and filters out vehicles with reported accidents, poor condition ratings, or other unacceptable attributes, and can evaluate the tens of thousands of potential vehicle purchases that remain per day, creating a competitive advantage versus in-person sourcing methods generally used by traditional dealerships. Once our algorithms have identified a suitable vehicle for purchase, bids are verified and executed by a centralized team of inventory-sourcing professionals. For vehicles sold to us through our website, we use proprietary algorithms to determine an appropriate offer. We assess vehicles on the basis of quality, inventory fit, consumer desirability, relative value, expected reconditioning costs, and vehicle location to identify what we believe represent the most in-demand and profitable vehicles to acquire for inventory. We utilize a broad range of data sources, including proprietary site data, and a variety of external data sources to support our assessments.

•Inspection and reconditioning.    Once we acquire a vehicle, we leverage our in-house logistics or a vendor to transport the vehicle to a greenfield inspection and reconditioning center or auction location with reconditioning capacity ("IRC"), at which point the vehicle is entered into our inventory management system. We then begin a 150-point inspection process covering controls, features, brakes, tires, and cosmetics. Each IRC includes trained technicians, vehicle lifts, paint-less dent repair, and paint capabilities and receives on-site support from vendors with whom we have integrated systems to ensure ready access to parts and materials. When an inspection is complete, we estimate the necessary reconditioning cost for the vehicle to be deemed "Carvana Certified" and expected timing for that vehicle to be made available for sale on our website.

•Photography and merchandising.    To provide transparency to our customers, our patented, automated photo booths capture a 360-degree exterior and interior virtual tour of each vehicle in our website inventory. Our photo booths photograph the interior and exterior of the vehicle while technicians annotate material defects based on visibility-threshold category. We also feature integrations with various vehicle data providers for vehicle feature and option information. We have instituted a unified cosmetic standard across all IRCs and certain auction sites to better ensure a consistent customer experience.

•Transportation and fulfillment.    Third-party vehicle transportation is often slow, expensive, and unreliable. To address these challenges, we built an in-house auto logistics network backed by a proprietary transportation management system ("TMS") to transport our vehicles to customers in our markets. The system is based on a "hub and spoke" model, which connects all IRCs to vending machines and hubs via our owned and leased fleet of multi-car and single car haulers. Our TMS allows us to efficiently manage locations, routes, route capacities, trucks, and drivers while also dynamically optimizing for speed and cost. We store inventory primarily at the IRCs and other sites, and when a vehicle is sold, it is delivered directly to customers in our markets or transported to a vending machine or certain hubs for pick-up by the customer. Due to our robust and proprietary logistics infrastructure, we are able to offer our customers and operations team highly accurate predictions of vehicle availability, minimizing unanticipated delays and ensuring a seamless and reliable customer experience.

Retail Vehicle Unit Sales

Since launching to customers in Atlanta, Georgia in January 2013, we have experienced rapid growth in sales through our website www.carvana.com. During the nine months ended September 30, 2022, the number of vehicles we sold to retail customers grew by 4.2% to 325,319 compared to 312,221 in the nine months ended September 30, 2021. Over time, we expect our retail vehicle sales to grow in future periods with increased penetration in our current markets and expansion into new markets.

We view the number of vehicles we sell to retail customers as the most important measure of our growth, and we expect to continue to focus on building a scalable platform to increase our retail units sold. This focus on retail units sold is motivated by several factors:

•Retail units sold enable multiple revenue streams, including the sale of the vehicle itself, the sale of automotive finance receivables originated to finance the vehicle, the sale of VSCs, GAP waiver coverage, other ancillary products, and the sale of vehicles acquired from customers.

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•Retail units sold are the primary driver of customer referrals and repeat sales. Each time we sell a vehicle to a new customer, that customer may refer future customers and can become a repeat buyer in the future.

•Retail units sold are an important driver of the average number of days between when we acquire the vehicle and when we sell it. Reducing average days to sale impacts gross profit on our vehicles because used vehicles depreciate over time.

•Retail units sold allow us to benefit from economies of scale due to our centralized online sales model. We believe our model provides meaningful operating leverage in acquisition, reconditioning, transport, customer service, and delivery.

We plan to invest in technology and infrastructure to support growth in retail units sold. This includes continued investment in our vehicle acquisition, reconditioning and logistics network, as well as continued investment in product development and engineering to deliver customers a best-in-class experience.

Markets and Population Coverage

Our historical growth in retail units sold is driven by increased penetration in our existing markets and expansion into new markets. We define a market as a metropolitan area in which we have commenced local advertising and generally offer home delivery to customers with a Carvana employee in a branded delivery truck. We define our population coverage as the percentage of U.S. population that lives within those markets. Opening a new market involves hiring a team of customer advocates, connecting the market to our existing logistics network and initiating local advertising. As a market scales, we may elect to build a vending machine in the market to further increase customer awareness and enhance our fulfillment operations.

Our expansion model has enabled us to increase our rate of market openings, resulting in serving more of the U.S. population, in each of the past nine years. Our market openings increased the total percentage of the U.S. population served to 81.1% in 315 markets as of September 30, 2022 from 80.6% in 308 markets as of September 30, 2021. Over time, we have continually improved our market expansion playbook, which we believe provides us with the capability to efficiently execute our growth plan. We continually evaluate consumer demand and our operational capacity to determine our market opening and vending machine launch strategy.

When we open a market, we commence advertising using a blend of brand and direct advertising channels. Our advertising spend in each market is approximately proportionate to each market’s population, subject to adjustments based on specific characteristics of the market, used vehicle market seasonality, and special events such as vending machine openings. This historically has led to increased market penetration over time following the market opening. We also advertise on national television to increase brand awareness. 

Revenue and Gross Profit

Our increased penetration in existing markets and expansion into new markets has generally led to growth in retail unit sales. We generate revenue on retail units sold from four primary sources: the sale of the vehicles, wholesale sales of vehicles we acquire from customers, gains on the sales of loans originated to finance the vehicles, and sales of ancillary products such as VSCs and GAP waiver coverage.

Our largest source of revenue, retail vehicle sales, totaled $2.5 billion and $2.7 billion during the three months ended September 30, 2022 and 2021, respectively, and $8.2 billion and $7.0 billion during the nine months ended September 30, 2022 and 2021, respectively. As we increase penetration in existing markets and expand to new ones, we generally expect retail vehicle sales to increase along with retail units sold, absent any material adverse macroeconomic conditions. We generate gross profit on retail vehicle sales from the difference between the retail selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

Wholesale sales and revenues, which includes sales of trade-ins and other vehicles acquired from customers that do not meet the requirements for our retail inventory, totaled $697 million and $552 million during the three months ended September 30, 2022 and 2021, respectively, and $2.0 billion and $1.3 billion during the nine months ended September 30, 2022 and 2021, respectively. We generally expect wholesale sales to trend proportionately with retail units sold through trade-ins and from customers who wish to sell us a car independent of a retail sale. We generate gross profit on wholesale vehicle sales from the difference between the wholesale selling price of the vehicle and our cost of sales associated with acquiring the vehicle and preparing it for sale.

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On May 9, 2022, we completed our acquisition of the U.S. physical auction business of ADESA from KAR Auction Services, Inc. We have included revenue earned from the sale of wholesale marketplace units by non-Carvana sellers through our wholesale marketplace platform, including auction fees and related services revenue, in wholesale sales and revenues from the date of acquisition. We generate a gross profit on wholesale marketplace units from the difference between the revenue earned from the sale of wholesale marketplace units through our wholesale marketplace platform less our cost of sales associated with operating the wholesale marketplace platform.

Other sales and revenues, which primarily includes gains on the sales of automotive finance receivables we originate, sales commissions on ancillary products such as VSCs, GAP waiver coverage, and auto insurance, totaled $197 million and $278 million during the three months ended September 30, 2022 and 2021, respectively, and $605 million and $758 million during the nine months ended September 30, 2022 and 2021, respectively. We generally expect other sales and revenues to trend proportionately with retail units sold. We also expect other sales and revenues to increase as we improve our ability to monetize loans we originate, including through securitization transactions, and sell and offer attractive financing solutions and ancillary products to our customers, including products customarily sold by automotive retailers or insurance products customarily sold by traditional insurance companies, absent any material adverse macroeconomic conditions. Other sales and revenues are 100% gross margin products for which gross profit equals revenue.

During current macroeconomic uncertainty, our highest priority will continue to be providing exceptional customer experiences while improving efficiency, increasing our brand awareness and maximizing our infrastructure to support efficient growth in retail units sold. Secondarily, we plan to pursue several strategies designed to increase our total gross profit per unit. These strategies include the following:

•Increase the purchase of vehicles from customers. Over time, we plan to grow the number of vehicles that we purchase from our customers either as trade-ins or independent of a retail sale. This in turn will grow our wholesale business, provide additional vehicles for our retail business, which on average are more profitable compared to the same vehicle acquired at auction, and expand our inventory selection.

•Reduce average days to sale. Our goal is generally to increase our sales at a faster rate than we increase our inventory size, which we believe would decrease average days to sale due to a relative increase in demand versus supply. Reductions in average days to sale lead to fewer vehicle price reductions, and therefore higher average selling prices, all other factors being equal. Higher average selling prices in turn lead to higher gross profit per unit sold, all other factors being equal.

•Leverage existing IRC infrastructure. As we scale, we intend to more fully utilize the capacity in our 17 existing IRCs, which collectively have capacity to inspect and recondition approximately 1 million vehicles per year at full utilization. We also intend to use existing capacity in the facilities acquired as part of the ADESA acquisition.

•Increase utilization of our logistics network. As we scale, we intend to more fully utilize our in-house logistics network to transport cars to our IRCs or other sites after acquisition from customers or wholesale auctions.

•Increase conversion on existing products. We plan to continue to improve our website to highlight the benefits of our complementary product offerings, including financing, VSCs, GAP waiver coverage, other ancillary products, and trade-ins.

•Add new products and services. We plan to utilize our online sales platform to offer additional complementary products and services to our customers.

•Increase monetization of our finance receivables. We plan to continue selling finance receivables in securitization transactions and otherwise expand our base of financial partners who purchase the finance receivables originated on our platform to reduce our effective cost of funds.

•Optimize purchasing and pricing. We are constantly improving the ways in which we predict customer demand, value vehicles sight unseen and optimize what we pay to acquire those vehicles. We also regularly test different pricing of our products, including vehicle sticker prices, trade-in and independent vehicle offers, and ancillary product prices, and we believe we can improve by further optimizing prices over time.

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Seasonality

Used vehicle sales (retail and wholesale) generally exhibit seasonality with sales peaking late in the first calendar quarter and diminishing through the rest of the year, with the lowest relative level of vehicle sales expected to occur in the fourth calendar quarter. Due to our rapid growth, our overall sales patterns in the past have not always reflected the general seasonality of the used vehicle industry. However, as our business and markets have and continue to mature, our results have become more reflective of typical market seasonality. Used vehicle prices also exhibit seasonality, with used vehicles depreciating at a faster rate in the last two quarters of each year and a slower rate in the first two quarters of each year, all other factors being equal. We expect to experience seasonal and other fluctuations in our quarterly operating results, including as a result of macroeconomic conditions, which may not fully reflect the underlying performance of our business.

Investment in Growth

We have aggressively invested in the growth of our business and we expect this investment to continue during normal conditions. While we intend to become increasingly efficient over time, we also anticipate that our operating expenses will increase substantially over time as we continue to expand our logistics network, increase our advertising spending, and serve more of the U.S. population. There is no guarantee that we will be able to realize the desired return on our investments.

Relationship with Related Parties

For discussion about our relationship with related parties, refer to Note 7 — Related Party Transactions of our accompanying unaudited condensed consolidated financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q.

Key Operating Metrics

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our progress and make strategic decisions. Our key operating metrics reflect the key drivers of our growth, including increasing brand awareness, enhancing the selection of vehicles we make available to our customers, and serving more of the U.S. population. Our key operating metrics also demonstrate our ability to translate these drivers into retail sales and to monetize these retail sales through a variety of product offerings.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Retail units sold	102,570			111,949			325,319			312,221
Population coverage	81.1		%	80.6		%	81.1		%	80.6		%
Average monthly unique visitors (in thousands)	21,333			20,071			23,203			16,632
Total website units	71,365			56,054			71,365			56,054
Total gross profit per unit (1)	$	3,500		$	4,672		$	3,237		$	4,526

(1) Includes $19, $0, $49, and $0, respectively, related to the CEO Milestone Gift.

Retail Units Sold

We define retail units sold as the number of vehicles sold to customers in a given period, net of returns under our seven-day return policy. We view retail units sold as a key measure of our growth for several reasons. First, retail units sold is the primary driver of our revenues and, indirectly, gross profit, since retail unit sales enable multiple complementary revenue streams, including financing, VSCs, GAP waiver coverage, other ancillary products, and trade-ins. Second, growth in retail units sold increases the base of available customers for referrals and repeat sales. Third, growth in retail units sold is an indicator of our ability to successfully scale our logistics, fulfillment, and customer service operations.

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Population Coverage

We previously reported number of markets as a key operating metric. As we have continued to grow, the population covered by these markets is increasingly a more important driver of our growth than the number of markets we serve. We define a market as a metropolitan area in which we have commenced local advertising and generally offer home delivery to customers with a Carvana employee in a branded delivery truck. We define our population coverage as the percentage of U.S. population that lives within those markets. We view the growth in population we serve as a key driver of our growth. As we increase our population coverage, the number of consumers who have access to our fully integrated customer experience increases, which in turn helps increase the number of vehicles we sell.

Average Monthly Unique Visitors

We define a monthly unique visitor as an individual who has visited our website within a calendar month, based on data provided by Google Analytics. We calculate average monthly unique visitors as the sum of monthly unique visitors in a given period, divided by the number of months in that period. We view average monthly unique visitors as a key indicator of the strength of our brand, the effectiveness of our advertising and merchandising campaigns, and consumer awareness of our brand.

Total Website Units

We define total website units as the number of vehicles listed on our website on the last day of a given reporting period, including vehicles available for sale, vehicles currently engaged in a purchase or reserved by a customer, and vehicles that can be reserved that generally have not yet completed the inspection and reconditioning process. We view total website units as a key measure of our growth. Growth in total website units increases the selection of vehicles available to our consumers, which we believe will allow us to increase the number of vehicles we sell over time. Moreover, growth in total website units indicates our ability to scale our vehicle purchasing, inspection and reconditioning operations. As part of our inventory strategy, over time we may choose not to expand total website units while continuing to grow sales, thereby improving other key operating metrics of the business.

Total Gross Profit per Unit

We define total gross profit per unit as the aggregate gross profit in a given period, divided by retail units sold in that period including gross profit generated from the sale of retail vehicles, gains on the sales of loans originated to finance the vehicles, commissions on sales of VSCs, GAP waiver coverage and other ancillary products, and gross profit generated from wholesale sales of vehicles. We operate an integrated business with the objective of increasing the number of retail units sold and total gross profit per unit. Gross profits generated from the sale of retail and wholesale units are interrelated. For example, our nationwide reconditioning and inspection centers are designed to produce vehicles for both retail and wholesale sales, our vehicle storage locations have shared parking for both retail and wholesale vehicles, and our integrated multi-vehicle logistics and last mile delivery network is operated in service of both retail and wholesale sales. Such interrelationships require us to share finite operational capacity and optimize joint decisions between retail and wholesale sales, in order to position us to achieve our objective of increasing total gross profit per unit. As a result, the inclusion of gross profit generated from wholesale sales of vehicles in total gross profit per unit reflects our integrated business model and the interrelationship between wholesale and retail vehicle sales. We believe the total gross profit per unit metric provides investors with the greatest opportunity to view our performance through the same lens that our management does, and therefore assists investors to best evaluate our business and measure our progress.

Number of IRCs

We previously reported our number of IRCs as a key operating metric. With the acquisition of ADESA's physical auction business, we have added an additional 56 locations and are performing reconditioning work at several of these locations as of September 30, 2022, in addition to the 17 historical Carvana-specific locations. Given the expanded reconditioning capacity associated with the acquisition of ADESA's physical auction business, we no longer consider the number of IRCs a key operating metric. During October 2022, we launched one additional IRC in California, bringing the total Carvana-specific locations to 18.

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Components of Results of Operations

Retail Vehicle Sales

Retail vehicle sales represent the aggregate sales of used vehicles to customers through our website. Revenue from retail vehicles sales is recognized upon delivery to the customer or pick up of the vehicle by the customer, and is reported net of a reserve for expected returns. Factors affecting retail vehicle sales revenue include the number of retail units sold and the average selling price of these vehicles. Changes in retail units sold are a much larger driver of changes in revenue than are changes in average selling price.

The number of retail vehicles we sell depends on the volume of traffic to our website, our population coverage, our inventory selection, the effectiveness of our branding and marketing efforts, the quality of our customer's purchase experience, our volume of referrals and repeat customers, the competitiveness of our pricing, competition from other used car dealerships and general economic conditions. On a quarterly basis, the number of retail vehicles we sell is also affected by seasonality, with demand for retail vehicles generally reaching a seasonal high point late in the first quarter of each year, commensurate with the timing of tax refunds, and diminishing through the rest of the year, with the lowest relative level of retail vehicle sales generally expected to occur in the fourth calendar quarter. However, in 2022, heightened inflation and rising interest rates have resulted in lower demand for used vehicles.

Our retail average selling price depends on the mix of vehicles we acquire, retail prices in our markets, our pricing strategy, and our average days to sale. We may choose to shift our inventory mix to higher or lower cost vehicles, or to raise or lower our prices relative to market to take advantage of supply or demand imbalances, which could temporarily lead to average selling prices increasing or decreasing. We also generally expect lower average days to sale to be associated with higher retail average selling prices due to decreased vehicle depreciation prior to sale, all other factors being equal.

Wholesale Sales and Revenues

Wholesale sales and revenues includes the aggregate proceeds we receive on vehicles we acquire and sell to wholesalers, and beginning in 2022, wholesale marketplace revenues. The vehicles we sell to wholesalers are primarily acquired from customers who sell a vehicle to us without purchasing a retail vehicle and from our customers who trade-in their existing vehicles when making a purchase from us. Factors affecting wholesale sales and revenues include the number of wholesale units sold and the average wholesale selling price of these vehicles. The average selling price of our wholesale units is primarily driven by the mix of vehicles we sell to wholesalers, as well as general supply and demand conditions in the applicable wholesale vehicle market, both of which have been impacted by the novel coronavirus ("COVID-19") in 2020, 2021, and to a lesser extent in 2022. Wholesale sales and revenues includes aggregate proceeds we receive on vehicles sold to DriveTime through competitive online auctions that are managed by an unrelated third party and through the Company's wholesale marketplace platform. Wholesale marketplace revenues include revenue earned from the sale of wholesale marketplace units by third-party sellers through our wholesale marketplace platform, including auction fees and related services revenue.

Other Sales and Revenues

We generate other sales and revenues primarily through the sales of loans we originate and sell in securitization transactions or to financing partners, reported net of a reserve for expected repurchases, commissions we receive on VSCs, sales of GAP waiver coverage, and commissions and warrants we receive on sales of auto insurance. In 2016, we entered into a master dealer agreement with DriveTime, pursuant to which we receive a commission for selling VSCs that DriveTime administers. The commission revenue we recognize on VSCs depends on the number of retail units we sell, the conversion rate of VSCs on these sales, commission rates we receive, VSC early cancellation frequency and product features. The GAP waiver coverage revenue we recognize depends on the number of retail units we sell, the number of customers that choose to finance their purchases with us, the frequency of GAP waiver coverage early cancellation, and the conversion rate of GAP waiver coverage on those sales.

In September 2022, we partnered with Root to offer an integrated auto insurance solution, through which customers may conveniently access auto insurance directly from the Carvana e-commerce platform. We receive commissions and Warrants to purchase shares of Root's Class A common stock based on the Root insurance policies sold through the Integrated Platform. The commission revenue we recognize depends on the number of retail units we sell, the conversion rate of auto policies on these sales, commission rates we receive, and forecasted attrition. The revenue we recognize from warrants as non-cash

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consideration depends on the probability of achieving certain auto policy sales thresholds within a specific timeline as well as our performance under the agreement.

We generally seek to sell the loans we originate to securitization trusts we sponsor and establish or to financing partners. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that we sell to the securitization trusts. We also sell the loans we originate under committed forward-flow arrangements, including a master purchase and sale agreement, and through fixed pool loan sales, with financing partners who generally acquire them at premium prices without recourse to us for their post-sale performance. Factors affecting revenue from these sales include the number of loans we originate, the average principal balance of the loans, the credit quality of the portfolio, and the price at which we are able to sell them in securitization transactions or to financing partners.

The number of loans we originate is driven by the number of retail vehicles sold and the percentage of our sales for which we provide financing, which is influenced by the financing terms we offer our customers relative to alternatives available to the customer. The average principal balance is driven primarily by the mix of vehicles we sell, since higher average selling prices typically mean higher average balances. The price at which we sell the loan is driven by the terms of our securitization transactions and forward-flow arrangement, applicable interest rates, and whether or not the loan includes GAP waiver coverage.

Cost of Sales

Cost of sales includes the cost to acquire, recondition, and transport vehicles associated with preparing them for resale, and beginning in 2022, wholesale marketplace cost of sales. Vehicle acquisition costs are driven by the mix of vehicles we acquire, the source of those vehicles, and supply-and-demand dynamics in the vehicle market. Reconditioning costs consist of direct costs, including parts, labor, and third-party repair expenses directly attributable to specific vehicles, as well as indirect costs, such as IRC overhead. Transportation costs consist of costs incurred to transport the vehicles from the point of acquisition to the IRC or other site. Cost of sales also includes any necessary adjustments to reflect vehicle inventory at the lower of cost or net realizable value. Wholesale marketplace cost of sales include costs related to the sale of wholesale marketplace units by third-party sellers through our wholesale marketplace platform, including labor, rent, depreciation and amortization.

Retail Vehicle Gross Profit

Retail vehicle gross profit is the vehicle sales price minus our costs of sales associated with vehicles that we list and sell on our website. Retail vehicle gross profit per unit is our aggregate retail vehicle gross profit in any measurement period divided by the number of retail units sold in that period.

Wholesale Gross Profit

Wholesale gross profit is the vehicle sales price minus our cost of sales associated with vehicles we sell to wholesalers, and beginning in 2022, wholesale marketplace revenues less wholesale marketplace cost of sales. Factors affecting wholesale gross profit include the number of wholesale units sold, the average wholesale selling price of these vehicles, the average acquisition price associated with these vehicles, and the number of wholesale marketplace units sold.

Other Gross Profit

Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in gross profit and the associated drivers are identical to changes in revenues from these products and the associated drivers.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses include expenses associated with advertising and providing customer service to customers, operating our vending machines, hubs, and physical auctions, operating our logistics and fulfillment network and other corporate overhead expenses, including expenses associated with information technology, product development, engineering, legal, accounting, finance, and business development. SG&A expenses exclude the costs of inspecting and reconditioning vehicles and transporting vehicles from the point of acquisition to the IRC, which are included in cost of sales, and payroll costs for our employees related to the development of software products for internal use, which are capitalized to software and depreciated over the estimated useful lives of the related assets.

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Interest Expense

Interest expense includes interest incurred on our Senior Notes, our Floor Plan Facilities, and our Finance Receivable Facilities (each as defined in Note 10 — Debt Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q), as well as our notes payable, finance leases, and long-term debt, which are used to fund general working capital, our inventory, our transportation fleet, and certain of our property and equipment. Interest expense excludes the interest incurred during various construction projects to build, upgrade or remodel certain facilities, which is capitalized to property and equipment and depreciated over the estimated useful lives of the related assets.

Other Expense (Income)

Other expense (income), net includes changes in fair value on our beneficial interests in securitizations, purchase price adjustment receivables, and fair value adjustments related to our Warrants to acquire Root's Class A common stock as discussed in Note 18 — Fair Value of Financial Instruments of our financial statements included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q, along with other general expenses such as gains or losses from disposals of long-lived assets.

Income Tax Provision

Income taxes are recognized based upon our anticipated underlying annual blended federal and state income tax rates adjusted, as necessary, for any discrete tax matters occurring during the period. As the sole managing member of Carvana Group, LLC (“Carvana Group”), Carvana Co. consolidates the financial results of Carvana Group. Carvana Group is treated as a partnership and therefore not subject to U.S. federal and most applicable state and local income tax purposes. Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., based on its economic interest held in Carvana Group. Carvana Co. is taxed as a corporation and is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of Carvana Group, as well as any stand-alone income or loss generated by Carvana Co. During the three and nine months ended September 30, 2022, the Company generated income tax expense of less than $1 million and $1 million, respectively, compared to less than $1 million during both the three and nine months ended September 30, 2021.

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Results of Operations

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022		2021		Change		2022		2021		Change
	(in millions, except unit and per unit amounts)						(in millions, except unit and per unit amounts)
Net sales and operating revenues:
Retail vehicle sales, net	$	2,492	$	2,650	(6.0)	%	$	8,186	$	6,954	17.7	%
Wholesale sales and revenues (1)	697		552		26.3	%	1,976		1,349		46.5	%
Other sales and revenues (2)	197		278		(29.1)	%	605		758		(20.2)	%
Total net sales and operating revenues	$	3,386	$	3,480	(2.7)	%	$	10,767	$	9,061	18.8	%
Gross profit:
Retail vehicle gross profit (3)	$	116	$	198	(41.4)	%	$	334	$	528	(36.7)	%
Wholesale gross profit (1)	46		47		(2.1)	%	114		127		(10.2)	%
Other gross profit (2)	197		278		(29.1)	%	605		758		(20.2)	%
Total gross profit	$	359	$	523	(31.4)	%	$	1,053	$	1,413	(25.5)	%
Unit sales information:
Retail vehicle unit sales	102,570		111,949		(8.4)	%	325,319		312,221		4.2	%
Wholesale vehicle unit sales	47,763		50,204		(4.9)	%	153,342		123,296		24.4	%
Per unit selling prices:
Retail vehicles	$	24,296	$	23,671	2.6	%	$	25,163	$	22,273	13.0	%
Wholesale vehicles	$	14,593	$	10,995	32.7	%	$	12,886	$	10,941	17.8	%
Per retail unit gross profit:
Retail vehicle gross profit (4)	$	1,131	$	1,769	(36.1)	%	$	1,027	$	1,691	(39.3)	%
Wholesale gross profit	448		420		6.7	%	350		407		(14.0)	%
Other gross profit	1,921		2,483		(22.6)	%	1,860		2,428		(23.4)	%
Total gross profit	$	3,500	$	4,672	(25.1)	%	$	3,237	$	4,526	(28.5)	%
Per wholesale unit gross profit:
Wholesale vehicle gross profit (5)	$	691	$	936	(26.2)	%	$	626	$	1,030	(39.2)	%
Wholesale marketplace:
Wholesale marketplace units sold	193,061		$	—	NM		304,944		$	—	NM
Wholesale marketplace revenues (6)	$	193	$	—	NM		$	301	$	—	NM
Wholesale marketplace gross profit (6) (7)	$	13	$	—	NM		$	18	$	—	NM

_________________________

(1) Includes $6, $15, $27 and $37, respectively, of wholesale revenue from related parties.

(2) Includes $39, $52, $137 and $143, respectively, of other sales and revenues from related parties.

(3) For the three and nine months ended September 30, 2022, retail vehicle gross profit includes $2 and $16, respectively, of share-based compensation expense related to the CEO Milestone Gift.

(4) For the three and nine months ended September 30, 2022, retail vehicle per unit gross profit includes $19 and $49, respectively, of share-based compensation expense related to the CEO Milestone Gift.

(5) Wholesale vehicle gross profit per wholesale unit excludes wholesale marketplace units sold and wholesale marketplace gross profit.

(6) Wholesale marketplace revenues and wholesale marketplace gross profit are included in wholesale sales and revenues and wholesale gross profit, respectively.

(7) For the three and nine months ended September 30, 2022, wholesale marketplace gross profit includes $22 and $37, respectively, of depreciation and amortization expense.

NM = Not meaningful

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Retail Vehicle Sales

Three months ended September 30, 2022 Versus 2021. Retail vehicle sales decreased by $158 million to $2.5 billion during the three months ended September 30, 2022, compared to $2.7 billion during the three months ended September 30, 2021. The decrease in revenue was primarily due to a decrease in the number of retail vehicles sold to 102,570 from 111,949 during the three months ended September 30, 2022 and 2021, respectively, which was driven by various macroeconomic factors including increased interest rates and inflation, leading to decreased vehicle affordability. The average selling price of our retail units sold increased to $24,296 from $23,671 during the three months ended September 30, 2022 and 2021, respectively, due primarily to the overall appreciation in the used vehicle market compared to the three months ended September 30, 2021.

Nine months ended September 30, 2022 Versus 2021. Retail vehicle sales increased by $1.2 billion to $8.2 billion during the nine months ended September 30, 2022 compared to $7.0 billion during the nine months ended September 30, 2021. The increase in revenue was primarily due to an increase in the number of retail vehicles sold to 325,319 from 312,221 during the nine months ended September 30, 2022 and 2021, respectively, which was driven by enhanced marketing efforts, expanded inventory selection, and increased brand awareness, partially offset by various macroeconomic factors including increased interest rates and inflation, leading to decreased vehicle affordability. The average selling price of our retail units sold also increased to $25,163 from $22,273 during the nine months ended September 30, 2022 and 2021, respectively, due primarily to the overall appreciation in the used vehicle market compared to the nine months ended September 30, 2021.

Wholesale Sales and Revenues

Three months ended September 30, 2022 Versus 2021. Wholesale sales and revenues increased by $145 million to $697 million during the three months ended September 30, 2022, compared to $552 million during the three months ended September 30, 2021. The increase in revenue was primarily driven by the acquisition of ADESA, resulting in 193,061 wholesale marketplace units sold and $193 million in wholesale revenue. Wholesale units sold decreased to 47,763 from 50,204 during the three months ended September 30, 2022 and 2021, respectively, while the average selling price of our wholesale units sold increased to $14,593 during the three months ended September 30, 2022 from $10,995 during the three months ended September 30, 2021. The decrease in wholesale units sold was due to acquiring fewer vehicles from customers, and the higher average selling price was due primarily to overall appreciation in the used vehicle market compared to the three months ended September 30, 2021.

Nine months ended September 30, 2022 Versus 2021. Wholesale vehicle sales increased by $0.6 billion to $2.0 billion during the nine months ended September 30, 2022, compared to $1.3 billion during the nine months ended September 30, 2021. The increase in revenue was primarily driven by the acquisition of ADESA, resulting in 304,944 wholesale marketplace units sold, for a total of $301 million in wholesale revenue. Additionally, wholesale units sold increased to 153,342 from 123,296 during the nine months ended September 30, 2022 and 2021, respectively, and the average selling price of our wholesale units sold increased to $12,886 during the nine months ended September 30, 2022 from $10,941 during the nine months ended September 30, 2021. The increase in wholesale units sold was due to acquiring more vehicles from customers, and the higher average selling price was due primarily to overall appreciation in the used vehicle market compared to the nine months ended September 30, 2021.

Other Sales and Revenues

Three months ended September 30, 2022 Versus 2021. Other sales and revenues decreased by $81 million to $197 million during the three months ended September 30, 2022, compared to $278 million during the three months ended September 30, 2021. This decrease was primarily due to the decrease in gain on loan sales driven by rapidly increasing benchmark interest rates and decrease in retail units sold, partially offset by the impact of higher industry-wide vehicle prices on average loan size during the three months ended September 30, 2022.

Nine months ended September 30, 2022 Versus 2021. Other sales and revenues decreased by $153 million to $605 million during the nine months ended September 30, 2022, compared to $758 million during the nine months ended September 30, 2021. The decrease is primarily due to the decrease in gain on loan sales driven by rapidly increasing benchmark interest rates,

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partially offset by the impact of the increase in retail units sold, and the impact of higher industry-wide vehicle prices on average loan size during the nine months ended September 30, 2022.

Retail Vehicle Gross Profit

Three months ended September 30, 2022 Versus 2021. Retail vehicle gross profit decreased by $82 million to $116 million during the three months ended September 30, 2022, compared to $198 million during the three months ended September 30, 2021. Retail vehicle gross profit per unit decreased to $1,131 for the three months ended September 30, 2022, compared to $1,769 for the three months ended September 30, 2021. The per unit decrease was primarily driven by higher acquisition, reconditioning and inbound transport costs, partially offset by a higher ratio of customer-sourced vehicles sold during the three months ended September 30, 2022.

Nine months ended September 30, 2022 Versus 2021. Retail vehicle gross profit decreased by $194 million to $334 million during the nine months ended September 30, 2022, compared to $528 million during the nine months ended September 30, 2021. This decrease was driven primarily by a decrease in retail vehicle gross profit per unit to $1,027 for the nine months ended September 30, 2022 compared to $1,691 for the nine months ended September 30, 2021, partially offset by an increase in retail units sold. The per unit decrease was primarily driven by higher acquisition, reconditioning and inbound transport costs, partially offset by a higher ratio of customer-sourced vehicles sold during the nine months ended September 30, 2022.

Wholesale Gross Profit

Three months ended September 30, 2022 Versus 2021. Wholesale gross profit decreased by $1 million to $46 million during the three months ended September 30, 2022, compared to $47 million during the three months ended September 30, 2021. This was primarily due to a decrease in wholesale units sold to 47,763 during the three months ended September 30, 2022 from 50,204 during the three months ended September 30, 2021 and a decrease in wholesale gross profit per wholesale unit to $691 in the three months ended September 30, 2022 compared to $936 in the three months ended September 30, 2021, partially offset by $13 million from the acquisition of ADESA. The decrease in wholesale gross profit per wholesale unit was primarily driven by the difference between our wholesale acquisition price and sales price and the decrease in wholesale units sold was primarily driven by acquiring less vehicles from customers compared to the three months ended September 30, 2021.

Nine months ended September 30, 2022 Versus 2021. Wholesale gross profit decreased by $13 million to $114 million during the nine months ended September 30, 2022, compared to $127 million during the nine months ended September 30, 2021. This decrease was driven primarily by a decrease in wholesale vehicle gross profit per wholesale unit to $626 from $1,030 in the nine months ended September 30, 2022, and 2021, respectively, partially offset by an increase in wholesale units sold to 153,342 from 123,296, respectively, as well as $18 million from the acquisition of ADESA. The increase in the number of wholesale units sold was primarily due to acquiring more vehicles from customers, while the decrease in gross profit per wholesale unit was driven by the difference between our wholesale acquisition price and sales price compared to the nine months ended September 30, 2021.

Other Gross Profit

Other sales and revenues consist of 100% gross margin products for which gross profit equals revenue. Therefore, changes in other gross profit and the associated drivers are identical to changes in other sales and revenues and the associated drivers.

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Components of SG&A

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Compensation and benefits (1)	$	221	$	181	$	705	$	455
CEO Milestone Gift (2)	2		—		26		—
Advertising	117		126		403		345
Market occupancy (3)	23		18		70		46
Logistics (4)	57		40		184		104
Other (5)	236		181		716		463
Total	$	656	$	546	$	2,104	$	1,413
Depreciation and amortization	57		26		143		72
Share-based compensation, excluding Gift	14		11		33		28
Total, excluding depreciation and amortization and share-based compensation	$	583	$	509	$	1,902	$	1,313

_________________________

(1) Compensation and benefits includes all payroll and related costs, including benefits, payroll taxes, and equity-based compensation, except those related to preparing vehicles for sale, which are included in cost of sales, and those related to the development of software products for internal use, which are capitalized to software and depreciated over the estimated useful lives of the related assets.

(2) CEO Milestone Gift includes all equity-based compensation and payroll tax costs associated with the Gift, except those Gift costs related to preparing vehicles for sale, which are included in cost of sales.

(3) Market occupancy costs includes occupancy costs of our vending machine and hubs. It excludes occupancy costs related to reconditioning vehicles which are included in cost of sales and the portion related to corporate occupancy which are included in other costs.

(4) Logistics includes fuel, maintenance and depreciation related to operating our own transportation fleet, and third-party transportation fees, except the portion related to inbound transportation, which is included in cost of sales.

(5) Other costs include all other selling, general and administrative expenses such as IT expenses, corporate occupancy, professional services and insurance, limited warranty, and title and registration.

Selling, general and administrative expenses increased by $110 million to $656 million during the three months ended September 30, 2022, compared to $546 million during the three months ended September 30, 2021. The increase was partially due to an increase in compensation and benefits of $40 million which was primarily driven by expansion of our teams to support growth, as well as compensation related to the team acquired in the acquisition of ADESA. Market occupancy, logistics, and other expenses also increased during the three and nine months ended September 30, 2022 compared to the respective prior year period primarily due to building capacity for increases in the number of units sold and in population coverage, and in preparation for future growth. These increases were offset by a $9 million decrease in advertising expenses during the three months ended September 30, 2022.

Selling, general and administrative expenses increased by $691 million to $2,104 million during the nine months ended September 30, 2022, compared to $1,413 million during the nine months ended September 30, 2021. The increase was partially due to an increase in compensation and benefits by $250 million which was primarily driven by expansion of our teams to support our growth, as well as the acquisition of ADESA.

In addition, during the nine months ended September 30, 2022, we incurred $26 million of compensation expense related to the CEO Milestone Gift within selling, general and administrative expense, which is presented separately above, compared to none in the nine months ended September 30, 2021.

The increase in selling, general and administrative expenses during the nine months ended September 30, 2022 was also driven by increased advertising expense of $58 million due to an increase in advertising to drive growth in units sold and vehicles acquired from customers. Market occupancy, logistics, and other expenses also increased during the nine months ended September 30, 2022 compared to the respective prior year period primarily due to building capacity for increases in the number of units sold and in population coverage, and in preparation for future growth.

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Interest Expense

Interest expense increased by $105 million to $153 million during the three months ended September 30, 2022, compared to $48 million during the three months ended September 30, 2021, and increased by $212 million to $333 million during the nine months ended September 30, 2022, compared to $121 million during the nine months ended September 30, 2021. The increase is primarily due to increased interest incurred on additional senior unsecured notes issued by the Company in March 2021, August 2021, and May 2022, along with increased interest expense incurred on sale leaseback financing since September 30, 2021.

Other Expense (Income), Net

Other expense (income), net changed by $61 million to expense of $58 million during the three months ended September 30, 2022 compared to income of $3 million during the three months ended September 30, 2021. Other expense (income), net changed by $84 million to expense of $68 million during the nine months ended September 30, 2022 compared to income of $16 million during the nine months ended September 30, 2021. The change is primarily due to fair value adjustments on our Warrants to acquire Root's Class A common stock and fair value adjustments on our retained beneficial interests in securitizations and purchase price adjustment receivables.

Non-GAAP Financial Measures

To supplement the consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we also present the following non-GAAP measures: Adjusted EBITDA, Adjusted EBITDA, excluding non-Gift share-based compensation, Adjusted EBITDA Margin, and Adjusted EBITDA Margin, excluding non-Gift share-based compensation. We historically presented EBITDA and EBITDA Margin, however we believe the presentation of Adjusted EBITDA, Adjusted EBITDA, excluding non-Gift share-based compensation, Adjusted EBITDA Margin, and Adjusted EBITDA Margin, excluding non-Gift share-based compensation in conjunction with U.S. GAAP financial measures provides investors with increased transparency into financial measures used by our management team, and it also improves investors’ understanding of our underlying operating performance and their ability to analyze our ongoing operating trends. All historic non-GAAP financial measures have been reconciled with the most directly comparable U.S. GAAP financial measures.

Adjusted EBITDA, Adjusted EBITDA, excluding non-Gift share-based compensation, Adjusted EBITDA Margin, and Adjusted EBITDA Margin, excluding non-Gift share-based compensation

Adjusted EBITDA, Adjusted EBITDA, excluding non-Gift share-based compensation, Adjusted EBITDA Margin, and Adjusted EBITDA Margin, excluding non-Gift share-based compensation are supplemental measures of operating performance that do not represent and should not be considered an alternative to net (loss) income or cash flow from operations, as determined by U.S. GAAP. Adjusted EBITDA is defined as net (loss) income plus income tax expense, interest expense, other (income) expense, net, depreciation and amortization, and share-based compensation related to the CEO Milestone Gift, Following our acquisition of ADESA, we are also excluding depreciation and amortization expense which is expensed as part of cost of sales which has historically been only a small component of cost of sales. Adjusted EBITDA, excluding non-Gift share-based compensation is defined as Adjusted EBITDA plus share-based compensation unrelated to the CEO Milestone Gift. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of total revenues. Adjusted EBITDA Margin, excluding non-Gift share-based compensation is Adjusted EBITDA, excluding non-Gift share-based compensation as a percentage of total revenues. We use Adjusted EBITDA and Adjusted EBITDA, excluding non-Gift share-based compensation to measure the operating performance of our business and Adjusted EBITDA Margin and Adjusted EBITDA Margin, excluding non-Gift share-based compensation to measure our operating performance relative to our total revenues. We believe these metrics are useful measures to us and to our investors because they exclude certain financial and capital structure items that we do not believe directly reflect our core operations and may not be indicative of our recurring operations, in part because they may vary widely across time and within our industry independent of the performance of our core operations. We believe that excluding these items enables us to more effectively evaluate our performance period-over-period and relative to our competitors. Adjusted EBITDA, Adjusted EBITDA, excluding non-Gift share-based compensation, Adjusted EBITDA Margin, and Adjusted EBITDA Margin, excluding non-Gift share-based compensation may not be comparable to similarly titled measures provided by other companies due to potential differences in methods of calculations. A reconciliation of Adjusted EBITDA and Adjusted EBITDA, excluding non-Gift share-based compensation to net loss, which is the most directly

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comparable U.S. GAAP measure, and calculation of Adjusted EBITDA Margin and Adjusted EBITDA Margin, excluding non-Gift share-based compensation is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(dollars in millions)
Net loss	$	(508)		$	(68)		$	(1,453)		$	(105)
Income tax provision	$	—		$	—		$	1		$	—
Interest expense	153			48			333			121
Other (income) expense, net	58			(3)			68			(16)
Depreciation and amortization expense in cost of sales	36			6			71			17
Depreciation and amortization expense in SG&A	57			26			143			72
CEO Milestone Gift in cost of sales	2			—			16			—
CEO Milestone Gift in SG&A	2			—			26			—
Adjusted EBITDA (1)	$	(200)		$	9		$	(795)		$	89
Share-based compensation, excluding Gift	14			11			33			28
Adjusted EBITDA, excluding non-Gift share-based compensation (1)	(186)			20			(762)			117
Total revenues	3,386			3,480			10,767			9,061
Net loss margin	(15.0)		%	(2.0)		%	(13.5)		%	(1.2)		%
Adjusted EBITDA margin (2)	(5.9)		%	0.3		%	(7.4)		%	1.0		%
Adjusted EBITDA margin, excluding non-Gift share-based compensation (2)	(5.5)		%	0.6		%	(7.1)		%	1.3		%

(1) For the three and nine months ended September 30, 2022, includes $0 and $14, respectively, of expenses associated with the previously announced workforce reduction.

(2) For the three and nine months ended September 30, 2022, includes 0.0% and 0.1%, respectively, of expenses associated with the previously announced workforce reduction.

Liquidity and Capital Resources

General

We generate cash from the sale of retail vehicles, the sale of wholesale vehicles, and proceeds from the sale of finance receivables originated in connection with the sale of retail vehicles. We generate additional cash flows through our financing activities including our short-term revolving inventory and finance receivable facilities, real estate and equipment financing, the issuance of long-term notes, and new issuances of equity. Historically, cash generated from financing activities has funded growth and expansion into new markets and strategic initiatives and we expect this to continue in the future.

Our ability to service our debt and fund working capital, capital expenditures, and business development efforts will depend on our ability to generate cash from operating and financing activities, which is subject to our future operating performance, as well as to general economic, financial, competitive, legislative, regulatory, and other conditions, some of which may be beyond our control. Our future capital requirements will depend on many factors, including our rate of revenue growth, our construction of IRCs and vending machines, the timing and extent of our spending to support our technology and software development efforts, and increased population coverage.

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We had the following liquidity resources available as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Cash and cash equivalents	$	316	$	403
Availability under short-term revolving facilities (1)	1,956		438
Committed liquidity resources available	$	2,272	$	841
Unpledged vehicle inventory not included above	52		665
Unpledged real estate not included above (2)	1,995		677
Unpledged beneficial interests in securitizations	67		100
Total liquidity resources	$	4,386	$	2,283

_________________________

(1) Based on pledging all eligible vehicles and finance receivables under the available capacity in our floor plan and finance receivable facilities, excluding the impact to restricted cash requirements.

(2) Total unpledged gross real estate assets minus committed sale leasebacks. Includes $1.1 billion of ADESA unpledged real estate assets based on preliminary valuations.

Our total liquidity resources is composed of cash and equivalents, availability under existing credit facilities, and additional unpledged assets, including vehicle inventory, finance receivables, real estate, and securities, on our balance sheet that can be financed using traditional asset-based financing sources.

Cash and cash equivalents includes cash deposits and highly liquid investment instruments with original maturities of three months or less, such as money market funds.

Availability under short-term revolving facilities is the available amount we can borrow under our existing vehicle inventory floor plan and finance receivable facilities based on the pledgable value of vehicle inventory and finance receivables on our balance sheet on the period end date. Availability under short-term revolving facilities is distinct from the total commitment amount of these facilities because it represents the currently borrowable amount, rather than committed future amounts that could be borrowed to finance future additional assets.

As of September 30, 2022 and December 31, 2021, the short-term revolving facilities had a total commitment of $4.8 billion and $4.3 billion, an outstanding balance of $575 million and $2.1 billion, and unused capacity of $4.2 billion and $2.2 billion, respectively.

Availability under real estate agreements is the available amount we can borrow under our existing real estate financing agreements based on the value of existing real estate on our balance sheet. From time to time, we may enter into committed real estate financing agreements that allow for future pledging of real estate assets on a flexible timeline. We began using committed real estate financing agreements in 2017 and may do so in the future.

Unpledged vehicle inventory and finance receivables is the value of vehicle inventory and finance receivables on our balance sheet on the period end date beyond that covered by committed financing agreements.

Unpledged real estate assets include real estate acquired as part of the acquisition of ADESA's U.S. physical auction business, IRC, vending machine, and hub real estate assets that have not been sold and are not pledged on the period end date. Since our first sale-leaseback transaction in 2017, we have historically had flexible access to real estate financing and expect to continue to use various forms of real estate financing in the future.

Unpledged beneficial interests in securitizations includes retained beneficial interests in securitizations that have not been previously pledged or sold. We historically have financed the majority of our retained beneficial interests in securitizations and expect to continue to do so in the future.

To optimize our cost of capital, in any given period we may choose not to maximize borrowings on our short-term revolving facilities, maximize revolving commitment size, or immediately sale-leaseback or pledge real estate and retained

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beneficial interests in securitizations. This has the benefit of reducing interest expense and debt issuance costs and providing flexibility to minimize financing costs over time.

We consider our total liquidity resources as an input into our planning. In general, changes in total liquidity resources fall into two broad categories: changes due to current business operations and changes due to investments in automotive retail assets.

Changes in liquidity due to current business operations include Adjusted EBITDA, excluding non-Gift share-based compensation, non-real estate capital expenditures, including technology, furniture, fixtures, and equipment, and changes in traditional working capital, including accounts receivable, accounts payable, accrued expenses, and other miscellaneous assets and liabilities.

In the ordinary course of business, we sponsor and engage in securitization transactions to sell our finance receivables to a diverse pool of investors. These securitizations involve unconsolidated variable interest entities in which we retain at least 5% of the credit risk of the underlying finance receivable by holding at least 5% of the notes and certificates issued by these entities. We are exposed to market risk in the securitization market. See Note 9 — Securitizations and Variable Interest Entities, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, for further discussion regarding our transactions with unconsolidated variable interest entities.

In addition, as a growing automotive retailer, we also invest in and generate several types of automotive retail assets, including vehicle inventory, finance receivables, retained beneficial interests in securitizations, and real estate. To maximize capital efficiency, we generally seek to finance these assets with matched sources of asset-based financing, including short-term revolving facilities for vehicle inventory and finance receivables, beneficial interests financing for retained beneficial interests in securitizations, and sale-leaseback or other real estate financing for IRCs and vending machines. We have historically used these sources of financing to finance our investment in these assets and expect to continue to do so in the future.

As of September 30, 2022 and December 31, 2021, our outstanding principal amount of indebtedness, including finance leases, was $7.5 billion and $5.4 billion, respectively, summarized in the table below. See Note 10 — Debt Instruments and Note 16 — Leases included in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q for further information on our debt and finance leases.

	September 30, 2022		December 31, 2021
	(in millions)
Asset-Based Financing:
Inventory	$	575	$	1,877
Finance receivables and beneficial interests	298		458
Transportation fleet(1)	402		212
Real estate(2)	489		450
Total asset-based financing	1,764		2,997
Senior Notes	5,725		2,450
Total debt	7,489		5,447
Less: unamortized debt issuance costs(3)	(85)		(34)
Total debt, net	$	7,404	$	5,413

_________________________

(1) Amount includes notes payable and finance leases.

(2) Amount includes real estate financing and notes payable.

(3) The unamortized debt issuance costs related to long-term debt are presented as a reduction of the carrying amount of the corresponding liabilities on our consolidated balance sheets. Unamortized debt issuance costs related to revolving debt agreements are presented within other assets on our consolidated balance sheets and not included here.

On April 26, 2022, we completed an equity offering of 15.6 million shares of Class A common stock for net proceeds of $1.2 billion. Also, on May 6, 2022, we issued $3.275 billion in senior unsecured notes due 2030. We are using the net proceeds from the Class A common stock offering for general corporate purposes and to pay any costs, fees and expenses incurred by us in connection with the offering. We used the net proceeds from the issuance and sale of the 2030 Notes (a) to finance the

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$2.2 billion ADESA acquisition and other ancillary transactions in connection therewith, and to pay related fees and expenses in connection therewith and (b) for working capital, capital expenditures and other general corporate purposes.

Cash Flows

The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Net cash used in operating activities	$	(585)	$	(1,422)
Net cash used in investing activities	(2,568)		(352)
Net cash provided by financing activities	2,994		1,849
Net (decrease) increase in cash, cash equivalents and restricted cash	(159)		75
Cash, cash equivalents and restricted cash at beginning of period	636		329
Cash, cash equivalents and restricted cash at end of period	$	477	$	404

Operating Activities

Our primary sources of operating cash flows result from the sales of retail vehicles, wholesale vehicles, loans we originate, and ancillary products. Our primary uses of cash from operating activities are purchases of inventory, personnel-related expenses, and cash used to acquire customers. Cash used in operating activities was $585 million and $1.4 billion during the nine months ended September 30, 2022 and 2021, respectively, a decrease of $837 million, primarily due to decreases in cash used to acquire vehicle inventory, partially offset by increased net loss as a result of increased selling, general and administrative expenses and reconditioning costs.

Investing Activities

Our primary use of cash for investing activities is purchases of property and equipment to expand our operations. Cash used in investing activities was $2.6 billion and $352 million during the nine months ended September 30, 2022 and 2021, respectively, an increase of $2.2 billion, primarily driven by our acquisition of the U.S. physical auction business of ADESA for approximately $2.2 billion.

Financing Activities

Cash flows from financing activities primarily relate to our short and long-term debt activity and proceeds from equity issuances which have been used to provide working capital, finance the $2.2 billion acquisition of ADESA, and for general corporate purposes, including paying down our short-term revolving facilities. Cash provided by financing activities was $3.0 billion and $1.8 billion during the nine months ended September 30, 2022 and 2021, respectively, an increase of $1.1 billion. The change primarily relates to increased net proceeds from long-term debt primarily from the issuance of our $3.275 billion Senior Notes in May 2022 along with proceeds from the issuance of Class A common stock during the nine months ended September 30, 2022, partially offset by decreased net proceeds from short-term revolving facilities.

Contractual Obligations and Commitments

As of September 30, 2022, there have been no material changes to the contractual obligations or commitments previously disclosed in our most recent Annual Report on Form 10-K, filed February 24, 2022 other than the issuance of $3.275 billion in Senior Notes in May 2022 and the purchase obligations for services of $174 million over the next seven years.

Fair Value Measurements

We report money market securities, certain receivables, Warrants to acquire Root's Class A common stock and beneficial interests in securitizations at fair value. See Note 18 — Fair Value of Financial Instruments, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

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Critical Accounting Estimates

Except for the following, there have been no material changes to our critical accounting estimates from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our most recent Annual Report on Form 10-K, filed on February 24, 2022.

Business Combination Purchase Price Allocation

The purchase price of an acquisition is allocated to the identifiable assets acquired and liabilities assumed based on their fair values at the date of acquisition, with the excess purchase price being recorded as goodwill. The purchase price allocation for ADESA is preliminary and will continue to be assessed during the measurement period, which may be up to one year from the acquisition date, with any adjustments being recorded against goodwill. See Note 3 — Business Combinations, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for a description of the preliminary status of the accounting for the ADESA acquisition.

The allocation of purchase price to the tangible and identifiable intangible assets acquired is specifically complex because of the significant estimates and assumptions involved in determining their fair values. Due to this higher degree of complexity, we obtained the assistance of outside valuation experts in the allocation of purchase price to the tangible and identifiable intangible assets acquired. While outside valuation experts were used, management has the ultimate responsibility for the valuation methods, models and inputs used and the resulting purchase price allocation. Critical estimates used in valuing tangible assets associated with the ADESA acquisition include, but are not limited to, the similarity of the acquired real property to market comparable transactions, costs of similar personal property in new condition, and economic obsolescence rates. Critical estimates used in valuing identifiable intangible assets associated with the ADESA acquisition include, but are not limited to, revenues and attrition rate.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:

•future financial position;

•business strategy;

•budgets, projected costs, and plans;

•future industry growth;

•financing sources;

•the impact of litigation, government inquiries, and investigations; and

•all other statements regarding our intent, plans, beliefs, or expectations or those of our directors or officers.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, the following:

•the impact on our business from macroeconomic conditions, including heightened inflation and rising interest rates;

•our acquisition of ADESA from KAR Auction Services, Inc., including the ability to successfully integrate the operations of the acquired businesses;

•our history of losses and ability to achieve or maintain profitability in the future;

•our ability to effectively manage our rapid growth;

•our ability to maintain customer service quality and reputational integrity and enhance our brand;

•our limited operating history;

•the seasonal and other fluctuations in our quarterly operating results, including as a result of COVID-19 and other future epidemics and public health crises;

•our relationship with DriveTime and its affiliates;

•our minority equity investment in Root, Inc.;

•our management’s accounting judgments and estimates, as well as changes to accounting policies;

•our ability to compete in the highly competitive industry in which we participate;

•the changes in prices of new and used vehicles;

56

•our ability to acquire desirable inventory;

•our ability to sell our inventory expeditiously;

•our access to structured finance, securitization, or derivative markets at competitive rates and in sufficient amounts;

•our dependence on the sale of automotive finance receivables for a substantial portion of our gross profits;

•our exposure to credit losses and prepayments on our interests in automotive finance receivables;

•our reliance on credit data for the automotive finance receivables we sell;

•our ability to successfully market and brand our business;

•our reliance on internet searches to drive traffic to our website;

•our ability to comply with the laws and regulations to which we are subject;

•the changes in the laws and regulations to which we are subject;

•our ability to comply with the Telephone Consumer Protection Act of 1991;

•the evolution of regulation of the internet and e-commerce;

•our ability to grow complementary product and service offerings;

•our ability to address the shift to mobile device technology by our customers;

•risks related to the larger automotive ecosystem;

•the geographic concentration where we provide services and recondition and store vehicle inventory;

•our ability to obtain affordable inventory insurance;

•our ability to raise additional capital;

•our ability to maintain adequate relationships with the lenders that finance our vehicle inventory purchases;

•the representations we make with regard to our finance receivables we sell;

•our reliance on our proprietary credit scoring model in the forecasting of loss rates;

•our reliance on internal and external logistics to transport our vehicle inventory;

•the risks associated with the construction and operation of our IRCs, hubs and vending machines, including our dependence on one supplier for construction and maintenance for our vending machines;

•our ability to finance IRCs and vending machines;

•our ability to protect the personal information and other data that we collect, process, and store;

•disruptions in availability and functionality of our website;

•our ability to protect our intellectual property, technology, and confidential information;

•our ability to defend against claims that our employees, consultants or advisors have wrongfully used or disclosed trade secrets or intellectual property;

57

•our ability to defend against intellectual property disputes;

•our ability to comply with the terms of open source licenses;

•conditions affecting automotive manufacturers, including manufacturer recalls;

•our reliance on third party technology to complete critical business functions;

•our dependence on key personnel to operate our business;

•the resources required to comply with public company obligations;

•the diversion of management’s attention and other disruptions associated with potential future acquisitions;

•the restrictions that could limit the flexibility in operating our business imposed by the covenants contained in the indentures governing our Senior Notes;

•the legal proceedings to which we may be subject in the ordinary course of business;

•risks relating to our corporate structure and tax receivable agreements; and

•other factors disclosed in the section titled "Risk Factors" in our most recent Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our quantitative and qualitative disclosures about market risk from those described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our most recent Annual Report on Form 10-K, filed on February 24, 2022, other than those disclosed below.

Inflation and Interest Rate Risk

We are affected by inflationary factors such as decreased vehicle affordability, including as a result of rising interest rates, and increases in supply chain and logistics costs, materials costs, and labor costs. We do not believe that inflation has historically had a material effect on our business, financial condition, or results of operations. However, given the current macroeconomic environment and its effect on our results of operations in the third quarter of 2022, which were primarily fewer units sold, we will continue to look for ways to manage any changes in consumer purchasing behavior and increased costs, both of which may continue to adversely affect our business, financial condition, and results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to

58

management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal controls over financial reporting that occurred during the three months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and legal actions that arise in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity and capital resources.

Future litigation may be necessary to defend ourselves and our partners by determining the scope, enforceability and validity of third party proprietary rights or to establish our proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. For more information, see “Legal Matters” in Note 17 — Commitments and Contingencies, included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, filed on February 24, 2022 and in our Quarterly Report on Form 10-Q filed May 10, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit No.	Description
10.1*	Third Amended and Restated Inventory Financing and Security Agreement, dated as of September 22, 2022, among Carvana, LLC, Ally Bank, and Ally Financial Inc. (incorporated by reference to Exhibit 10.1 to Carvana Co.'s Current Report on Form 8-K filed with the SEC on September 22, 2022).
10.2*	Inventory Financing and Security Agreement, dated as of September 22, 2022, among Carvana, LLC, Ally Bank, and Ally Financial Inc. (incorporated by reference to Exhibit 10.2 to Carvana Co.'s Current Report on Form 8-K filed with the SEC on September 22, 2022).
10.3*	Second Amended and Restated Master Purchase and Sale Agreement, dated November 1, 2022, among Ally Bank, Ally Financial Inc. and Carvana Auto Receivables 2016-1 LLC, filed herewith.
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a), filed herewith.
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a), filed herewith.
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, furnished herewith.
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, furnished herewith.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

*Certain portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:	November 3, 2022		Carvana Co.
			(Registrant)
		By:	/s/ Mark Jenkins
			Mark Jenkins
			Chief Financial Officer
			(On behalf of the Registrant and as Principal Financial Officer)

62

EX-10.3

Exhibit 10.3

SECOND AMENDED AND RESTATED

MASTER PURCHASE AND SALE AGREEMENT

among

Carvana Auto Receivables 2016-1 LLC

as Transferor

and

ALLY BANK and ALLY FINANCIAL INC.

each a Purchaser

DATED AS OF NOVEMBER 1, 2022

Certain information has been excluded because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

TABLE OF CONTENTS

PAGE

ARTICLE I DEFINITIONS AND USAGE			1
	Section 1.1	Definitions	1
ARTICLE II COMMITMENT TO SELL RECEIVABLES POOLS			2
	Section 2.1	Commitments to Sell and Purchase Receivables Pools	2
	Section 2.2	Payment of Second Step Receivables Purchase Price	4
	Section 2.3	Pricing Model	4
	Section 2.4	Termination Options.	5
	Section 2.5	Taxes.	8
	Section 2.6	Loss and Liquidation Data.	9
	Section 2.7	Re-Liening Trigger Events	9
ARTICLE III PURCHASE AND SALE OF RECEIVABLES			10
	Section 3.1	Sale of Receivables	10
	Section 3.2	The Closing	13
ARTICLE IV			13
CLOSINGS			13
	Section 4.1	Effecting Purchases	13
ARTICLE V REPRESENTATIONS AND WARRANTIES			14
	Section 5.1	Representations and Warranties of the Purchasers.	14
	Section 5.2	Representations and Warranties of the Transferor	15
ARTICLE VI CONDITIONS			23
	Section 6.1	Conditions to Effectiveness	23
	Section 6.2	Conditions to Obligation of the Purchasers	24
	Section 6.3	Conditions to Obligation of the Transferor	27
ARTICLE VII COVENANTS OF THE TRANSFEROR			27
	Section 7.1	Protection of Right, Title and Interest	27
	Section 7.2	Other Liens or Interests	29
	Section 7.3	Perfection Costs and Expenses	29
	Section 7.4	Separateness	29
	Section 7.5	Notice of Servicer Termination; Etc.	29
	Section 7.6	Conduct of Business; Ownership	29
	Section 7.7	Collections	30
	Section 7.8	Consolidations, Mergers and Sales of Assets.	30
	Section 7.9	Master Sale Agreement	30
	Section 7.10	Operation of the Transferor	30
	Section 7.11	Selection Standards; Quarterly Meetings.	30
	Section 7.12	Furnishing of Information and Inspection of Records	31

	Section 7.13	Compliance with Laws, Etc.	31
	Section 7.14	Indemnity.	31
	Section 7.15	Publicity	32
	Section 7.16	No Solicitation	33
	Section 7.17	Remediation	33
	Section 7.18	Quarterly Statements as to Compliance	33
	Section 7.19	Additional Covenants	33
	Section 7.20	Negative Covenants	36
	Section 7.21	Accountant’s Letter	38
ARTICLE VIII MISCELLANEOUS PROVISIONS			39
	Section 8.1	Obligations of the Transferor	39
	Section 8.2	Repurchase of Receivables Upon Breach by the Transferor	39
	Section 8.3	Assignment of Warranty Receivables	39
	Section 8.4	Amendment	39
	Section 8.5	Waivers	39
	Section 8.6	Notices	40
	Section 8.7	Costs and Expenses	40
	Section 8.8	Survival	41
	Section 8.9	Headings and Cross-References	41
	Section 8.10	Governing Law, Submission to Jurisdiction, Etc	41
	Section 8.11	Counterparts; Facsimile and Electronic Signatures	41
	Section 8.12	Further Assurances	42
	Section 8.13	No Reliance	42
	Section 8.14	Severability of Provisions	42
	Section 8.15	Assignment	42
	Section 8.16	No Third Party Beneficiaries	42
	Section 8.17	No Petition Covenant	42
	Section 8.18	Special Acknowledgement of Purchasers	43
	Section 8.19	Effect of Amendment and Restatement	43
	Section 8.20	Recourse Limited to Collateral; Subordination	43

EXHIBITS

EXHIBIT A FORM OF SECOND STEP POOL SUPPLEMENT

EXHIBIT B [RESERVED]

EXHIBIT C FORM OF NOTICE OF CLOSING DATE

EXHIBIT D PURCHASE-BID FILE TAPE DATA LAYOUT

EXHIBIT E CREDIT POLICY

EXHIBIT F SYSTEM DESCRIPTION

EXHIBIT G SYSTEM DESCRIPTION

EXHIBIT H COLLECTION ACCOUNT WIRING INFORMATION

APPENDIX

APPENDIX A Definitions

SECOND AMENDED AND RESTATED MASTER PURCHASE AND SALE

AGREEMENT

THIS SECOND AMENDED AND RESTATED MASTER PURCHASE AND SALE AGREEMENT (as from time to time amended, supplemented or otherwise modified and in effect, this “Agreement”) is made as of November 1, 2022, among Carvana Auto Receivables 2016-1 LLC, a Delaware limited liability company (the “Transferor”), Ally Bank., a Utah chartered bank, and Ally Financial Inc., a Delaware corporation (each a “Purchaser” and collectively, the “Purchasers”).

RECITALS:

In the regular course of its business, Carvana, LLC (the “Seller”) sells used automobiles and light trucks and originates automobile and light truck retail installment sale contracts secured by such automobiles and light trucks.

1.On the Original Execution Date, the Seller and the Transferor have entered into the Master Sale Agreement (Flow) (the “Master Sale Agreement”) pursuant to which the Seller has agreed to sell, from time to time, Receivables and related property to the Transferor pursuant to the terms and conditions set forth therein.

2.The Transferor wishes to sell, and the Purchasers wish to purchase, from time to time, Receivables and related property (including the security interests in the related Financed Vehicles) pursuant to the terms of this Agreement.

3.Bridgecrest has agreed to service the Receivables Pools and related Purchased Property for the benefit of the Purchasers pursuant to the Master Servicing Agreement.

4.The Transferor and the Purchasers wish to provide in this Agreement, among other things, the terms on which the Receivables Pools and related property are to be sold by the Transferor to the Purchasers.

In consideration of the foregoing, other good and valuable consideration, and the mutual terms and covenants contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND USAGE

Section 1.1 Definitions. Certain capitalized terms used in the above recitals and in this Agreement are defined in and shall have the respective meanings assigned to them in (or by reference in) Appendix A to this Agreement. All references herein to “the Agreement” or “this Agreement” are to this Master Purchase and Sale Agreement as it may be amended, supplemented or modified from time to time, the exhibits and attachments hereto and the capitalized terms used herein which are defined in such Appendix A, and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Agreement unless otherwise specified. The rules of construction and usage set forth in such Appendix A shall be applicable to this Agreement.

ARTICLE II

COMMITMENT TO SELL RECEIVABLES POOLS

Section 2.1 Commitments to Sell and Purchase Receivables Pools

(a)Transferor Obligation. Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements set forth herein, the Transferor commits to sell to the Purchasers one Receivables Pool each calendar quarter during the Commitment Period, with a total Cutoff Date Aggregate Outstanding Principal Balance for all such Receivables Pools sold during the Commitment Period, taken together, equal to the Commitment Amount and each Receivables Pool sold to the Purchaser shall have a Cutoff Date Aggregate Outstanding Principal Balance

equal to at least $300,000,000, other than during the period from October 1, 2020 through March 22, 2021 when the Purchase Percentage will be 0%, (adjusted downward for a nonmaterial amount resulting from application of the Selection Procedures, including the Freestyle Selection, by the Purchase Percentage, other than during the period from October 1, 2020 through March 22, 2021 when the Purchase Percentage will be 0%), of the aggregate principal balance of quarterly pools of receivables originated by the Seller that meet the criteria described in the definition of “Eligible Receivable” and such other documented administrative criteria as the Purchasers may agree to from time to time during the second calendar week preceding the calendar week in which the related Closing Date shall occur related to such Receivables Pool during the Commitment Period; provided, that the Transferor shall not be obligated to sell any Receivables Pool if the related Second Step Receivables Purchase Price for such Receivables Pool is less than or equal to the Cutoff Date Aggregate Outstanding Principal Balance (collectively, the “Transferor Obligation”); provided, further, notwithstanding the maximum FICO score described in clause (xxxiv) in the definition of “Eligible Receivable,” if the Seller elects to consummate a Limited Sale Option under the Master Sale Agreement, then the Transferor shall include in any related Receivables Pool that has a related Cutoff Date on and including February 24, 2019 through and including March 24, 2019, all Receivables (without regard to the Purchase Percentage or application of the Freestyle Selection Criteria) where the related Obligors have a FICO score of more than the Upper Bound FICO Score and that otherwise meet the definition of “Eligible Receivable” (other than the Upper Bound FICO Score described in clause (xxxiv) thereof) originated during the related Origination Period; providedfurther that, in connection with a Limited Sale Option, if the Transferor sells such Receivables with FICO scores of more than the Upper Bound FICO Score, the Transferor shall also be required to include in such Receivables Pool all Eligible Receivables originated during the related Origination Period with FICO scores of not less than [***] and not more than the Upper Bound FICO Score that otherwise meet the definition of “Eligible Receivable” with randomization codes of the related contract numbers that are greater than the Purchase Percentage; provided, further, that the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Flex Receivables sold during the period beginning April 30, 2020 through and including July 2, 2020, taken together, shall not exceed $[***] (or such other later dates or higher amount as agreed to by the Purchasers in their sole discretion). Notwithstanding the foregoing or anything to the contrary herein, solely for the purposes of this Section 2.1(a), any Receivable sold on June 30, 2020, September 29, 2020, or December 30, 2020 shall not be deemed to be a Flex Receivable.

(b)Purchaser Obligation. Upon the terms and subject to the conditions set forth in this Agreement, including Section 2.1(c) below, and in reliance on the covenants, representations, warranties and agreements herein set forth, the Purchasers commit to purchase one Receivables Pool each calendar quarter during the Commitment Period on each Closing Date designated by the Transferor pursuant to Section 4.1(a); provided that the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Receivables Pools purchased during the Commitment Period shall not exceed the Commitment Amount and the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Flex Receivables purchased during the period beginning April 30, 2020 through and including July 2, 2020, taken together, shall not exceed $[***], or such other later dates or higher amount with respect to Flex Receivables as agreed to by the Purchasers in their sole discretion (collectively, the “Purchaser Obligation”). Notwithstanding the foregoing or anything to the contrary herein, solely for the purposes of this Section 2.1(b), any Receivable sold on June 30, 2020, September 29, 2020, or December 30, 2020 shall not be deemed to be a Flex Receivable.

(c)Basic Documents; Second Step Pool Supplement. The Transferor’s right, title and interest in the Receivables and related Purchased Property purchased, from time to time, by the Purchaser pursuant to Section 3.1 shall be transferred and assigned by the execution and delivery of a Second Step Pool Supplement, in form and content substantially similar to Exhibit A attached hereto, and the satisfaction of the terms and conditions and the performance of the transactions contained in this Agreement and such Second Step Pool Supplement, as applicable. The Transferor shall deliver the Second Step Pool Supplement to the Purchaser for any Receivables Pool in accordance with the time periods specified in Section 6.2(i)(i).

[***] Redacted for confidentiality purposes.

(d)Selection of Receivables Pools. The Receivables to be sold in each Receivables Pool shall be selected by the Seller and the Transferor in accordance with the Selection Procedures, as selected by the Seller in accordance with the Selection Procedures and such other documented administrative criteria as the Purchasers may agree to from time to time, and sold to the Transferor pursuant to the Master Sale Agreement, after the Transferor has determined that both before and after giving effect to such Selection Procedures, (i) each such Receivable meets the Eligible Receivable criteria and (ii) (a) with respect to Receivables with a Cut-Off Date on or prior to March 19, 2020, such Receivables Pool together with all Receivable Pools previously purchased, meet the applicable Eligible Receivables Pool criteria and (b) with respect to Receivables with a Cut-Off Date after March 19, 2020, to the best of the Transferor's knowledge, such Receivables Pool together with all Receivable Pools previously purchased, meet the applicable Eligible Receivables Pool criteria. If any of the Purchaser, the Seller or the Transferor determines that such Receivables Pool does not satisfy the applicable criteria for an Eligible Receivables Pool, then the Seller and the Transferor shall, without any selection believed to be adverse to the Purchaser, randomly select Eligible Receivables for removal from such Receivables Pool that will positively impact the out of compliance criteria. If the Purchasers reasonably determine that such Receivables Pool does not appear to have been selected on a random basis after applying such documented administrative criteria as the Purchasers may agree to from time to time (based on information reasonably requested by the Purchasers and provided by the Seller and the Transferor comparing the Receivables to be sold to the Purchasers on the related Closing Date as compared against receivables originated during the related Origination Period that meet the definition of an Eligible Receivable and are not sold to the Purchasers), then the Purchasers, the Seller and the Transferor will determine an approach to adjust the mix of Eligible Receivables in such pool (including adding or removing Receivables meeting the definition of Eligible Receivables) to ensure that such Receivables Pool was randomly selected by the Seller and the Transferor. In such circumstance, the Seller, the Transferor and the Purchasers will revisit this Section 2.1(d) and the related definitions to determine if changes thereto are needed to ensure future Receivables Pools are representative of receivables originated by the Seller during the related Origination Period that are eligible to be sold hereunder and that there was no adverse selection pursuant to the Freestyle Selection.

Section 2.2 Payment of Second Step Receivables Purchase Price. Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants, representations, warranties and agreements herein set forth, the Second Step Receivables Purchase Price due on each Closing Date shall be paid by the Purchasers to the Transferor on such Closing Date by wire transfer of immediately available funds to an account or accounts designated by the Transferor. The Second Step Receivables Purchase Price will be set forth in the Second Step Pool Supplement for each Receivables Pool, in the form set forth in Exhibit A.

Section 2.3 Pricing Model. On the initial Closing Date, the Pricing Model shall be as agreed upon by the Parties and may thereafter be amended in accordance with this Section 2.3. The “Pricing Model” shall be delivered by the Purchaser to the Transferor in a Microsoft excel file format by electronic mail. The Parties shall not modify the Pricing Model other than in accordance with this Section 2.3, or by the Purchasers as necessary to cure any ambiguity, correct any error, or to make it consistent with this Agreement; provided, that, for the avoidance of doubt, the inputs and variables used by the Pricing Model (including, for example, any Specified Variables) shall be freely changeable by the Purchasers based on attributes of the Receivables Pool in order to determine the Purchase Price without regard to this Section 2.3. Otherwise, the Pricing Model may only be changed as follows:

(a)At any time, but no more frequently than weekly, the Purchasers will have the right to send a written notice to the Transferor (a “Pricing Model Change Notice”) proposing changes to the Pricing Model, including any assumptions within the Pricing Model (the “Pricing Model Amendments”), applicable to all Receivable Pools to be purchased on or after the effective date of such Pricing Model Amendment (which effective date shall be at least 30 days, but no longer than ninety (90) days, after delivery of a Pricing Model Change Notice as described below, or such earlier date as otherwise agreed to by the Transferor and the Purchasers). A Pricing Model Change Notice shall be provided by the Purchasers to the Transferor at least ninety (90) days prior to the effectiveness of the related Pricing Model Amendment; provided that, such notice need only be provided thirty (30) days prior to effectiveness of the related Pricing Model Amendment if the changes based upon (A) 15% deviation in quarterly vintage loss or liquidation experience for any Receivables as compared against prior assumptions, including experience reflected in Vintage Data reports provided to the Purchasers from the Servicer, (B) changes in any of the Credit Policy or the definitions of Eligible Receivable or Eligible Receivables Pool, (C) changes impacting the

Purchasers or their Affiliates due to or arising out of any Banking Regulatory Change or change in Requirements of Law, (D) changes in the cost of funds (including any internal allocation of costs or cost of funds) to the auto finance division of the Purchasers, (E) at any time during the existence and continuance of any Catalyst Event, (F) changes to the methodology (including underlying loss assumptions for comparably-designated dealers) for calculating the NAALR, or (G) a failure by the Transferor and the Purchasers to agree upon mutually acceptable changes to the defined term Eligible Receivables Pool prior by January 24, 2018.

(b)If the Purchasers and the Transferor reach mutual written agreement regarding such Pricing Model Amendments, then the Pricing Model shall be amended to include such Pricing Model Amendments for Pools purchased subsequent to the date of such mutual agreement. If the Purchasers and the Transferor are not able to reach mutual agreement regarding such Pricing Model Amendments within thirty (30) days after receipt of the related Pricing Model Change Notice, then, the Purchasers may elect, in their sole discretion, to (A) remove or amend and resubmit such Pricing Model Change Notice upon written notice to the Transferor (and the Transferor shall have the longer of (i) the remainder of such thirty (30) day period and (ii) ten (10) days to consider such amended notice) or (B) terminate their obligation to make any further purchases hereunder effective immediately, upon written notice to the Transferor (the “Pricing Termination Notice”). If there is no agreement to amend the Pricing Model and this Agreement is not so terminated, the Pricing Model will remain in effect without the proposed change.

(c)If a change to the Pricing Model was previously made based on a Pricing Model Change Notice delivered in connection with the occurrence of a Catalyst Event under Section 2.3(a)(E), within thirty (30) days after the end of such Catalyst Event, the Purchasers shall send a subsequent Pricing Model Change Notice to the Transferor proposing changes to the Pricing Model that reasonably reflect the change of circumstances that caused the cessation of such Catalyst Event. Notwithstanding the forgoing, if (i) the Pricing Model Amendment has not yet taken effect and (ii) the Catalyst Event is not continuing, Purchasers shall immediately withdraw the Pricing Model Change Notice upon the termination of the Catalyst Event.

Section 2.4 Termination Options.

(a)Transferor Termination Options. The Transferor may terminate the Transferor Obligation and the Purchaser Obligation by providing the Purchaser written notice thereof at any time after the occurrence of any of the following (the “Transferor Termination Option”):

(i)the commencement of a voluntary case by either Purchaser under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by either Purchaser to the entry of an order for relief in an involuntary case under any such law, or the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of either Purchaser;

(ii)If the Purchasers and the Transferor are not able to reach mutual agreement regarding a Pricing Model Amendment; provided¸ that such termination shall not take effect until the last day of the applicable 90 day or 30 day notice period described in Section 2.3(a), as applicable);

(iii)the breach of any representation, warranty or covenant in this Agreement or the Master Sale Agreement in any material respect by a Purchaser and, if such breach is capable of being cured and such Purchaser is attempting in good faith to remedy such breach, such breach shall continue uncured for more than thirty (30) days after written notice of such failure is received from the Transferor or after discovery of such failure by the related Purchaser; or

(iv)for any reason with ninety (90) days’ prior written notice to the Purchaser.

(b)Purchaser Termination Options. The Purchasers may terminate the Transferor Obligation and the Purchaser Obligation by providing the Transferor written notice thereof at any time after the occurrence of any of the following (the “Purchaser Termination Option”):

(i)the commencement of a voluntary case by the Transferor, the Seller, the Performance Guarantor, or the Servicer under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Transferor, the Seller, the Performance Guarantor, or the Servicer to the entry of an order for relief in an involuntary case under any such law, or the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Transferor, the Seller, the Performance Guarantor, or the Servicer;

(ii)the Seller or the Performance Guarantor (x) consolidates or merges with or into another Person and is not the surviving entity, or (y) is a party to a merger, conversion or consolidation and is not the surviving entity, or (z) has a Person succeed to its business and, in each case, in the case of the Performance Guarantor, the Guaranty ceases to be legally enforceable against the successor entity;

(iii)a Servicer Termination Event shall be continuing pursuant to the terms of the Servicing Agreement;

(iv)if for any reason, a modification to the servicing of the Purchased Property in respect of any Banking Regulatory Change is not made pursuant to Section 3.17 of the Servicing Agreement;

(v)if the System of Record, including the components thereof, is updated or otherwise modified, or replaced by a successor computer system utilized by the Seller to select receivables, such that the updated, modified or replaced System of Record, including the components thereof, cannot apply the Selection Procedures, as determined by the Purchasers after consultation with the Seller during the Quarterly Selection Standards Meeting following the update, modification or replacement of the System of Record, including the components thereof;

(vi)(y) the occurrence of a “Termination Event” or “Commitment Termination Event” under any Other Facility Transaction Document or a termination event, event of default, or servicer default under any other credit or purchase facility by the Purchasers or any of their Affiliates to the Seller or the Transferor or any of their consolidated Affiliates that enables or permits the holder or holders of such indebtedness or any trustee or agent on its or their behalf to cause such indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (z) any indebtedness of the Seller or the Transferor or any of their consolidated Affiliates which exceeds $[***] in aggregate principal or face amount becoming due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

(vii)a Material Adverse Effect occurs with respect to the Seller or the Transferor;

(viii)failure of the Seller or the Transferor to pay any amount owed to the Purchasers or any other transaction party under any Basic Document for at least five (5) Business Days;

(ix)the failure of the Seller or the Transferor to deliver a report or data file under in any Basic Document for at least five (5) Business Days after written notice of such failure is received from either Purchaser or after discovery of such failure by the Seller or the Transferor;

(x)the breach of any representation, warranty or covenant in any Basic Document in any material respect by the Seller or Transferor and, if such breach is capable of being cured and the Seller or the Transferor is attempting in good faith to remedy such breach, such breach shall continue uncured for more than thirty (30) days after written notice of such breach is received from either Purchaser or after discovery of such breach by the Seller or the Transferor;

(xi)the Transferor is required to register as an “investment company” under the Investment Company Act of 1940;

(xii)the entry of (y) one or more judgments against the Transferor of $25,000 or more or (z) a judgment against the Seller of $2,500,000 or more or one or more judgments, in the aggregate, of $5,000,000 or more;

[***] Redacted for confidentiality purposes.

(xiii)the Purchasers shall cease to have a valid and perfected first-priority security interest in any Purchased Property related to 5.0% or more of the Aggregate Outstanding Principal Balance of any Purchased Receivables, and, upon and following the Seller’s breach of its purchase obligations pursuant to Section 7.2 of the Master Sale Agreement or the Transferor’s breach of its repurchase obligations pursuant to Section 8.2 of this Agreement, any of the Purchased Property;

(xiv)a Pension Benefit Guaranty Corporation or tax lien is filed against the Seller or Transferor;

(xv)a Change in Control;

(xvi)for any reason with ninety (90) days’ prior written notice to the Transferor; or

(xvii)upon delivery of a Pricing Termination Notice pursuant to Section 2.3(b)

Section 2.5 Taxes.

(a)All payments made by the Transferor, the Servicer, the Seller, the Performance Guarantor or the Purchasers under this Agreement and the other Basic Documents shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes or any other tax based upon net income (including any income or capital gain earned by such Party or subsequent transferee or assignee thereof in respect of any Receivable) imposed on any Party as a result of a present or former connection between such Party and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from such Party having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement). If any such non‑excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non‑Excluded Taxes”) are required to be withheld from any amounts payable to any Party hereunder, the amounts so payable to such Party shall be increased to the extent necessary to yield to such Party (after payment of all Non‑Excluded Taxes) the amounts payable hereunder in the amounts specified in or pursuant to this Agreement or the other Basic Documents. Whenever any Non‑Excluded Taxes are payable by any Party, as promptly as possible thereafter the Party subject to such Non‑Excluded Taxes shall send to the paying Party a certified copy of an original official receipt received by the Party subject to such Non‑Excluded Taxes showing payment thereof. If any Party fails to pay any Non‑Excluded Taxes when due to the appropriate taxing authority or other required documentary evidence, such Party shall indemnify the Party subject to such Non‑Excluded Taxes for any incremental taxes, interest or penalties that may become payable by such Party as a result of any such failure. The agreements in this Section 2.5(a) shall survive the termination of this Agreement and the payment of all other amounts payable hereunder.

(b)Notice of Increased Costs; Relocation of Purchasing Office; Mandatory Assignment.

(i)In the event that a Purchaser becomes aware that any amounts are or will be owed to it pursuant to Section 2.5(a), then it shall promptly notify the Transferor thereof and, as soon as possible thereafter, such Purchaser shall submit to the Transferor a certificate indicating the amount of such Purchaser’s increased costs, Non‑Excluded Taxes and the calculation thereof. Such certificate shall only be prima facie evidence of such increased costs or Non‑Excluded Taxes.

(ii)If such Purchaser claims any additional amounts payable pursuant to Section 2.5(a), it shall use its reasonable efforts (consistent with legal and regulatory restrictions) to avoid the need for changing the methodology for calculating the Second Step Receivables Purchase Price Purchase Price, including changing the jurisdiction of its applicable purchasing office, provided that the taking of any such action would not, in the reasonable judgment of such Purchaser, be disadvantageous to such Purchaser.

(c)No Assignee Rights to Increased Costs. The terms and conditions of Section 2.5 hereof are personal to the Purchaser and shall not accrue to the benefit of any other Person, including any assignee or transferee of any direct or indirect interest in the Receivables.

Section 2.6 Loss and Liquidation Data. No later than 60 days after the end of each calendar quarter during the period beginning on the date hereof and ending on the third annual anniversary of the Commitment Termination Date of this Agreement (or, if the Seller provides such information to another finance counterparty or the Seller makes such information publicly available, until the final payment or liquidation of all of the Purchased Receivables), the Transferor shall, or shall cause the Seller, Bridgecrest or any other Affiliate holding or aggregating such information to, deliver to the Purchasers a cumulative net loss ratio as of the end of the related calendar quarter (and a narrative description of the methodology for making such calculation), which may be included in the Monthly Servicer Report delivered within 60 days after the end of each calendar quarter to the extent the information is available at that time, for the Seller’s entire originated portfolio of retail installment sales contracts as of the end of the related calendar quarter.

Section 2.7 Re-Liening Trigger Events. Upon the occurrence of a Re-Liening Trigger Event, at the direction of the Purchasers, the Transferor shall, and the Transferor shall direct and cause any Affiliate that is a Title Lien Nominee to and shall cooperate with the Servicer to, take all steps necessary to cause the Certificate of Title or other evidence of ownership of the related Financed Vehicles (or if such Re-Liening Trigger Event relates to (i) one or more States, the related Financed Vehicles titled in such States or (ii) a Title Lien Nominee, the related Financed Vehicles liened in the name of such Title Lien Nominee) to be revised to name the Purchasers or their designee as lienholder; any Re-Liening Expenses shall be paid by the Servicer, and to the extent such costs are not paid by the Servicer but are paid by the Purchasers, such costs shall be recovered by adjusting the Second Step Receivables Purchase Price for an upcoming Receivables Pool as described in Section 2.2 and the related Second Step Pool Supplement. In addition, at the sole expense of the Purchasers, upon the request of the Purchasers, the Transferor shall, and the Transferor shall direct and cause the any Affiliate that is a Title Lien Nominee and shall cooperate with the Servicer to, take all steps necessary to cause the Certificate of Title or other evidence of ownership of the related Financed Vehicles identified, individually or by characteristic, by the Purchasers to be revised to name the Purchasers or their designee as lienholder. The Purchasers shall not direct the Servicer or the Transferor to take any steps to cause the Certificate of Title or other evidence of ownership of the related Financed Vehicle to be revised to name any other Person. The Transferor shall cause any Affiliate that is a Title Lien Nominee to irrevocably appoint or cause each relevant subservicer to irrevocably appoint, the Purchasers as its attorney-in-fact, such appointment being coupled with an interest, to take any and all steps required to be performed pursuant to this Section 2.7, including execution of Certificates of Title or any other documents in the name of the Transferor or such Title Lien Nominee and, in connection with the appointment of any successor Servicer, to execute a power of attorney with respect to such successor Servicer promptly after its appointment as such, naming such successor Servicer as its attorney-in-fact for the same purposes.

ARTICLE III

PURCHASE AND SALE OF RECEIVABLES

Section 3.1 Sale of Receivables.

(a)On each Closing Date during the Commitment Period, subject to the terms and conditions of this Agreement, the Transferor agrees to sell to the Purchasers, and the Purchasers agree to purchase from the Transferor, a Receivables Pool and the following other property relating thereto (collectively, the “Purchased Property”):

(i)all right, title and interest of the Transferor in, to and under each Receivable included in the applicable Receivables Pool listed on a Schedule of Receivables (the form of which is attached as Schedule 2 to the Second Step Pool Supplement) delivered to the Purchaser on such Closing Date and all monies received thereon after the related Cutoff Date, exclusive of any amounts allocable to the premium for physical damage collateral protection insurance required by the Seller or the Servicer, as applicable, covering any related Financed Vehicle;

(ii)the interest of the Transferor in the security interests in the related Financed Vehicles granted by Obligors pursuant to the Receivables in the applicable Receivables Pool and, to the extent permitted by law, any accessions thereto;

(iii)the interest of the Transferor in any proceeds from claims on any physical damage, credit life, credit disability, warranties, debt cancellation agreements or other insurance policies covering the related Financed Vehicles or Obligors, including any rebates or credits of any premium or other payment with respect to any of the foregoing;

(iv)all of the Transferor’s right, title and interest in, to and under the related Receivable Files;

(v)all right, title and interest of the Transferor in, to and under the Master Sale Agreement and the applicable First Step Pool Supplement and First Step Receivables Assignment, including the right of the Transferor to cause the Seller to repurchase Receivables under certain circumstances and the right of the Transferor to be indemnified under the circumstances specified in the Master Sale Agreement; and

(vi)all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing described in clauses (i) through (v) above and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all the foregoing, including all proceeds of the conversion of any or all of the foregoing, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, investment property, payment intangibles, general intangibles, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

(b)Second Step Receivables Purchase Price. On each Closing Date, in consideration for the related Purchased Property, the Purchasers shall pay to the Transferor an amount (the “Second Step Receivables Purchase Price”) equal to the Purchase Price for such Purchased Property.

The Cutoff Date Aggregate Outstanding Principal Balance, the purchase price designated by the Pricing Model, the Pre-closing Interest Carry Amount, the re-liening expenses described in Section 2.7 and the Second Step Receivables Purchase Price for each Receivables Pool shall be set forth on the related Second Step Pool Supplement.

(c)Wire Transfer. The Purchasers shall pay each Second Step Receivables Purchase Price by federal wire transfer (same day) funds to the Transferor (or its designee) to the account set forth below:

Account Name: Carvana LLC

Account Number: 4124114661

Bank: Wells Fargo Bank, N.A.

ABA: 121000248

Within two (2) Business Days after each Closing Date, the Transferor shall pay to or as directed by the Purchasers in (same day) funds an amount equal to the aggregate amount of all Collections received by the Transferor after the related Cutoff Date, including from the Seller or the Servicer, with respect to the Receivables Pool sold to the Purchasers on such Closing Date through (but excluding) the applicable Closing Date.

(d)Purchase Price Adjustment Payments. Purchase price adjustment payments may be due to the Transferor by the Purchasers as agreed upon by the Parties, as applicable.

(e)Purchase Cadence and Second Step Pool Supplement. Not later than the third (3rd) Business Day following an Origination Period, the Transferor shall provide the Purchasers with the Purchase Percentage and supply the Purchasers with an initial data tape in form and substance acceptable to the Purchasers containing the information as called for in Exhibit D and indicating which Receivables listed in such initial data tape are Flex Receivables with respect to all Receivables originated or acquired by the Seller in the preceding Origination Period (and any Previously Originated Receivables to be included in the Related Receivables Pool) that the Seller and the Transferor intend in good faith to sell to the Purchasers under this Agreement meeting the selection criteria for sale to the Transferor and those Receivables meeting the eligibility criteria for sale by the Transferor to the Purchasers, a Receivables Pool. Not later than the first (1st) Business Day of the second week following an Origination Period (but at least two (2) Business Days prior to the related

Closing Date), the Transferor shall supply the Purchasers with a final data tape in form and substance acceptable to the Purchasers containing the final information as called for in Exhibit D and indicating which Receivables listed in such initial data tape are Flex Receivables with respect to all Receivables in the related Receivables Pool and identifying any receivable in the initial data tape that was determined not to be an Eligible Receivable, including any receivable with respect to which the applicable obligor has exercised its right to return the related financed vehicle and terminate the related receivable. Not less than one (1) Business Day prior to each proposed Closing Date, the Transferor will deliver to the Purchasers the related Second Step Pool Supplement substantially in the form of Exhibit A hereto and in form and substance reasonably acceptable to the Purchasers. Exhibit A will set forth amounts due by the Transferor with respect to the applicable Receivables Pool and will contain at least the following settlement information: calculation of the related Cutoff Date Aggregate Outstanding Principal Balance, the Pre-closing Interest Carry Amount, the purchase price designated by the Pricing Model, the re-liening expenses described in Section 2.7 and the Second Step Receivables Purchase Price.

(f)No Recourse. It is understood that each sale of Purchased Property by the Transferor to the Purchaser pursuant to this Agreement, a Second Step Pool Supplement and the related Second Step Receivables Assignment shall be without recourse (except as set forth herein and in the other Basic Documents) and the Transferor does not guarantee collection of any Receivable. However, each such sale shall be made pursuant to and in reliance by the Purchaser on the representations, warranties and covenants of the Transferor as set forth in Section 5.2, the indemnities set forth in Section 7.14 and the repurchase obligation set forth in Section 8.2.

(g)Intent of the Parties. This Agreement, the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment is intended to effect a sale of each Receivables Pool by the Transferor to the Purchasers, and the parties intend to treat each such transaction as an independent sale for federal income tax and financial reporting purposes. It is the intention of the Transferor that each sale, transfer, assignment and other conveyance of each Receivables Pool contemplated by this Agreement, the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment constitutes an independent sale of the related Purchased Property from the Transferor to the Purchasers and that the beneficial interest in and title to each such Receivables Pool shall not be part of the Transferor’s estate in the event of the filing of a bankruptcy petition by or against the Transferor under any bankruptcy law. Each sale, transfer, assignment and other conveyance contemplated by this Agreement, the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment does not constitute and is not intended to result in any assumption by the Purchasers (or any of its assigns) of any obligation of the Seller or the Transferor to the Obligors, Affiliates of the Seller, insurers or any other Person in connection with any Receivables, any insurance policies or any agreement or instrument relating to any of them, in each case related to such transfer and assignment. Although the parties intend that each sale, transfer, assignment and other conveyance contemplated by this Agreement, the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment to be an independent sale, in the event any such transfer and assignment is deemed to be other than a sale, the parties intend and agree (i) that all filings described in this Agreement shall give the Purchasers a first priority perfected security interest in, to and under the Receivables Pool and the related Purchased Property and all proceeds of any of the foregoing, in each case with respect to such transfer and assignment; (ii) this Agreement, together with the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment, shall be deemed to be the grant of, and the Transferor hereby grants to the Purchasers, a security interest from the Transferor to the Purchasers in such Receivables and the related Purchased Property in order to secure its obligations hereunder with respect to such transfer and assignment; (iii) this Agreement, together with the applicable Second Step Pool Supplement and the related Second Step Receivables Assignment, shall be a security agreement under applicable law for the purpose of each such transfer and assignment; and (iv) the Purchasers shall have all of the rights, powers and privileges of a secured party under the UCC with respect to each such transfer and assignment and the Purchased Property related thereto.

Section 3.2 The Closing. The initial closing during the Commitment Period shall take place at or about 11:00 a.m., Chicago time, at the offices of Kirkland & Ellis LLP, in Chicago, Illinois on or about December 30, 2016, or at such other time, date and place as the parties shall agree upon.

ARTICLE IV

CLOSINGS

Section 4.1 Effecting Purchases.

(a)General Procedures. During the Commitment Period, the purchase and sale of a Receivables Pool pursuant to the Transferor Obligation will occur on the Closing Date for the calendar quarter that follows receipt of notification from the Transferor of its intent to complete such a sale at such time (which Closing Date, for the avoidance of doubt, will fall in the last calendar week of the related Origination Period). For the avoidance of doubt, subject to the terms and conditions of this Agreement, the Transferor is obligated to sell a Receivables Pool to the Purchasers hereunder during each calendar quarter during the Commitment Period.

(i)Notification of each sale must be provided by the Transferor to the Purchasers no later the third (3rd) Business Day following an Origination Period (which date falls in the week prior to the week in which the proposed Closing Date for such sale falls), substantially in the form of Exhibit C attached hereto. Such notification must specify for each such proposed Receivables Pool (i) the approximate Cutoff Date Aggregate Outstanding Principal Balance, (ii) the applicable proposed Closing Date, and (iii) the proposed Cutoff Date.

(ii)Not later than the third (3rd) Business Day after receipt of the initial data tape received in Section 3.1(e) above (but at least three (3) Business Days prior to the related Closing Date), the Purchasers shall notify the Seller of the Purchase Price for each Eligible Receivable on the initial data tape by the Purchasers and the allocation of purchases between Ally Bank and Ally Financial.

(iii)Not later than the second (2nd) Business Day of the second week following an Origination Period (but at least one (1) Business Day prior to the related Closing Date), the Purchasers shall notify the Seller of the final Purchase Price (including any Flex Amount) for the Receivables Pool and the final allocation of purchase between Ally Bank and Ally Financial.

(iv)Not less than two (2) Business Days prior to the proposed Closing Date, the Transferor shall deliver to the Purchaser a receivables pool schedule in the form of Schedule 2 to Exhibit A (the “Receivables Pool Schedule”), which shall identify as of the Cutoff Date the pool of Receivables (the “Receivables Pool”) to be sold. The Transferor shall promptly provide to the Purchaser all data related to the Receivables Pool that are necessary to determine the Purchase Price for such Receivables Pool or that are reasonably requested by the Purchaser.

(v)On the Pricing Date, the Purchase Price shall be calculated in accordance with Section 2.3.

(b)Upon the satisfaction or written waiver of the conditions specified in Section 6.3, on each Closing Date, the Seller will sell the related Purchased Property to the Transferor and the Transferor will sell the Purchased Property in such Receivables Pool to the Purchaser in accordance with the applicable Basic Documents.

(c)Due Diligence. With respect to each proposed purchase of a Receivables Pool the Seller and the Transferor agree to cooperate with the Purchasers, with respect to all reasonable requests for documents or other information and due diligence procedures.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.1 Representations and Warranties of the Purchasers. The Purchasers represent and warrant to the Transferor as of the date hereof and as of each Closing Date:

(a)Organization and Good Standing. Ally Bank has been duly organized and is validly existing as a Utah chartered bank in good standing, with power and authority to own its properties and to conduct its business

as such properties are presently owned and such business is presently conducted; and as of the date hereof, Ally Bank’s deposits are insured by the Federal Deposit Insurance Corporation and Ally Bank is subject to the Federal Deposit Insurance Act. Ally Financial has been duly organized and validly exists as an entity in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, including to acquire and own the Receivables.

(b)Due Qualification. Ally Bank is duly qualified to do business as a foreign entity in good standing, and has authority to hold loans in all jurisdictions of the United States of America. Ally Financial is duly qualified to do business as a foreign entity in good standing, and has authority to hold loans in all jurisdictions of the United States of America.

(c)Power and Authority. The Purchasers have full power and authority to execute and deliver this Agreement and the Master Servicing Agreement and to perform the terms and provisions hereof and thereof and the execution, delivery and performance of this Agreement and the Master Servicing Agreement have been duly authorized by the Purchasers by all necessary action.

(d)Due Authorization; Enforceability; No Violation. This Agreement and the Master Servicing Agreement have been duly authorized, executed and delivered by the Purchasers, and each is the legal, valid and binding obligation of the Purchasers, enforceable against the Purchasers in accordance with its terms, except as such enforceability may be limited by applicable insolvency, bankruptcy, reorganization, conservatorship, receivership, liquidation or other laws and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. The consummation of the transactions contemplated by this Agreement and the Master Servicing Agreement and the fulfillment of the terms of this Agreement and the Master Servicing Agreement shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Purchasers, or, in any material respect, any indenture, agreement, mortgage, deed of trust or other instrument to which the Purchasers is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument, or violate, in any material respect, any law or, to the best of the Purchaser’s knowledge, any order, rule or regulation applicable to the Purchasers of any Governmental Authority having jurisdiction over the Purchasers or any of its properties, in each case, that would materially and adversely affect the performance by the Purchasers of its obligations under, or the validity and enforceability of, this Agreement.

(e)No Proceedings. There are no proceedings or investigations pending, or, to the best of the Purchasers’ knowledge, threatened, before any Governmental Authority having jurisdiction over either Purchaser or any of their properties (i) asserting the invalidity of this Agreement and the Master Servicing Agreement, or (ii) seeking any determination or ruling that might materially and adversely affect the performance by either Purchaser of its obligations under, or the validity or enforceability of, this Agreement and the Master Servicing Agreement against the Purchasers.

Section 5.2 Representations and Warranties of the Transferor. The Transferor represents and warrants to the Purchasers as of the date hereof and as of each Closing Date (except as provided herein otherwise):

(a)Organization and Good Standing. It has been duly organized, and is validly existing and in good standing under the laws of the jurisdiction of its formation, with all requisite power and authority to own or lease its properties and conduct its business as such business is presently conducted, and had at all relevant times, and now has all necessary power, authority and legal right to own or lease its properties and conduct its business as such business is presently conducted, including to acquire, own and sell the Receivables and the other Purchased Property except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(b)Due Qualification. It is duly qualified to do business and is in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, licenses or approvals (including, as applicable, the origination,

purchase, sale and servicing of the Receivables) except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(c)Power and Authority; Due Authorization. It (i) has all necessary power, authority and legal right to (A) execute and deliver the Basic Documents to which it is a party, (B) carry out the terms of the Basic Documents to which it is a party and (C) to assign or grant the security interest in the assets transferred by it on the terms and conditions in this Agreement and (ii) has taken all necessary action to authorize the execution, delivery and performance of the Basic Documents to which it is a party and to assign or grant a security interest in the assets transferred by it on the terms and conditions in this Agreement.

(d)Binding Obligation. The Basic Documents to which it is a party have been duly executed and delivered by it and constitute legal, valid and binding obligations of it enforceable against it in accordance with their terms.

(e)No Violation. The consummation of the transactions contemplated by the Basic Documents to which it is a party and the fulfillment of the terms thereof will not (i) conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, its formation documents or any agreement to which it is bound, (ii) result in the creation or imposition of any Lien upon any of its properties, other than pursuant to the Master Sale Agreement and this Agreement, or (iii) violate any Requirements of Law, except, in each case, for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(f)No Proceedings. There is no litigation, proceeding or investigation pending or, to the best of its knowledge, threatened against it, before any governmental authority (i) asserting the invalidity of any Basic Document, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Basic Documents, (iii) challenging the enforceability of a material portion of the Receivables or (iv) seeking any determination or ruling that would reasonably be expected to have a Material Adverse Effect.

(g)All Consents Required. All approvals, authorizations, consents, orders, licenses or other actions of any person or of any governmental authority required for the due execution, delivery and performance by it of the Basic Documents to which it is a party have been obtained except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(h)Compliance. It is not in violation in any material respect of any Basic Document to which it is a party or any laws, ordinances, Governmental Rules or regulations to which it is subject except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(i)Bulk Sales. The execution, delivery and performance of the Basic Documents to which it is a party is in the ordinary course of business and does not require compliance with any bulk sales act or similar law.

(j)Solvency. As of each Closing Date, (i) the Transferor is not and shall not become insolvent as a result of the transfer of the related Purchased Property on such date, (ii) the Transferor did not intend to or believe that it would incur debts that would be beyond its ability to pay as such debts matured, (iii) the Transferor did not transfer the related Purchased Property with the actual intent to hinder, delay or defraud any Person and (iv) the assets of the Transferor did not constitute unreasonably small capital to carry out its business as conducted.

(k)Selection Procedures. No procedures believed by it to be materially adverse to the interests of the Purchasers were utilized by it in identifying or selecting Receivables to be transferred by it. In addition, each Receivable assigned pursuant to this Agreement has been underwritten in accordance with and satisfies the standards of the Credit Policy in all material respects.

(l)Taxes. It has filed, caused to be filed, or received an extension of time for filing that has not yet expired, all federal and material state, local or foreign tax returns that are required to be filed by it. It has paid or made adequate provisions for the payment of all federal or material amounts of state, local or foreign taxes and all material assessments made against it or any of its property (other than any amount of tax the validity of

which is currently being contested in good faith by appropriate proceedings and with respect to which reserves have been provided on the books of it), and no tax lien has been filed and, to the its knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.

(m)Exchange Act Compliance; Regulations T, U and X. None of the transactions contemplated in the Basic Documents to which it is a party (including the use of the proceeds from the advances) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including Regulations T, U and X of the Federal Reserve Board, 12 C.F.R., Chapter II. It does not own or intend to carry or purchase, and no proceeds from the sale of the Purchased Property will be used to carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purchase credit” within the meaning of Regulation U.

(n)Quality of Title. Each Receivable, together with the Contract related thereto, transferred by it were, prior to the transfer thereof, owned by it free and clear of any Lien except for Permitted Liens, and the Purchasers upon the providing of value described herein shall acquire a valid ownership interest and a perfected first priority security interest in each Receivable and the related Purchased Property then-existing or thereafter arising, free and clear of any Lien, other than Permitted Liens. No effective financing statement or other instrument similar in effect covering any portion of the Purchased Property shall, after the relevant Cutoff Date, be on file in any recording office except such as may be filed in favor of the Transferor or the Purchasers in accordance with the Master Sale Agreement and this Agreement.

(o)Security Interest. It has granted a security interest (as defined in the UCC) to the Purchasers in the Purchased Property, which is enforceable in accordance with applicable law upon execution and delivery of the Basic Documents. Upon the filing of UCC-1 financing statements naming the Purchasers as secured party, or upon the Collateral Custodian obtaining possession, in the case of that portion of the Purchased Property which constitutes tangible chattel paper, or upon the E-Vault Provider granting control to the Purchasers, in the case of that portion of the Purchased Property which constitutes electronic chattel paper, the Purchasers shall have a first priority (except for any Permitted Liens) perfected security interest in the Purchased Property.

(p)Reports Accurate. All Monthly Reports, information, exhibits, financial statements, documents, books, records or reports (including the data file indicating characteristics of the Receivables and including electronic writings) furnished or to be furnished by the Seller or the Transferor directly or indirectly to the Purchasers, the Servicer, the Collateral Custodian or the bank holding the Collection Account under or in connection with the Basic Documents to which it is a party (including the Second Step Pool Supplement delivered in connection with each saleare true, correct and complete in all material respects as of the date specified therein or the date so furnished (as applicable).

(q)Location of Offices. The principal place of business and chief executive office of it and the office where it keeps all the Records related to the tangible Contracts are located at the address set forth in Section 8.6; provided, that on or about April 1, 2017, the Transferor’s principal place of business and chief executive office will be located at 1930 W. Rio Salado Pkwy, Tempe, AZ 85281 (or at such other locations as to which the notice and other specified requirements shall have been satisfied).

(r)Tradenames and Place of Business. (i) Except as specified in this Agreement, it has no trade names, fictitious names, assumed names or “doing business as” names or other names under which it has done or is doing business and (ii) its principal place of business and chief executive office is located at the address set forth in Section 8.6 and has been so for the last four (4) months; provided, that on or about April 1, 2017, the Transferor’s principal place of business and chief executive office will be located at 1930 W. Rio Salado Pkwy, Tempe, AZ 85281.

(s)Transfer Agreements. The Master Sale Agreement and this Agreement are the only agreements pursuant to which it purchases or sells the Receivables and the related Contracts.

(t)Value Given. The Purchasers shall have given reasonably equivalent value to the Transferor in consideration for the transfer by the Transferor to the Purchasers of the Receivables and the related Purchased Property under this Agreement, no such transfer shall have been made for or on account of an

antecedent debt owed by the Transferor to the Purchasers and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code. The Transferor shall have given reasonably equivalent value to the Seller in consideration for the transfer by the Seller to the Transferor of the Receivables and the related 2016-1 Purchased Property under the Master Sale Agreement, no such transfer shall have been made for or on account of an antecedent debt owed by the Seller to the Transferor and no such transfer is or may be voidable or subject to avoidance under any section of the Bankruptcy Code.

(u)Accounting. The Transferor accounts for the transfers to the Purchasers of Receivables and related Purchased Property under the Basic Documents as sales of such Receivables and related Purchased Property in its books, records and financial statements, in each case consistent with the requirements set forth in the Basic Documents. The Seller accounts for the transfers to the Transferor of Receivables and related Purchased Property and by the Transferor to the Purchasers under the Basic Documents as sales of such Receivables and related Purchased Property in its books, records and financial statements, in each case consistent with the requirements set forth in the Basic Documents, other than for income tax and consolidated accounting purposes.

(v)Investment Company Act. The Transferor is not (i) an “investment company” and is not controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and (ii) a “covered fund” as defined in the final regulations issued December 10, 2013, implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In making that determination, the Transferor is entitled to rely upon the exemption provided in Section 3(c)(5)(A) or (B) of the Investment Company Act, although there may be additional exemptions or exclusions available to the Transferor.

(w)ERISA. (i) No prohibited transactions or Reportable Events have occurred with respect to any Pension Plan (if any), (ii) no notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA has been filed, nor has any Pension Plan been terminated under Section 4041(c) of ERISA, nor has the Pension Benefit Guaranty Corporation instituted proceedings to terminate, or appointed a trustee to administer a Pension Plan and no event has occurred or condition exists that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, and (iii) no liability under Title IV (other than accrued premiums to the Pension Benefit Guaranty Corporation) has been incurred (whether or not assessed), which individually or in the aggregate with respect to all or any of (i), (ii) and (iii) above, would reasonably be expected to have a Material Adverse Effect on the Seller or Transferor (including its rights and interests in, to or under any Contracts or related Receivables), with respect to the Seller or Transferor.

(x)Accuracy of Representations and Warranties. Each representation or warranty by the Transferor contained in the Basic Documents to which it is a party or in any certificate or other document furnished by the Seller or Transferor pursuant thereto or in connection therewith is true and correct in all material respects as of the date made.

(y)OFAC. Neither the Transferor nor any Affiliate is a Sanctioned Person. The proceeds of any funding will not be used and have not been used to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.

(z)Master Sale Agreement. As of each Closing Date, the Transferor has not taken any action that would cause the representations and warranties of the Seller under the Master Sale Agreement or the applicable First Step Pool Supplement, or Bridgecrest under the Master Servicing Agreement, or the Collateral Custodian under the Collateral Custodian Agreement, to be false.

(aa)Use of Proceeds. No proceeds of a purchase hereunder shall be used by the Transferor for a purpose that violates or would be inconsistent with Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.

(ab)Remediation. In the event that the Seller, the Transferor or the Servicer or any of their Affiliates has been required under any Requirements of Law, or has agreed or made arrangements with any Governmental

Authority, to make any Remediation, such Person shall have taken such action as so agreed or arranged or in compliance with all Requirements of Law, as applicable.

(ac)Receivables. The Transferor makes the following representations and warranties as of each Closing Date (except to the extent otherwise provided) with respect to the Receivables the Transferor sold to the Purchasers on such Closing Date, on which the Purchasers relies in accepting such Receivables. Such representations and warranties speak as of the applicable Closing Date (except as provided herein otherwise), and shall survive the sale, transfer and assignment of such Receivables to the Purchasers and any subsequent sale, assignment or transfer of any such Receivables:

(i)Characteristics of Receivables. As of each Cutoff Date (except to the extent otherwise provided in the definition of “Eligible Receivable”) with respect to the related Receivables to be purchased, (A) each Receivable is an Eligible Receivable, (B) (i) with respect to Receivables with a Cut-Off Date on or prior to March 19, 2020, all of the Receivables to be purchased on the applicable Closing Date together with all Receivables previously purchased, constitute an Eligible Receivables Pool (as determined as of each relevant Cutoff Date for each such Receivable) and (ii) with respect to Receivables with a Cut-Off Date after March 19, 2020, to the best of the Transferor's knowledge, all of the Receivables to be purchased on the applicable Closing Date together with all Receivables previously purchased, constitute an Eligible Receivables Pool (as determined as of each relevant Cutoff Date for each such Receivable) and (C) the Receivables Pool was selected as described in Section 2.1(d).

(ii)Creation, Perfection and Priority of Security Interests. The following representations and warranties regarding creation, perfection and priority of security interests in the related Purchased Property are true and correct:

(A)While it is the intention of the Transferor and the Purchasers that the transfer and assignment contemplated by this Agreement, each Second Step Pool Supplement and each Second Step Receivables Assignment shall constitute sales of the related Purchased Property from the Transferor to the Purchaser, this Agreement, each Second Step Pool Supplement and each Second Step Receivables Assignment shall create a valid and continuing security interest (as defined in the applicable UCC) in the related Purchased Property in favor of the Purchaser, which security interest is prior to all other Liens, and is enforceable as such against creditors of and purchasers from the Transferor.

(B)Prior to the sale of such Purchased Property to the Purchaser under this Agreement, the Receivables constituted “tangible chattel paper” or “electronic chattel paper” within the meaning of the applicable UCC.

(C)All filings (including such UCC filings) as are necessary in any jurisdiction to perfect the security interest of the Purchasers in the Purchased Property have been (or prior to the applicable Closing Date will be) made.

(D)Other than the sale and backup security interest granted to the Purchasers pursuant to this Agreement, the Transferor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of such Purchased Property. The Transferor has not authorized the filing of, and is not aware of, any financing statements against the Transferor that include a description of collateral covering such Purchased Property other than the financing statements relating to the security interests granted to the Purchasers under this Agreement or any financing statement that has been effectively terminated. The Transferor is not aware of any judgment or tax lien filings against it or such Purchased Property.

(E)Wells Fargo, as Collateral Custodian, or a permitted subcontractor, has in its possession all original copies of the related Original Contract Documents and other documents that constitute or evidence such Receivables and the related Purchased Property that are tangible chattel paper. The E-Vault Provider has in its “control” (as such term is used in Section 9-105 of the UCC), for the benefit of the Purchasers as the “secured party” (as such term is used in Section 9-105 of the UCC), all electronic records constituting or forming a part of the Receivables that are electronic

chattel paper, such that the Purchasers have had and will at all times have a first priority perfected security interest against the Seller and the Transferor and their creditors in such Receivables. Such Receivable Files and other documents that constitute or evidence such Purchased Property do not have any marks or notations indicating that any ownership or security interest therein has been pledged, assigned or otherwise conveyed to any Person other than the Purchasers.

(F)None of the Seller, the Transferor, the Servicer or a custodian or vaulting agent thereof holding any Receivable that is electronic chattel paper has communicated an Authoritative Copy of any loan agreement that constitutes or evidences such Receivable to any Person other than the Purchasers and the Collateral Custodian.

(iii)Schedule of Receivables. The information set forth in the related Schedule of Receivables and in any computer tape regarding the Receivables is true, accurate and complete, and, other than as may be a result of the application of the criteria included in the definitions of Eligible Receivables Pool set forth in Exhibit A, no selection procedures believed to be adverse to the Purchasers were utilized in selecting such Receivables, with respect to the related Receivables Pool, from those receivables of the Seller or the Transferor that otherwise meet such criteria as well as the definition of Eligible Receivables.

(iv)Compliance With Law. All Requirements of Law in respect of any aspect of such Receivables and the related Purchased Property (including the origination thereof), in each case, have been complied with in all material respects and each Receivable and the sale of the related Financed Vehicle evidenced thereby complied at the time it was originated or made and now complies in all material respects with all applicable Requirements of Law.

(v)Binding Obligation. Each such Receivable with respect to the related Receivables Pool represents the genuine, legal, valid and binding payment obligation in writing of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except as enforceability may be limited by bankruptcy, receivership, conservatorship, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights in general and by equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(vi)Security Interest in Financed Vehicle. Immediately prior to the sale, transfer and assignment thereof pursuant hereto and the related Second Step Receivables Assignment, each such Receivable with respect to the related Receivables Pool was secured by a valid security interest in the Financed Vehicle in favor of the Transferor as secured party, or all necessary and appropriate actions shall have been commenced that would result in the valid perfection of a first priority security interest in the Financed Vehicle favor of the Transferor as secured party.

(vii)Receivables In Force. As of the applicable Cutoff Date, no such Receivable has been satisfied, subordinated or rescinded, and the Financed Vehicle securing each such Receivable has not been released from the lien of the related Receivable in whole or in part.

(viii)No Waiver. Since the applicable Cutoff Date, no provision of a Receivable has been, or shall be, waived, altered or modified in any respect other than with respect to alterations and modifications so that such Receivable is an Eligible Receivable (other than clause (ix) thereof, which must have been satisfied at the time of origination) and such Receivable is enforceable after giving effect thereto.

(ix)No Defenses. No right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any such Receivable.

(x)No Liens. To the best of the Transferor’s knowledge: (1) there are no Lien or claims that have been filed for work, labor or materials affecting any Financed Vehicle securing any such Receivable that are or may be Lien prior to, or equal or coordinate with, the security interest in the Financed Vehicle granted by such Receivable; (2) no contribution failure has occurred with respect to any Benefit Plan which is sufficient to give rise to a Lien under Section 303(k) of ERISA with respect to any such Receivable; and (3) no tax lien has been filed and no claim related thereto is being asserted with respect to any such Receivable.

(xi)Insurance. Each Obligor under such Receivables is required to maintain a physical damage insurance policy of the type that the Seller requires in accordance with the Credit Policy.

(xii)Good Title. No such Receivable or the related Purchased Property has been sold, transferred, assigned or pledged by the Transferor to any Person other than the Purchasers; immediately prior to the conveyance of such Receivables and the related Purchased Property pursuant to this Agreement, the related Second Step Pool Supplement and the related Second Step Receivables Assignment, the Transferor had good and marketable title thereto, free of any Lien other than Permitted Liens; and, upon execution and delivery of the Second Step Pool Supplement and the related Second Step Receivables Assignment by the Transferor, the Purchasers shall acquire a valid and enforceable perfected ownership interest in each such Receivable and Purchased Property, the unpaid indebtedness evidenced thereby and the collateral security therefor, free of any Lien other than Permitted Liens.

(xiii)Lawful Assignment. No such Receivable or the related Purchased Property was originated in, or is subject to Requirements of Law of, any jurisdiction the Requirements of Law of which would make unlawful, void or voidable the sale, transfer and assignment of such Receivable and the other related Purchased Property under this Agreement and the related Second Step Receivables Assignment. None of the Seller, the Transferor or the Servicer has entered into any agreement with any Obligor that prohibits, restricts or conditions the assignment of such Receivable or any other Purchased Property.

(xiv)All Filings Made. All filings (including UCC filings) necessary in any jurisdiction to give the Purchasers a first priority perfected ownership interest in the Receivables and the related Purchased Property shall have been made.

(xv)One Original. There is only one original executed copy of each tangible record constituting or forming a part of such Receivable that is tangible chattel paper or a single Authoritative Copy of each electronic record constituting or forming a part of each Purchased Receivable that is electronic chattel paper.

(xvi)No Documents or Instruments. No such Receivable, or constituent part thereof, constitutes a “negotiable instrument” or “negotiable document of title” (as such terms are used in the UCC).

ARTICLE VI

CONDITIONS

Section 6.1 Conditions to Effectiveness. The effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent as of the date hereof:

(a)Basic Documents. Each of the Purchasers, the Transferor, the Seller, Bridgecrest, the Collateral Custodian and the Performance Guarantor, as the case may be, shall have executed and delivered each of the Basic Documents to which it is a party, and shall have executed and/or delivered each other document and instrument required to be executed and/or delivered by such party on or about the Original Execution Date or the date hereof, as applicable, prior to the effectiveness hereof or thereof, hereunder or thereunder.

(b)Documents to be Delivered by the Transferor.

(i)Good Standing Certificates. The Purchasers shall have received a certificate from the Secretary of State of the States of Arizona and Delaware as to the formation and good standing of the Seller and the Transferor, respectively.

(ii)Corporate Documents. The Purchasers shall have received duly certified copies of the Seller and the Transferor's certificate of formation and limited liability company agreement, resolutions of its directors approving the execution, delivery and performance of this Agreement and the other Basic Documents to which it is a party and the transactions contemplated hereby and thereby, and such other evidence of the authority and incumbency of officers and other appropriate personnel of the Seller and the Transferor, respectively.

(iii)Opinions. External counsel (which shall be satisfactory to the Purchasers in its reasonable judgment) for the Transferor, the Seller, Bridgecrest, the Collateral Custodian (which may be internal counsel) and the Performance Guarantor shall have furnished to the Purchasers written opinions dated as of the Original Execution Date in the form satisfactory to the Purchasers in its reasonable judgment.

(iv)Evidence of UCC Filing. On or prior to Effective Date of this Agreement, the Transferor shall record and file, at its own expense, a UCC-1 financing statement in each jurisdiction in which it is required by applicable law, authorized by and naming the Transferor as seller or debtor, naming the Purchasers as purchaser or secured party, naming the Receivables and the other Purchased Property as collateral, meeting the requirements of the laws of each such jurisdiction and in such manner as is necessary to perfect each sale, transfer, assignment and conveyance of Receivables to the Purchasers hereunder. Such UCC-1 financing statement shall be provided to the Purchasers on or prior to such Effective Date.

(v)Other Documents. The Transferor, the Servicer, the Collateral Custodian and the Performance Guarantor shall have provided such other documents as the Purchaser may reasonably request.

(c)Representations and Warranties. Each of the representations and warranties of each of the Transferor, the Servicer, the Seller, the Collateral Custodian and the Performance Guarantor, under each of the Basic Documents shall be true and correct in all material respects as of the date hereof (or, if another date for such representation or warranty is specified herein or therein, then such other date), and the Transferor, the Servicer, the Seller, the Collateral Custodian and the Performance Guarantor shall have performed in all material respects all covenants and agreements required to be performed by it hereunder and thereunder on or prior to the date hereof.

(d)UCC Search Reports. (A) The Transferor shall deliver to the Purchasers (i) certified copies of requests for information or copies (Form UCC-11) (or a similar search report certified by parties acceptable to the Purchasers) dated a date reasonably near the Original Execution Date listing all effective financing statements which name the Seller and the Transferor (under each of its present names and any previous names) as debtor or seller and which are filed in Arizona and Delaware, respectively, and such other jurisdictions where the Purchasers may reasonably request, together with copies of such financing statements, none of which shall cover any Receivables or other Purchased Property, (ii) search reports, each dated a date reasonably near the Original Execution Date with respect to federal, state and local tax liens, judgment liens and liens of the PBGC, respectively, filed against the Seller and the Transferor from the Secretaries of State of the States of Arizona and Delaware and from Maricopa County, Arizona and New Castle County, Delaware, respectively, or such other jurisdictions as the Purchasers shall reasonably request, in each case, showing no such Lien on any of the Receivables or other Purchased Property.

Section 6.2 Conditions to Obligation of the Purchasers. The obligation of the Purchasers to purchase Receivables and the related Purchased Property with respect to each Receivables Pool and the related Purchased Property under this Agreement, the related Second Step Pool Supplement and the related Second Step Receivables Assignment is subject to the satisfaction of the following conditions on or before the related Closing Date:

(a)Aggregate Purchase Commitment. After giving effect to such purchase and sale, the sum of the Cutoff Date Aggregate Outstanding Principal Balance for such Receivables Pool and the aggregate amount of the Cutoff Date Aggregate Outstanding Principal Balance for all previous Receivables Pools within the Commitment Period shall not exceed the amount of Purchaser’s Obligation as of such Closing Date and the sum of the Cutoff Date Aggregate Outstanding Principal Balance for all Flex Receivables purchased during the period beginning April 30, 2020 through and including July 2, 2020, taken together, shall not exceed $[***] (or such other later dates or higher amount as agreed to by the Purchasers in their sole discretion). Notwithstanding the foregoing or anything to the contrary herein, solely for the purposes of this Section 6.2(a), any Receivable sold on June 30, 2020, September 29, 2020, or December 30, 2020 shall not be deemed to be a Flex Receivable.

[***] Redacted for confidentiality purposes.

(b)Minimum Sales Amount. The Aggregate Outstanding Principal Balance as of the related Cutoff Date shall not be less than $[***] other than during the period from October 1, 2020 through March 22, 2021 when the Purchase Percentage will be 0%, (adjusted downward for a nonmaterial amount resulting from application of the Freestyle Selection by the Purchase Percentage, other than during the period from October 1, 2020 through March 22, 2021 when the Purchase Percentage will be 0%,) of the aggregate principal balance of quarterly pools of receivables meeting the criteria described in the definition of “Eligible Receivable” and such other documented administrative criteria as the Purchasers may agree to from time to time originated by the Seller during the second calendar week preceding the related Closing Date unless otherwise agreed by the Purchasers.

(c)Commitment Termination Event. No Commitment Termination Event shall have occurred and the Sale shall occur during the Commitment Period.

(d)Scheduled Commitment Termination Date. The Scheduled Commitment Termination Date shall not have occurred.

(e)Representations and Warranties. Each of the representations and warranties of each of the Transferor, the Servicer the Seller, the Collateral Custodian and the Performance Guarantor, under each of the Basic Documents shall be true and correct in all material respects at the time of each Closing Date (or, if another date for such representation or warranty is specified herein or therein, then such other date), and the Transferor, Servicer, the Seller, the Collateral Custodian and the Performance Guarantor shall have performed in all material respects all covenants and agreements required to be performed by it hereunder and thereunder on or prior to each Closing Date.

(f)Master Sale Agreement. Each of the conditions to the obligations of the Seller under the Master Sale Agreement shall have been satisfied without any waiver thereof.

(g)Security Interests. The security interest granted by the Transferor in favor of the Purchasers in each Receivables Pool previously sold to the Purchasers is a valid and continuing security interest prior to all other Liens, and is enforceable as against such other creditors of and purchasers from the Transferor.

(h)Computer Files Marked. Each of the Seller and the Servicer shall have, on or prior to each Closing Date, indicated in its Receivables System, that such Purchased Property has been sold to the Purchasers pursuant to this Agreement and the related Second Step Receivables Assignment.

(i)Documents to be Delivered By the Transferor. On or before such Closing Date, the Transferor shall have delivered to the Purchasers the following documents:

(i)The Second Step Pool Supplement. The Transferor will execute and deliver the related Second Step Pool Supplement and each of the other documents, certificates and instruments required to be attached thereto as set forth in Exhibit A (a final completed draft of which shall be delivered to the Purchasers at least one (1) Business Day prior to the Closing Date).

(ii)Master Sale Agreement Documents. The Transferor shall deliver to the Purchasers a set of all documents and other writings delivered in connection with the Master Sale Agreement.

[***] Redacted for confidentiality purposes.

(iii)Opinions. On the initial Closing Date, counsel for the Seller and the Transferor shall have furnished to the Purchasers one or more opinions of external counsel in the form satisfactory to the Purchasers in its reasonable judgment, dated as of the initial Closing Date, with respect to true sale characterization of the sales from the Seller to the Transferor pursuant to the Master Sale Agreement, nonconsolidation of the Transferor with the Seller and security interest matters (including creation, perfection and filing priority and control of electronic chattel paper) along with bring-downs of the opinions referred to in Section 6.1(b)(iii). For any subsequent Closing Date, such counsel shall deliver such bring-downs of the foregoing opinions or new opinions with respect to such matters or such other matters, in each case, due to material changes in circumstances or Requirements of Law (since previously delivered), in each case that the Purchaser shall reasonably request. For the first Closing Date for which there is, or will be, a concentration with respect to any State of outstanding Receivables in all Eligible Receivables Pools purchased by the Purchasers that exceeds 10% of the aggregate Outstanding Principal Balance of all Receivables in all purchased Eligible Receivables Pools after giving effect to such sale, counsel for the Seller and the Transferor shall have furnished to the Purchasers one or more opinions of external counsel in the form satisfactory to the Purchasers in its reasonable judgment, dated as of such Closing Date, with respect to state titling statute opinions with respect to the Lien on the related Financed Vehicles.

(iv) Other Documents. On each Closing Date, the Transferor, the Servicer and the Performance Guarantor shall provide such other documents as the Purchasers may reasonably request.

(j)Collateral Custodian Certificate. With respect to all Receivables included in the related Receivables Pool, the Transferor shall, or shall have caused the Seller to, have Delivered each related Original Contract Document to the Collateral Custodian, and the Purchasers shall have received the related executed Document Receipt in accordance with the requirements of the Collateral Custodian Agreement, and the Seller, the Transferor and the Servicer shall have marked their computer files with respect to such Receivables to indicate the interest of the Purchasers.

(k)Other Transactions. The transactions contemplated by the Master Sale Agreement and the Master Servicing Agreement shall be consummated to the extent that such transactions are intended to be substantially contemporaneous with the transactions hereunder.

Section 6.3 Conditions to Obligation of the Transferor. The obligation of the Transferor to sell the Receivables with respect to each Receivables Pool and the related Purchased Property under this Agreement, the related Second Step Pool Supplement and the related Second Step Receivables Assignment is subject to the satisfaction of the following conditions on or before the related Closing Date:

(a)Second Step Receivables Purchase Price. On such Closing Date, the Purchasers shall deliver to the Transferor the Second Step Receivables Purchase Price for such Receivables Pool, in accordance with Section 3.1(b) of this Agreement.

(b)Representations and Warranties True. The representations and warranties of the Purchasers under this Agreement and each of the other Basic Documents to which it is a party shall be true and correct in all material respects as of such Closing Date, and the Purchasers shall have performed in all material respects all covenants and agreements, if any, required to be performed by it hereunder and thereunder on or prior to such Closing Date.

(c)Documents to be Delivered By the Purchaser. On or before such Closing Date, the Purchasers shall have delivered to the Transferor the related Second Step Pool Supplement.

(d)Other Transactions. The transactions contemplated by the Master Sale Agreement and the Master Servicing Agreement shall be consummated to the extent that such transactions are intended to be substantially contemporaneous with the transactions hereunder in connection with such sale and such Closing Date.

(e)Other Documents. On such Closing Date, the Purchasers shall provide such other documents as the Transferor may reasonably request.

ARTICLE VII

COVENANTS OF THE TRANSFEROR

Section 7.1 Protection of Right, Title and Interest. The Transferor covenants and agrees with the Purchasers as follows:

(a)Protection of Title; Filings. The Transferor shall authorize and file such financing statements and amendments to financing statements and cause to be authorized, as applicable, and filed such continuation and other statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Purchasers under this Agreement, each Second Step Pool Supplement and each Second Step Receivables Assignment in the Receivables and the other Purchased Property and in the proceeds thereof. The Transferor shall deliver (or cause to be delivered) to the Purchasers file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.

(b)Name Change. The Transferor shall not change its State of organization or its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Transferor in accordance with Section 7.1(a) seriously misleading within the meaning of the UCC, unless it shall have given the Purchasers (i) at least 30 days prior written notice thereof if such change would create a new debtor under the UCC (which for purposes of this Section 7.1(b), shall not include a name change) or change the jurisdiction that would govern the perfection or effect of perfection against the Transferor and after delivery to the Purchasers of the applicable financing statements necessary to perfect or continue the perfection of the Purchaser’s security and ownership interests hereunder and under the other Basic Documents, or (ii) otherwise, notice thereof within 30 calendar days after effectiveness of such change, together with delivery to the Purchasers of the applicable financing statements necessary to perfect or continue the perfection of the Purchaser’s security and ownership interests hereunder and under the other Basic Documents.

(c)Executive Office; Maintenance of Offices. The Transferor shall (i) give the Purchasers at least 30 days prior written notice of any relocation of its principal executive office if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement Records; provided, that on or about April 1, 2017, the its principal place of business and chief executive office will be located at 1930 W. Rio Salado Pkwy, Tempe, AZ 85281 and (ii) deliver to the Purchasers acknowledgment copies of the applicable financing statements necessary to perfect or continue the perfection of their respective security or ownership interests hereunder and under the other Basic Documents (it being understood that amendments to all relevant financing statements will be filed in connection with the change in chief executive office described above). The Transferor shall at all times maintain offices from which it primarily services Receivables and its principal executive office within the United States of America.

(d)New Debtor. In the event that the Transferor shall change the jurisdiction in which it is formed or otherwise enter into any transaction which would result in a “new debtor” (as defined in the UCC) succeeding to the obligations of the Transferor hereunder, the Transferor shall comply fully with the obligations of Section 7.1(a).

(e)Receivables Systems. If the Transferor maintains computer systems, the Transferor shall maintain, or cause to be maintained, its computer systems so that, from and after the time of sale of the Receivables under this Agreement, if the computer systems and records (including any backup archives) shall refer to any such Receivable, they shall indicate clearly the interest of the Purchasers in such Receivable and that such Receivable is owned by the Purchasers. Indication of the Purchaser’s ownership of a Receivable shall be deleted from or modified on the computer systems and records of the Transferor, if any, when, and only when, the related Receivable shall have been paid in full or repurchased. The Transferor shall cause the Collateral Custodian or the E-Vault Provider on its behalf at all times to maintain “control” (as such term is used in Section 9-105 of the UCC) of all electronic records constituting or forming a part of a Receivable constituting electronic chattel paper on behalf of the Purchasers, as “secured party” (as such term is used in

Section 9-105 of the UCC) such that the Purchasers have had and at all times will have a first priority perfected security interest against the Seller and the Transferor and their creditors in such Receivable.

(f)Certificates of Title. If the Seller has not received a Certificate of Title related to a Purchased Receivable naming a Title Lien Nominee the first lien holder on such Certificate of Title for the related Financed Vehicle or the title application or other documentation necessary to obtain a Certificate of Title thereto noting such lien holder has not been submitted, then, promptly, but no later than 30 days following the related date of origination, the Transferor shall, or shall cause the Seller, to take all steps necessary to perfect the security interest against each Obligor in the related Financed Vehicle.

Section 7.2 Other Liens or Interests. Except for the sale contemplated by this Agreement and the Second Step Receivables Assignment, the Transferor shall not sell, pledge, assign or transfer any Receivable or the related Purchased Property (or any portion thereof) to any other Person, or grant, create, incur, assume or suffer to exist any Lien thereon or on any interest therein, and the Transferor shall defend the right, title and interest of the Purchasers in, to and under such Receivables and the related Purchased Property against all claims of third parties claiming through or under the Transferor. The Transferor shall not do anything to impair the right, title, ownership or security interest of the Purchasers in the Purchased Property.

Section 7.3 Perfection Costs and Expenses. The Transferor agrees to pay all reasonable costs and disbursements in connection with the perfection, as against all third parties, of the Purchaser’s right, title and interest in and to the Purchased Property with respect to each Receivables Pool.

Section 7.4 Separateness. Each of the Seller and the Transferor has taken, and shall continue to take, steps to make it unlikely that a voluntary or involuntary application for relief by the Seller under the Bankruptcy Code or similar applicable Requirements of Law in any state jurisdiction, would result in consolidation of the assets and liabilities of the Transferor with those of the Seller. These steps include the maintenance of the Transferor as a separate, limited-purpose subsidiary pursuant to the limitations in the Transferor’s limited liability company agreement and compliance with any assumptions or statements of fact in the non-consolidation opinion delivered to the Purchasers in connection with this Agreement. These limitations include restrictions on the nature of the Transferor’s business and a restriction on the Transferor’s ability to commence a voluntary case or proceeding under the United States Bankruptcy Code or similar applicable state Requirements of Law without the unanimous affirmative vote of all of the Transferor’s directors. Under the circumstances set forth in the Transferor’s limited liability company agreement, the Transferor is required to have at least one (1) director who qualifies thereunder as an independent director.

Section 7.5 Notice of Servicer Termination; Etc. The Transferor shall notify the Purchasers (A) as soon as possible and in any event within five (5) Business Days after it obtains knowledge of the occurrence of an Event of Servicing Termination; and (B) promptly after the Transferor obtains knowledge thereof, notice of any litigation, investigation or proceeding that may exist at any time between the Transferor and any Person or any litigation or proceeding relating to this Agreement, any other Basic Document or the Purchased Property.

Section 7.6 Conduct of Business; Ownership. The Transferor shall carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly organized, validly existing and in good standing as a domestic limited liability company in its jurisdictions of formation and maintain all requisite authority, licenses and permits to conduct its business in each jurisdiction in which its business is conducted, except for any such noncompliance that would not reasonably be expected to have a Material Adverse Effect on the Purchasers or any of the Purchased Property or any of the transactions contemplated by the Basic Documents. The Transferor shall at all times be a wholly-owned subsidiary of the Seller.

Section 7.7 Collections. In the event the Transferor receives any Collections after the related Cutoff Date with respect to the Purchased Property, it shall turn over any Collections received by it with respect to any Purchased Property to the Servicer within two (2) Business Days after its identification of such Collections.

Section 7.8 Consolidations, Mergers and Sales of Assets.

(a)The Transferor shall not consolidate or merge with or into any other Person or sell, lease or otherwise transfer all or substantially all of its assets to any other Person.

(b)The Transferor hereby agrees that, until the last Business Day of the twelfth (12th) month following the latest maturing Receivable, it shall not (i) take any action prohibited by (or inconsistent with) its limited liability company agreement, or (ii) without the prior written consent of the Purchasers, amend its limited liability company agreement.

Section 7.9 Master Sale Agreement. The Transferor, on its own behalf and on behalf of the Purchasers and the other Seller Indemnified Parties, shall promptly enforce all covenants, indemnities and other obligations of the Seller contained in the Master Sale Agreement (including Sections 6.11 and 7.2 thereof). The Transferor shall deliver consents, approvals, directions, notices, waivers and take other actions under the Master Sale Agreement as may be directed by the Purchasers.

Section 7.10 Operation of the Transferor. Without limiting the generality of Sections 7.4 and 7.8(b), the Transferor shall be operated and managed in accordance with rating agency requirements for multi-use special purpose entities.

Section 7.11 Selection Standards; Quarterly Meetings.

(a)Until the Commitment Termination Date, in addition to the Quarterly Operations Review (as defined in the Master Servicing Agreement), the Transferor shall participate in quarterly meetings with the Purchasers (“Quarterly Selection Standards Meeting”) on the 60th day (or such other day as soon thereafter as the Transferor and the Purchasers shall mutually agree) of each quarter and if such day is not a Business Day, then on the next Business Day (or as Parties may mutually agree) by telephone or, if agreed to by the parties, in person, to discuss and review, among other things, loss and delinquency performance of the Seller’s originated portfolio of motor vehicle installment sales contracts and installment loans, any material changes to the Seller’s Credit Policy and other origination or underwriting guidelines, processes or policies, including special origination programs, that could influence, modify or impact the Purchased Property or the mix or characteristics of future Receivables Pools, as well as any proposed amendments or modifications to the definitions of Eligible Receivable or Eligible Receivables Pool since the preceding Quarterly Selection Standards Meeting.

(b)During, or following, any Quarterly Selection Standards Meeting, the Purchasers may propose a change by delivering a written request to the Transferor containing such proposed changes (“Selection Standards Change Notice”) to the definitions of Eligible Receivable or Eligible Receivables Pool. If Purchasers and the Transferor reach mutual written agreement regarding such changes (“Selection Standards Modification”), then the definitions of Eligible Receivable or Eligible Receivables Pool shall be amended to include such Selection Standards Modification for any Receivables Pools purchased on or after the date of such mutual agreement, or if Purchasers and the Transferor are not able to reach mutual agreement regarding such Selection Standards Modification within 30 days after receipt of the related Selection Standards Change Notice, then no change will occur to the definitions of Eligible Receivable or Eligible Receivables Pool.

Section 7.12 Furnishing of Information and Inspection of Records. If at any time the Transferor maintains any information regarding the Purchased Property, the Transferor shall furnish to the Purchasers from time to time such information with respect to the Purchased Property as the Purchasers may reasonably request. If the Transferor maintains such information, the Transferor shall, at any time and from time to time during regular business hours, as requested by the Purchasers, permit the requesting party, or its agents, representatives or regulators, (i) to examine and make copies of and take abstracts from all books, records and documents (including computer tapes and disks) relating to the Receivables or other Purchased Property, and (ii) to visit the offices and properties of the Transferor for the purpose of examining such materials described in clause (i), and to discuss matters relating to the Purchased Property or the Transferor’s performance hereunder and under the other Basic Documents to which such Person is a party with any of the officers, directors, employees or independent public accountants of the Transferor having knowledge of such matters.

Section 7.13 Compliance with Laws, Etc. The Transferor shall comply with all Requirements of Law applicable to it, except for any such noncompliance that would not reasonably be expected to have a Material Adverse Effect on the Purchasers or any of the Purchased Property or any of the transactions contemplated by the Basic Documents.

Section 7.14 Indemnity.

(a)The Transferor shall indemnify, defend and hold harmless the Purchasers and its officers, directors, employees, Affiliates and agents (the “Indemnified Parties”) from and against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from the use, ownership or operation by the Transferor or any of its Affiliates of any Financed Vehicle.

(b)The Transferor shall indemnify, defend and hold harmless the Indemnified Parties from and against any and all reasonable and documented costs, expenses, losses, claims, damages and liabilities solely to the extent that such cost, expense, loss, claim, damage or liability arose out of or resulted from the action or inaction (including any failure to comply with any applicable Requirements of Law) of any third party to whom the Transferor subcontracted or delegated the performance of its duties under this Agreement or the other Basic Documents and only to the extent such cost, expense, loss, claim, damage or liability is not related to any credit loss.

(c)The Transferor shall indemnify, defend and hold harmless the Indemnified Parties from and against any and all costs, expenses, losses, claims, damages and liabilities, including reasonable external legal fees and expenses (i) to the extent that such cost, expense, loss, claim, damage, or liability arose out of, resulted from or was imposed upon any such Indemnified Party through the negligence (except for reasonable errors in judgment), willful misfeasance or bad faith of the Transferor or agent in the performance of its duties under this Agreement or the other Basic Documents to which it is a party or by reason of a breach of its obligations or duties under this Agreement or the other Basic Documents to which it is a party, (ii) arising out of, or resulting from, any breach of any representation, warranty, covenant or obligation of the Transferor in this Agreement, the other Basic Documents to which it is a party or in any Schedule, Exhibit, written statement or certificate furnished by the Transferor pursuant to this Agreement or the other Basic Documents to which it is a party (in each case, as each such representation or warranty would read if all qualifications as to knowledge or materiality, including each reference to the defined term “Material Adverse Effect,” were deleted therefrom), (iii) arising out of, or resulting from, any untrue statement of a material fact in any written information provided or delivered by the Transferor, or any Affiliate of the Transferor on its behalf, to the Purchasers pursuant to, for the purposes of, or in connection with, this Agreement or the other Basic Documents to which it is a party, (iv) arising out of, or resulting from, any action, suit, proceeding or claim or other litigation to the extent resulting from the actions or omissions of the Seller, the Transferor or any of their consolidated Affiliates or any of their respective agents, directors, officers, servants or employees, excluding, however, any costs, expenses, losses, claims, damages or liabilities resulting from the gross negligence, bad faith or willful misconduct on the part of any such Indemnified Party, and (v) resulting from the failure of either Purchaser to have a perfected and enforceable security interest against a related Obligor in the related Financed Vehicle, including any failure to obtain a first priority perfected security interest in the related Financed Vehicle in connection with the origination of the Receivable. Indemnification under this Section 7.14 shall include reasonable fees and expenses of one external counsel and reasonable costs and expenses of litigation; provided, however, that the Transferor pursuant to this Section 7.14, the Seller pursuant to Section 5.4 of the Master Sale Agreement and the Servicer pursuant to Section 5.2 of the Master Servicing Agreement shall only be responsible collectively for reasonable fees and expenses of one external counsel. If the Transferor has made any indemnity payments pursuant to this Section 7.14 and the recipient thereafter collects any of such amounts from others with respect to such claim, the recipient shall promptly repay such amounts collected to the Servicer, without interest.

(d)This Section 7.14 shall survive any termination of this Agreement.

Section 7.15 Publicity. All media releases, public announcements and public disclosures by any Party or its respective employees or agents, relating to this Agreement or the other Basic Documents or the transactions contemplated hereby or thereby or the name of the Purchasers or the Transferor, including promotional or marketing material, shall be coordinated with and consented to by the other Party in writing prior to the release thereof, which

consent shall not be unreasonably withheld or delayed; provided, however, that any announcement intended solely for internal distribution by the disclosing Party to its directors, employees, officers and agents or any disclosure required by Requirements of Law or by accounting requirements, shall not require such coordination or consent.

Section 7.16 No Solicitation.The Transferor agrees that it will not, directly or indirectly, specifically solicit, and will not permit any of its Affiliates to, directly or indirectly, specifically solicit, any Obligor (in writing or otherwise) to refinance any Purchased Receivable (including solicitations for the purchase of a new vehicle); provided, however, that each of Transferor and its Affiliates may, directly or indirectly, engage in a general solicitation directed generally at the obligors of receivables originated or serviced by the Seller or the Servicer at large, so long as the Obligors under the Purchased Receivables are not the predominant targets of such general solicitation for refinancing.

Section 7.17 Remediation. The Transferor shall (i) provide the Purchasers with written notice, to the extent not prohibited by any applicable Requirements of Law, of any Remediation if such Remediation could reasonably be expected, individually or in the aggregate with any other Remediation, to have a Material Adverse Effect on the Purchasers or any of the Purchased Property and (ii) implement any Remediation in accordance with all terms thereof and all applicable Requirements of Law.

Section 7.18 Quarterly Statements as to Compliance. The Transferor shall deliver to the Purchasers, on or before the forty-fifth (45th) day following each calendar quarter, beginning February 14, 2017 (or, if such day is not a Business Day, the next succeeding Business Day), an Officer’s Certificate of the Transferor, dated as of the last Business Day of the immediately preceding calendar quarter, in each instance stating that (i) a review of the activities of the Transferor during the preceding calendar quarter (or, with respect to the first such certificate, such period as shall have elapsed from the Effective Date to the date of such certificate) and of its performance under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Transferor has fulfilled all its obligations under this Agreement in all material respects throughout such period, or, if there has been a default in the fulfillment of any such obligation, in any material respect specifying each such default known to such officer and the nature and status thereof.

Section 7.19 Additional Covenants. From the date hereof until the later of the Commitment Termination Date and the date on which the Receivables have been paid in full, the Transferor will:

(a)Preservation of Existence; License. It will preserve and maintain its existence, rights, franchises and privileges in its State of formation, and qualify and remain qualified in good standing in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification has had, or would reasonably be expected to have, a Material Adverse Effect and (without suspension or limitation) will not terminate or let lapse any licenses, consents or approval currently held by it necessary to ensure its performance of any duty contemplated by this Agreement and the other Basic Document to which it is a party.

(b)Performance and Compliance with Contracts. It will, at its expense, timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts and in and all other agreements related to such Contracts. It shall enforce its rights under this Agreement and the other Basic Documents.

(c)Keeping of Records and Books of Account. It will (or will cooperate with the Servicer to) maintain and implement administrative and operating procedures (including an ability to re-create records evidencing Receivables in the event of the destruction of the originals thereof, in the case of tangible Contracts, or loss of access to the vault system of the Contracts maintained therein, in the case of electronic Contracts), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables.

(d)Transferred Assets. With respect to each Receivable transferred or acquired by it, it will: (i) transfer or acquire such Receivable pursuant to and in accordance with the terms of the Master Sale Agreement and this Agreement, (ii) take all action necessary to perfect, protect and more fully evidence the assignee’s interest in such Receivable, including (A) filing and maintaining, effective financing statements (Form UCC-1) in all necessary or appropriate filing offices, and filing continuation statements, amendments or

assignments with respect thereto in such filing offices and (B) executing or causing to be executed such other instruments or notices as may be necessary or appropriate and (iii) taking all additional action that the Purchasers may reasonably request, including the filing of financing statements to perfect, protect and more fully evidence the respective interests of the parties to the Master Sale Agreement and this Agreement in the Purchased Property.

(e)Collection Policy. It will (or will cooperate with the Servicer to), to the extent applicable, comply with the Collection Policy with respect to each Receivable.

(f)Taxes. It will file or cause to be filed all federal and material state, local or foreign tax returns that are required to be filed by it. It will shall pay all federal or material amounts of state, local or foreign taxes and all material assessments made against it or any of its property (other than any amount of tax the validity of which it plans to contest in good faith by appropriate proceedings and with respect to which it retains reserves on its books).

(g)Use of Proceeds. The Transferor will use the proceeds only to acquire Receivables from the Seller.

(h)Liens. It will not create, or participate in the creation of, or permit to exist, any Lien with respect to the Collection Account or any account into which collections on the Receivables are deposited, except as set forth in the Basic Documents.

(i)Reporting. It will distribute, or cause to be distributed, to the Purchasers:

(i)Monthly Reports. Not later than the Reporting Date preceding each Payment Date, a Monthly Servicer Report.

(ii)Additional Data. Additionally, and solely to the extent such data is available, the Transferor shall provide, or reasonably cooperate with the Servicer to provide the Purchasers the Monthly Servicer Report or Monthly Data File, as applicable, in a format reasonably acceptable to the Purchasers, with data regarding the characteristics of the Receivables, in form and substance reasonably acceptable to the Purchasers, including (A) delinquencies (including a list of Delinquent Receivables), and (B) annualized losses or loss information by vintage origination year on the Seller’s originated portfolio of motor vehicle installment sales contracts and installment loans, presented on a quarterly basis, in each case of clause (A) and (B), until the third annual anniversary of the Commitment Termination Date of this Agreement (or, if the Seller provides such information to another finance counterparty or the Seller makes such information publicly available, until the final payment or liquidation of all of the Purchased Receivables).

(iii)Income Tax Liability. Within ten (10) Business Days after the receipt of revenue agent reports or other written proposals, determinations or assessments of the Internal Revenue Service or any other taxing authority which propose, determine or otherwise set forth positive adjustments to the tax liability of any “Affiliated Group” (within the meaning of Section 1504(a)(l) of the Code) which equal or exceed one million dollars ($1,000,000) with respect to the Seller or twenty-five thousand dollars ($25,000) with respect to the Transferor, telephonic or emailed notice (confirmed in writing within five (5) Business Days) specifying the nature of the items giving rise to such adjustments and the amounts thereof.

(iv)Tax Returns. Upon demand by the Purchasers, copies of all federal, State and local tax returns and reports filed by the Seller or the Transferor (excluding sales, use and like taxes), to the extent the Seller or the Transferor is required to file such tax returns.

(v)Auditors’ Management Letters. Promptly after any auditors’ management letters are received by the Seller or the Transferor or by its accountants, which refer in whole or in part to any inadequacy, defect, problem, qualification or other lack of fully satisfactory accounting controls utilized by the Seller or the Transferor.

(vi)ERISA. Promptly after receiving written notice of any “Reportable Event” (as defined in Title IV of ERISA) with respect to the Seller or the Transferor (or any ERISA Affiliate thereof), a copy of such written notice.

(vii)Notice of Material Events. Promptly after obtaining knowledge of an event or circumstance that is likely to result in a Commitment Termination Event, Event of Servicing Termination or have a Material Adverse Effect on the Seller or the Transferor, the Purchased Property, or the Purchasers, notice of such event or circumstance. Promptly upon the entry of a judgment against the Seller of $1,000,000 or more.

(j)Accounting Policy. It will promptly notify the Purchasers of any material change in its accounting policies.

(k)Other. It will furnish to the Purchasers promptly, from time to time, such other information, documents, records or reports respecting the Purchased Property or the condition or operations, financial or otherwise, of it as the Purchasers may from time to time reasonably request in order to protect the interests of the Purchasers under or as contemplated by the Basic Documents.

(l)Compliance with System Description. It will, and will cause the Collateral Custodian, E-Vault Provider and, to the extent applicable to the then-applicable E-Vault System, E-Sign Provider to, at all times comply in all material respects with the System Description with respect to matters related to the perfection in the Receivables and the Purchased Receivables by “control” (as such term is used in Section 9-105 of the UCC).

(m)Financial Statements. To the extent not filed with the Commission and publicly available on EDGAR, within 120 days after the end of each fiscal year and 60 days after each fiscal quarter (or if the Seller is a reporting company under the Securities and Exchange Act of 1934, such period as required thereunder for the filing thereof), the Transferor will cause the Seller to provide to the Purchasers copies of its audited financial statements for the prior fiscal year or unaudited financial statements with respect to each of the first three fiscal quarters.

(n)Access to Systems. During the period beginning on the initial Closing Date and ending thirty (30) days after the Commitment Period, the Transferor shall, or cause the Seller to, give the Purchasers and their duly authorized representatives, attorneys and auditors, upon reasonable request of Purchaser, on-site access to the Transferor and the Seller’s loan originations systems and document repository, which access shall facilitate quality assurance and quality control reviews, to enable the Purchasers to back-up Receivables Files to the Purchasers’ systems, enable the Purchasers to review Receivables originations processes, procedures, approvals and boarding and permit the Purchasers with reasonable access to the Seller’s quality reporting and backup documentation (e.g., workpapers, sampled transactions and account-level results). Promptly following the end of each calendar month during the period beginning on the initial Closing Date and ending thirty (30) days after the Commitment Period, the Transferor shall, and shall cause the Seller to, at the reasonable request of Purchasers, provide the Purchasers with screenshots that would enable the Purchasers to complete the foregoing review on a sample of Receivables determined by the Purchasers (limited to one hundred (100) Receivables in any calendar week).

(o)Annual Opinion of Counsel. Counsel for the Transferor shall deliver on or before March 15 of each year (or, if such date is not a Business Day, the next succeeding Business Day), beginning March 15, 2018, an Opinion or Opinions of Counsel addressed to the Purchasers stating that, in the opinion of such counsel, such action has been taken with respect to the authorization, execution and filing of any financing statements and continuation statements as is necessary to maintain the liens and security interests created under this Agreement and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the liens and security interests created under this Agreement.

(p)Delivery of Servicer Files. To the extent that any portion of the Servicer Files related to any Purchased Receivable is not in the possession of the Servicer immediately prior to any related Closing Date, the Transferor shall, and shall cause the Seller to, deliver such portion of the Servicer Files for each Receivable listed on the Schedule of Receivables delivered to the Purchasers on each Closing Date.

Section 7.20 Negative Covenants. From the date hereof until the later of the Commitment Termination Date and the date on which the Receivables have been paid in full, the Transferor will not:

(a)Other Business. It will not (i) engage in any business other than the transactions contemplated by the Basic Documents, (ii) incur any indebtedness, obligation, liability or contingent obligation of any kind other than pursuant to or as contemplated by the Basic Documents (excluding any incidental expenses incurred in connection with the performance of its obligations under the Basic Documents) or (iii) form any subsidiary or make any investments in any other person.

(b)Receivables Not to be Evidenced by Instruments. It will take no action to cause any Receivable that is not, as of the Closing Date or the related Settlement Date, as the case may be, evidenced by an “instrument” (as defined in Article 9 of the UCC), other than an instrument that constitutes part of chattel paper, to be so evidenced except in connection with the enforcement or collection of such Receivable.

(c)True Sale. It will not account for or treat (whether in its financial statements or otherwise) the transfers by the Seller to the Transferor or the Transferor to the Purchasers in any manner other than as the sale, or absolute assignment, of the Receivables and related assets.

(d)ERISA Matters. It will not, to the extent it could reasonably result in material liability to or impairment of any assets of or interests of the Purchaser in assets of the Transferor, (i) engage or permit any ERISA affiliate to engage in any prohibited transaction for which an exemption is not available or has not previously been obtained from the United States Department of Labor, (ii) permit to exist any accumulated funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the Code with respect to any Pension Plan, (iii) fail to make any payments to a Multiemployer Plan that it or any ERISA Affiliate is required to make under the agreement relating to such Multiemployer Plan or any law pertaining thereto, (iv) permit the filing of any notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA, (v) permit the termination of any Pension Plan under Section 4041(c) of ERISA or the institution by the Pension Benefit Guaranty Corporation of proceedings to terminate or appoint a trustee to administer a Pension Plan, or (vi) permit any event or condition that might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, except for non-compliance which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(e)Formation Documents; Transfer Agreement. Without the prior consent of the Purchasers, the Transferor will not amend, modify, waive or terminate any provision of its formation documents, and the Seller and the Transferor will not amend, modify, waive or terminate any provision of the Basic Documents.

(f)Changes in Payment Instructions to Obligors. It will not add or make any change, or permit the Servicer to make any change, in its instructions to Obligors regarding payments to be made with respect to the Receivables, unless the Purchasers shall have consented to such change and has received duly executed copies of all documentation related thereto, which documentation shall be satisfactory in form and substance to the Purchasers.

(g)Extension or Amendment of Receivables. It will not, except as otherwise permitted in pursuant to this Agreement or the other Basic Documents, extend, amend or otherwise modify, or permit the Servicer to extend, amend or otherwise modify, the terms of any Receivables.

(h)Credit Policy. During the Commitment Period, the Transferor will not, and it will not permit the Seller to, amend, modify, restate or replace, in whole or in part, its identity, income, and payment verification practices, including, but not limited to, any change to Exhibit E attached hereto, without written notification to the Purchasers; provided that the prior written consent of the Purchasers shall be required if such amendment, modification, restatement or replacement would impair the collectability of any Receivable or otherwise materially and adversely affect the interests or the remedies of the Purchasers under this Agreement or any other Basic Document. The Transferor will provide, or shall cause to be provided, to the Purchasers on a [***] basis a current version of the Seller’s policies concerning generation of financing terms as well as (i) a comparison showing all changes to the Seller’s policies concerning generation of financing terms as provided to the Purchasers during the previous calendar month or (ii) an affirmation that no changes were made to the Seller’s policies concerning generation of financing terms as provided to the Purchasers during the previous [***], noting that the Purchasers may also request a current version of the Seller’s policies concerning generation of financing terms at any point in time. For the avoidance of doubt, changes to the Receivable Structure Constraints shall be considered material changes to policies concerning generation of financing terms. The Transferor will provide, or shall cause to be provided, to the Purchasers on a monthly basis a current version of the Seller’s Credit Policy as well as (i) a comparison showing all changes to the Seller’s Credit Policy as provided to the Purchasers during the previous [***] or (ii) an affirmation that no changes were made to the Seller’s Credit Policy as provided to the Purchasers during the previous [***], noting that the Purchasers may also request a current version of the Seller’s Credit Policy at any point in time.

(i)Collection Policy. The Transferor will not amend, modify, restate or replace, in whole or in part, the Collection Policy, as such guidelines, policies and procedures as may be amended, modified, restated, replaced or otherwise supplemented from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement, and as modified by the Servicing Exceptions, if any, or with respect to any successor Servicer, the customary servicing and collection guidelines, policies and procedures of such successor Servicer with such changes as shall be required by the Purchasers and agreed to in writing by such successor Servicer and the Purchasers, as such agreed upon guidelines, policies and procedures may be changed from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement.

(j)No Assignments. It will not assign or delegate, grant any interest in or permit any Lien (other than Permitted Liens) to exist upon any of its rights, obligations or duties under this Agreement or any other Basic Document without the prior written consent of the Purchasers.

Section 7.21 Accountant’s Letter. Not later than thirty (30) days after the end of each calendar quarter, upon the request of the Purchasers, the Transferor shall cause a firm of independent certified public accountants, to furnish to the Purchasers a letter in form and substance acceptable to the Purchasers, stating as of the Cutoff Date that they have performed specified procedures with respect to each Receivables Pool sold to the Purchasers during the preceding calendar quarter. The Transferor shall be responsible for all expenses associated with obtaining such agreed upon procedures letters up to $[***] annually; provided that in the event an agreed upon procedures letter reveals deviations material in nature or amount, then the Transferor shall be obligated to reimburse up to an additional $[***] of agreed upon procedure letters costs incurred in the following 12-month period.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.1 Obligations of the Transferor. The obligations of the Transferor under this Agreement shall not be affected by reason of any invalidity, illegality or irregularity of any Receivable with respect to any Receivables Pool.

[***] Redacted for confidentiality purposes.

Section 8.2 Repurchase of Receivables Upon Breach by the Transferor. Upon (i) the discovery of any breach of any representation or warranty as set forth in Section 5.2(cc) of this Agreement (and with respect to paragraphs (i)(B)(ii) and (x) therein, without giving effect to any knowledge requirements) or (ii) the Purchasers incurring any cost, expense, loss, claim, damage or liability resulting from the failure of either Purchaser to have a perfected and enforceable security interest against a related Obligor in the related Financed Vehicle (including any failure to obtain a first priority perfected security interest in the related Financed Vehicle in connection with the origination of the Receivable), the Party discovering such breach shall give prompt written notice of the breach to the other Parties. Such notice shall specify the reason for such ineligibility or breach and shall identify all Receivables that the party preparing such notice knows is so ineligible or in breach as of such date. Unless the breach described in clause (i) above has been cured in all material respects by the last day of the Collection Period immediately following the Collection Period during which such breach is discovered or notice of such breach is given and, with respect to the failure described in clause (ii) above, in each such circumstance, the Transferor shall repurchase, as of the last day of such Collection Period, any Receivable for which such representation or warranty was breached for the Warranty Payment. In consideration of the repurchase of a Warranty Receivable, the Transferor shall remit, or cause to be remitted the Warranty Payment to the applicable Collection Account for distribution pursuant to Section 4.2 of the Master Servicing Agreement. The obligation of the Transferor to repurchase any Receivable as to which a breach has occurred and is continuing, shall, if such obligation is fulfilled, constitute the sole remedy (except as provided in Section 7.14 of this Agreement) against the Transferor for such breach available to the Purchasers.

Section 8.3 Assignment of Warranty Receivables. With respect to all Receivables repurchased pursuant to this Agreement, the Purchasers shall assign to the Transferor, without recourse, representation or warranty to the Transferor, all the Purchaser’s right, title and interest in and to such Receivables, and all security and documents relating thereto.

Section 8.4 Amendment. This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Transferor and the Purchasers.

Section 8.5 Waivers. No failure or delay on the part of the Purchasers in exercising any power, right or remedy under this Agreement, any Second Step Pool Supplement or any Second Step Receivables Assignment shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy.

Section 8.6 Notices. All communications and notices pursuant hereto to either Party must be in writing personally delivered, sent by facsimile or email and shall be deemed to have been duly given at the address, fax number or email for each Party set forth below.

To Transferor:    Carvana Auto Receivables 2016-1 LLC

c/o Carvana, LLC, its sole member

1930 W. Rio Salado Pkwy

Tempe, AZ 85281

Attention: General Counsel

Email: DL-CarvanaLegal@carvana.com

With a copy to:        Snell & Wilmer L.L.P.

400 East Van Buren

Phoenix, Arizona 85004-2202

Attention: Brian Burke

602.382.6379

bburke@swlaw.com

To Purchasers:    Ally Bank

500 Woodward Avenue

Detroit, MI 48226

Attn: Scott Brobecker

Email: Scott.Brobecker@ally.com

and:        Ally Financial

Ally Detroit Center

500 Woodward Avenue

MC: MI-01-10-LEGAL

Detroit, MI 48226

Attn: Richard V. Kent

Fax No.: (313) 334-3276

Section 8.7 Costs and Expenses. Except as otherwise provided in this Agreement or the other Basic Documents, the Transferor agrees to pay to the Purchasers all reasonable costs and expenses in connection with the preparation, execution and delivery of this Agreement and the other Basic Documents and the other documents to be delivered hereunder or in connection herewith and any requested amendments, waivers or consents hereof including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Purchasers (which shall not exceed $[***] under the Basic Documents), with respect thereto and all costs and expenses, if any, in connection with the enforcement of this Agreement and the other documents delivered hereunder or in connection herewith.

Section 8.8 Survival. The respective agreements, representations, warranties and other statements by the Transferor and the Purchasers set forth in or made pursuant to this Agreement shall remain in full force and effect and shall survive the closing under Section 3.2 and any sale, transfer or other assignment of the Receivables or other Purchased Property by the Purchasers.

Section 8.9 Headings and Cross-References. The various headings in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement.

Section 8.10 Governing Law, Submission to Jurisdiction, Etc.

(a)THIS AGREEMENT AND THE SECOND STEP RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5‑1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS..

(b)THE TRANSFEROR AND THE PURCHASERS HEREBY MUTUALLY AGREE TO SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER BASIC DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF THE TRANSFEROR AND THE PURCHASERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)THE TRANSFEROR AND PURCHASERS EACH HEREBY WAIVES (TO THE EXTENT THAT IT MAY LAWFULLY DO SO) ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER BASIC DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. INSTEAD, ANY DISPUTE RESOLVED IN COURT SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

[***] Redacted for confidentiality purposes.

Section 8.11 Counterparts; Facsimile and Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which will be an original, but which together will constitute one and the same instrument. This Agreement may be executed and delivered electronically or by facsimile. Any electronic or facsimile signatures will have the same legal effect as manual signatures. The words “execution”, “signed”, “signature”, and words of like import in this Agreement or in any such amendment, waiver, certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the UCC.

Section 8.12 Further Assurances. The Transferor and Purchasers shall each, at the request of the other, execute and deliver to the other all other instruments that either may reasonably request in order to more fully effect the sale of the Purchased Property to the Purchasers.

Section 8.13 No Reliance. The Purchasers acknowledges and agrees that it is purchasing the Receivables without recourse to the Transferor (other than as otherwise provided in this Agreement).

Section 8.14 Severability of Provisions. If any provision of this Agreement is invalid or unenforceable, then, to the extent such invalidity or unenforceability shall not deprive either Party of any material benefit intended to be provided by this Agreement, all of the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the parties hereto.

Section 8.15 Assignment. Subject to the terms of the Confidentiality and Reconstitution Agreement, neither the Transferor nor the Purchasers may assign or otherwise transfer its rights and obligations under this Agreement without the prior written consent of the other Party.

Section 8.16 No Third Party Beneficiaries. This Agreement does not create, and shall not be deemed to create, a relationship between the Parties or any of them and any third party in the nature of a third party beneficiary or fiduciary relationship;provided, however, that the existence of this Section 8.15 shall not relieve the Transferor of its indemnity obligations set forth in Section 7.14 of this Agreement and the Purchasers may enforce such indemnification claims for the Indemnified Parties set forth in Section 7.14.

Section 8.17 No Petition Covenant. Notwithstanding any prior termination of this Agreement, no party to this Agreement shall, prior to the date which is one year and one day after the later of (i) the final payment or liquidation of all Receivables purchased by Ally Bank and Ally Financial Inc. under the Master Purchase Agreement (Flow) and (ii) the repayment in full of all obligations of each Bankruptcy Remote Party in respect of all amounts owing by any Bankruptcy Remote Party to the Administrative Agent and the Lenders pursuant to the Loan and Security Agreement or any other similar financing arrangement to which Ally Bank or any of its Affiliates is a party other than inchoate obligations for which no claim has been made, acquiesce, petition or otherwise invoke or cause any Bankruptcy Remote Party to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against such Bankruptcy Remote Party under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of such Bankruptcy Remote Party or any substantial part of its property, or ordering the winding up or liquidation of the affairs of any Bankruptcy Remote Party under any federal or state bankruptcy or Insolvency Proceeding.

Section 8.18 Special Acknowledgement of Purchasers. Each Purchaser hereby acknowledges that it is a sophisticated purchaser capable of analyzing the risk of purchasing the Receivables and that subsequent to the consummation of the transaction contemplated hereby, the Purchasers shall bear all of the risks of ownership of the Receivables, including the risks of defaults and credit losses with respect thereto, except as otherwise set forth in any of the Basic Documents.

Section 8.19 Effect of Amendment and Restatement. It is the intent of the parties hereto that this Second Amended and Restated Master Purchase and Sale Agreement shall, as of the date hereof, amend and restate and replace in its entirety the Amended and Restated Master Purchase and Sale Agreement (Flow), dated March 6, 2017 (the “Original Amended Master Purchase and Sale Agreement”), among the Transferor and the Purchasers, which amended and restated and replaced in its entirety the Master Purchase and Sale Agreement (the “Original Master Purchase and Sale Agreement”), dated December 22, 2016, among the Transferor and the Purchasers; provided that, with respect to the period of time from December 22, 2016 through Mach 6, 2017, the rights, obligations, representations and warranties of the parties shall be governed by the Original Master Purchase and Sale Agreement and, with respect to the period of time from March 6, 2017, through the date hereof, the rights, obligations, representations and warranties of the parties shall be governed by the Original Amended Master Purchase and Sale Agreement; provided further, that the amendment and restatement of the Original Amended Master Purchase and Sale Agreement shall not affect any of the grants, transfers or conveyances contemplated by the Original Amended Master Purchase and Sale Agreement to have occurred prior to the date hereof. Each of the parties hereto, in each of its respective capacities hereunder and under each of the other Basic Documents, as applicable, hereby consents to the amendment and restatement of the Original Amended Master Purchase and Sale Agreement and each of the other Basic Documents on the date hereof, and does hereby acknowledge receipt of notice of such amendments and restatements and waives any further notice requirement with respect thereto, if and to the extent any such consent or notice was required hereunder or thereunder.

Section 8.20 Recourse Limited to Collateral; Subordination.

(a)The obligations of the Transferor under this Agreement and the other Transaction Documents are obligations solely of the Transferor and shall not constitute a claim against the Transferor to the extent that the Transferor does not have funds sufficient to make payment of such obligations. In furtherance of and not in derogation of the foregoing, to the extent the Transferor enters into secured transactions, the parties hereto acknowledge and agree that they shall have no right, title or interest in or to Other Assets. To the extent that, notwithstanding the agreements and provisions contained in the preceding sentences of this subsection, any of the parties hereto either (i) asserts an interest or claim to, or benefit from, Other Assets, or (ii) is deemed to have any such interest, claim to, or benefit in or from Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including by virtue of Section 1111(b) of the Bankruptcy Code or any successor provision having similar effect under the Bankruptcy Code), then the parties hereto further acknowledge and agree that any such interest, claim or benefit in or from Other Assets is and shall be expressly subordinated to the indefeasible payment in full of all obligations and liabilities of the Transferor which, under the terms of the relevant documents relating to such Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distribution or application under applicable law, including insolvency laws, and whether asserted against the Transferor), including the payment of post-petition interest on such other obligations and liabilities. This subordination agreement shall be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code. The parties hereto further acknowledge and agree that no adequate remedy at law exists for a breach of this Section 8.20 and the terms of this Section 8.20 may be enforced by an action for specific performance.

(b)The provisions of this Section 8.20 shall be for the third party benefit of those entitled to rely thereon and shall survive the termination of this Agreement.

(c)The Transferor covenants and agrees that if it enters into secured transactions with respect to Other Assets, it shall cause the appropriate documentation with respect thereto to include provisions substantially similar to those contained in (i) this Section 8.20 pursuant to which the Person(s) to which Other Assets are conveyed disclaims (and subordinates) any interest it may have in the assets of the Transferor other than the specific Other Assets related to such secured transaction and (ii) Section 8.17.

* * *

The Parties have caused this Second Amended and Restated Master Purchase and Sale Agreement to be executed by their respective duly authorized officers as of the date and year first above written.

CARVANA AUTO RECEIVABLES 2016-1 LLC,
as Transferor
By:	/s/ Paul Breaux
	Name: Paul Breaux
	Title: Vice President
ALLY BANK,
as Purchaser
By:	/s/ Scott M. Brobecker
	Name: Scott Brobecker
	Title: Authorized Representative
ALLY FINANCIAL INC.,
as Purchaser
By:	/s/ Thomas E. Elkins
	Name: Tom Elkins
	Title: Authorized Representative

Agreed to and accepted by:
CARVANA, LLC,
as Seller
By:	/s/ Paul Breaux
	Name: Paul Breaux
	Title: Vice President

APPENDIX A

DEFINITIONS AND USAGE

(a)Construction and Usage. Unless otherwise provided in the Master Sale Agreement, the Master Purchase and Sale Agreement, the Master Servicing Agreement or any other Basic Documents, the following rules of construction and usage are applicable to this Appendix and the Master Sale Agreement, the Master Purchase and Sale Agreement, the Master Servicing Agreement and any other Basic Documents.

(i)As used in this Appendix or in any Basic Document and in any certificate or other document made or delivered pursuant thereto, accounting terms not defined herein, or in any such Basic Document, or in any such certificate or other document, and accounting terms partly defined herein or in any such certificate or other document, to the extent not defined herein, have the respective meanings given to them under generally accepted accounting principles. To the extent that the definitions of accounting terms herein, in any such Basic Document or in any such certificate or other document are inconsistent with the meanings of such terms under such generally accepted accounting principles, the definitions contained herein, in such Basic Document or in any such certificate or other document control.

(ii)The words “hereof,” “herein,” “hereunder” and words of similar import when used in any Basic Document refer to such Basic Document as a whole and not to any particular provision or subdivision thereof. References in any Basic Document to “Article,” “Section” or another subdivision or to an attachment are, unless the context otherwise requires, to an article, section or subdivision of or an attachment to such Basic Document. The term “including” means “including without limitation.” The word “or” is not exclusive.

(iii)The definitions contained in any Basic Document are equally applicable to both the singular and plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

(iv)Any agreement, instrument, statute or regulation defined or referred to below means such agreement, instrument, statute or regulation as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein.

(v)Any interest calculated over a period under any Basic Document shall be based on the actual number of days in such period and 365-day years.

(b)Definitions

All terms defined in this Appendix shall have the defined meanings when used in any Basic Document, unless otherwise specified or defined therein.

“2-year Prime ABS Spread” means, as of any day, the “2-year Prime ABS Spread” for the most recent week set forth in the Morgan Markets Auto ABS Index; provided, that, if the Morgan Markets Auto ABS Index ceases or fails to publish the 2-year Prime ABS Spread, the 2-year Prime ABS Spread shall be the 2-year Prime ABS Spread as determined by the Purchasers from time to time in the ordinary course of their business and provided to the Transferor; and provided, further, that if the Purchasers no longer periodically determine the 2-year Prime ABS Spread in the ordinary course of their business, then the Purchasers and the Transferor will otherwise establish a methodology for determining the 2-year Prime ABS Spread in a manner mutually acceptable to the Purchasers and the Transferor.

“Action Plan”, with respect to a Receivables Pool, has the meaning set forth in Section 3.16(d) of the Master Servicing Agreement.

“Action Plan Meeting”, with respect to a Receivables Pool, has the meaning set forth in Section 3.16(c) of the Master Servicing Agreement.

“Action Plan Meeting Regarding Certificates of Title”, with respect to all of the Receivables in all Receivables Pools, has the meaning set forth in Section 3.16(g) of the Master Servicing Agreement.

“Action Plan Regarding Certificates of Title”, with respect to all of the Receivables in all Receivables Pools, has the meaning set forth in Section 3.16(h) of the Master Servicing Agreement.

“Administrative Purchase Payment” means, with respect to an Administrative Receivable within a Receivables Pool to be repurchased as of the last day of a Collection Period, a payment equal to the sum of (i) the product of (a) the Outstanding Principal Balance with respect to such Administrative Receivable as of such date and (b) the Receivables Purchase Rate and (ii) the product of (x) the amount set forth in clause (i) above, (y) the APR of such Administrative Receivable and (z) 30/360.

“Administrative Receivable” means a Receivable which the Servicer has repurchased pursuant to Section 3.8 of the Master Servicing Agreement.

“Affiliate” means, with respect to any specified Person, any other Person controlling, controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Aggregate Outstanding Principal Balance” means, with respect to a First Tier Receivables Pool or a Receivables Pool and as of any date, the aggregate of the Outstanding Principal Balance of each Receivable in such First Tier Receivables Pool or Receivables Pool, as applicable.

“Ally Bank” means Ally Bank, a Utah chartered bank, and its permitted successors and assigns.

“Ally Bank Controls Effectiveness Review” means the Ally Bank process that assesses a suppliers’ risk management controls in compliance with FDIC/FFIEC Third Party Vendor Management guidelines.

“Ally Financial” means Ally Financial Inc., a Delaware corporation, and its permitted successors and assigns.

“Anti-Corruption Laws” has the meaning set forth in Section 3.30 of the Master Servicing Agreement.

“Annual Percentage Rate” or “APR” of a Receivable means the annual rate of finance charges stated in the Receivable.

“Applicable Servicing Modification,” with respect to a Banking Regulatory Change, shall be the modification to the Servicer’s servicing standards and practices (i) approved by the Banking Regulator, if the Banking Regulator has approved a different modification than that proposed by the Purchaser in the related Notice of Banking Regulatory Change, (ii) if clause (i) is inapplicable, then as approved by the Purchaser, if the Purchaser has approved a different modification than that proposed by the Purchaser in the related Notice of Banking Regulatory Change, or (iii) otherwise, the modification proposed by the Purchaser in the related Notice of Banking Regulatory Change.

“Approved Financed Ancillary Products” means, the products mutually agreed to by the Purchasers and the Transferor with respect to vehicle service contracts, global positioning systems, gap insurance or waiver, prepaid maintenance, tire & wheel protection, paintless dent repair, and such other products as may be agreed to in writing by the Purchasers and Transferor from time to time.

“Authoritative Copy” means with respect to any Electronic Contract, a copy of such Contract that is unique, identifiable and, except as otherwise provided in Section 9-105 of the UCC, unalterable, and is marked “original” or has no watermark or other marking that would indicate that it is a “copy” or “duplicate” or not an original or not an “authoritative” copy.

“Available Collections” means, with respect to a Receivables Pool for any date or period of determination, the sum of the following amounts with respect to such date or period:

(i)all monies collected from whatever source on such date or during such period with respect to the Receivables within such Receivables Pool;

(ii)all Liquidation Proceeds received with respect to a Receivable within such Receivables Pool during such period; and

(iii)the Administrative Purchase Payments or Warranty Payments received with respect to each Receivable within such Receivables Pool that became an Administrative Receivable or Warranty Receivable on such date or during such period pursuant to Section 8.2 of the Master Purchase and Sale Agreement or pursuant to Section 3.8 of the Master Servicing Agreement;

provided, however, that in calculating the Available Collections the following will be excluded:

(i)all payments and proceeds of any Receivables the Warranty Payment or Administrative Purchase Payment of which has previously been included in Available Collections for such Receivables Pool;

“Banking Regulator” means a United States federal or State regulatory agency or instrumentality having authority over U.S. national banks or state chartered banks, including the Office of the Comptroller of the Currency, the Federal Reserve Board, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Federal Financial Institutional Examination Council and the Utah Department of Financial Institutions, or any successor federal or state agency or instrumentality.

“Banking Regulatory Change” will occur if (i) a Banking Regulator adopts or modifies regulations or policies which alter the obligations of U.S. national or state chartered banks in general, or Ally Bank in particular, with respect to the servicing of retail automotive loans and retail automotive installment sales contracts, (ii) such regulations apply to retail automotive installment sale contracts owned or serviced by Ally Bank, (iii) compliance by third parties servicing receivables (as servicer for Ally Bank) owned by Ally Bank is required by law and (iv) such regulations require the Servicer (as servicer for Ally Bank) to implement new servicing standards or practices, or otherwise modify the existing standards or practices, other than those set forth in the Basic Documents.

“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.), as amended from time to time.

“Bankruptcy Remote Party” means each of CAR 2016-1, the Borrower or any trust, limited liability company or corporation wholly-owned by CAR 2016-1.

“Basic Documents” means the Master Sale Agreement (including the First Step Receivables Assignment), the Master Purchase and Sale Agreement (including the Second Step Receivables Assignment), the Master Servicing Agreement, , the First Step Pool Supplements, the Second Step Pool Supplements, the Master Confidentiality and Reconstitution Agreement, the Collateral Custodian Agreement, the Letter Agreement and any other document, certificate, opinion, agreement or writing the execution of which is necessary or incidental to carrying out the transactions contemplated by this Agreement or any of the other foregoing documents.

“Benefit Plan” means any of (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan subject to Section 4975 of the Code or (iii) any entity whose underlying assets include plan assets by reason of investment by an employee benefit plan or plan in such entity.

“Bridgecrest” means Bridgecrest Credit Company, LLC, an Arizona limited liability company, and its permitted successors and assigns.

“Business Continuity Plan” means the document in which the Servicer plans to protect its employees, and continue its most critical business functions in situations where the facilities, people or information technology resources are interrupted for an extended period.

“Business Day” means any day other than a Saturday, a Sunday or any other day on which banking institutions or trust companies in New York, New York, Minneapolis, Minnesota or Detroit, Michigan may, or are required to, remain closed.

“CAR 2016-1” means the Transferor.

“CAR 2016-1 Purchased Property” has the meaning set forth in Section 3.1(a) of the Master Sale Agreement.

“Carvana” means Carvana, LLC, an Arizona limited liability company, and its permitted successors and assigns.

“Catalyst Event” means a period of time commencing on the date when the 2-year Prime ABS Spread exceeds 0.75% and continuing until the earliest time as of which the 2-year Prime ABS Spread is equal to or less than 0.75%.

“CER” has the meaning set forth in Section 3.23 of the Master Servicing Agreement.

“Certificate of Title” means with respect to a Financed Vehicle, (i) the original certificate of title relating thereto, or copies of correspondence to the applicable Registrar of Titles, and all enclosures thereto, for issuance of the original Certificate of Title or (ii) if the applicable Registrar of Titles issues a letter or other form of evidence of lien in lieu of a Certificate of Title (including electronic titling), either notification of an electronic recordation, by either a Title Intermediary or the applicable Registrar of Titles, or the original lien entry letter or form or copies of correspondence to such applicable Registrar of Titles, and all enclosures thereto, for issuance of the original lien entry letter or form, which, in either case, shall name the related Obligor as the owner of such Financed Vehicle and a Title Lien Nominee as secured party.

“Change in Control” means the (i) failure of Carvana to maintain, directly or indirectly, (A) control of the board of directors (or similar governing body) and (B) a beneficial ownership of 100% percent of the equity interests (having ordinary voting power on an as-converted, fully-diluted basis) of the Transferor or (ii) failure of Persons that, as of the Closing Date, directly or indirectly maintain, (X) control of the board of directors (or similar governing body) and (Y) a beneficial ownership of more than fifty percent (50%) of the equity interests (having ordinary voting power on an as-converted, fully-diluted basis) of Carvana to maintain such control or more than 50% ownership, other than as a result of (1) a registered public offering of securities of Carvana or (2) transfers of equity interests to Affiliates of such Persons or to other Persons that, individually or collectively, as of the Closing Date, owned equity interests (having ordinary voting power on an as-converted, fully-diluted basis) of Carvana representing not less than ten percent (10%) of such equity interests or Affiliates thereof.

“Change Order” has the meaning set forth in Section 7.1(b) of the Master Servicing Agreement.

“Change Request” has the meaning set forth in Section 7.1(b) of the Master Servicing Agreement.

“Closing” means the initial closing that shall take place at or about 11:00 a.m., Chicago time, at the offices of Kirkland & Ellis LLP, in Chicago, Illinois on or about December 30, 2016, or at such other time, date and place as the parties shall agree upon.

“Closing Date” means, with respect to a First Tier Receivables Pool and subject to Section 3.1(e) of the Master Sale Agreement or a Receivables Pool and subject to Section 4.1(a) of the Master Purchase and Sale Agreement, the date on which the related First Step Pool Supplement or Second Step Pool Supplement is executed and delivered and the Purchase Price is paid, which generally will be the third (3rd) Business Day of the last calendar week of each calendar quarter.

“CNL” means, with respect to any Receivables Pool and any Distribution Date, the Cumulative Net Losses for such Receivables Pool through the last day of the related Collection Period.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder.

“Collateral Custodian” means Wells Fargo Bank, National Association.

“Collateral Custodian Agreement” means the Amended and Restated Collateral Custodian Agreement, dated as of November 1, 2022, among the Purchasers, the Collateral Custodian, the Servicer, the Transferor and the Seller, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Collateral Custodian Fee: The fees set forth in the Collateral Custodian Agreement as the Collateral Custodian Fees.

“Collection Account” has the meaning set forth in Section 4.1 of the Master Servicing Agreement.

“Collection Period” means each calendar month during the term of the Master Servicing Agreement or, in the case of the initial Collection Period, the period from and including the Cutoff Date of the related Receivables to and including the last day of the month preceding the month in which the first related Distribution Date occurs. Any amount stated “as of the close of business of the last day of a Collection Period” gives effect to all applications of Collections and all remittances or distributions as of the end of the day on such last day.

“Collection Policy” means, with respect to (i) the initial Servicer, the customary servicing and collection guidelines, policies and procedures of the Servicer, including those as attached as Exhibit D to the Master Servicing Agreement, in effect on the Original Execution Date, as such guidelines, policies and procedures as may be amended, modified, restated, replaced or otherwise supplemented from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement, and as modified by the Servicing Exceptions and the Process Remediations attached to the Master Servicing Agreement as Exhibit F, if any, or (ii) any successor Servicer, the customary servicing and collection guidelines, policies and procedures of such successor Servicer with such changes as shall be required by the Purchasers and agreed to in writing by such successor Servicer and the Purchasers, as such agreed upon guidelines, policies and procedures may be changed from time to time in accordance with Section 3.1(c) of the Master Servicing Agreement.

“Collections” means, with respect to a First Tier Receivables Pool or a Receivables Pool, all amounts collected by the Servicer or its agents (from whatever source) or otherwise turned over to the Collection Account on or with respect to the related Receivables or the other CAR 2016-1 Purchased Property or Purchased Property, as applicable.

“Commission” means the Securities and Exchange Commission.

“Commitment Amount” means the sum of (i) $5,000,000,000 plus (ii) the Outstanding Principal Balance of a Receivable that had been previously included in a Receivables Pool and was repurchased, remediated and resold to the Purchasers in a subsequent Receivables Pool.

“Commitment Period” means the period from the Fifth Extension Amendment Effective Date to the earliest of (i) the Scheduled Commitment Termination Date, (ii) the occurrence of a Commitment Termination Event and (iii) the purchase by the Purchasers of Receivables Pools with a total Cutoff Date Aggregate Outstanding Principal Balance in an amount equal to the Commitment Amount.

“Commitment Termination Event” means the occurrence of a termination pursuant to Section 2.4(a) or 2.4(b) of the Master Purchase and Sale Agreement.

“Confidential Information” means all information and material of any type, scope or subject matter whatsoever relating to the Purchasers, the Transferor, the Seller, the Servicer or any of their subsidiaries, whether oral or written, and howsoever evidenced or embodied, which each Party, each Party’s representatives or agents (including any officers of any Party or any of their subsidiaries) may furnish to the other, or to which either Party is afforded access by the other Party, either directly or indirectly for purposes of such Party’s participation in the transactions contemplated by the Master Purchase and Sale Agreement. However, “Confidential Information” shall not include information or material of a Party which (i) becomes generally available to the public other than as a result of a disclosure by the receiving Party or its agents and other representatives, (ii) was available to the receiving Party on a non-confidential basis prior to its disclosure by the disclosing Party, (iii) becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party or the disclosing Party’s

representatives or agents, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information to the Purchaser, the Seller, the Servicer or the Transferor by a contractual, legal or fiduciary obligation or (iv) consists of the documents evidencing the consummation of the transactions contemplated by the Basic Documents so long as all references to the other Party and all information specific to the assets sold or price paid pursuant to the transactions are removed.

“Confidentiality Agreement” has the meaning set forth in Section 2(c) of the Master Confidentiality and Reconstitution Agreement.

“Contract” means, a fully-executed retail installment sale contract, direct purchase money loan or conditional sale contract for a Financed Vehicle and any amendments, modifications or supplements to such retail installment sale contract under which an extension of credit is made in the ordinary course of business of the Seller to such Obligor and which is secured by the related Financed Vehicle.

“Credit Policy” means the credit underwriting guidelines, policies and procedures that Carvana or its Subsidiaries utilize in originating or acquiring retail installment sales contracts, including the credit policies as attached as Exhibit E to the Master Purchase and Sale Agreement, as such guidelines, policies and procedures may be amended, modified, restated, replaced or otherwise supplemented from time to time in accordance with Section 7.20(h) of the Master Purchase and Sale Agreement and Section 6.22(f) of the Master Sale Agreement.

“Cumulative Net Losses” means, with respect to a Receivables Pool as of any Distribution Date, the sum of (i) the aggregate Net Losses experienced on all Liquidating Receivables with such Receivables Pool from the first day of the related Origination Period through the end of the related Collection Period and (ii) the Outstanding Principal Balance as of the Pool Termination Date of any Receivables within such Receivables Pool outstanding on the related Pool Termination Date.

“Customer Information” has the meaning set forth in Section 2(b) of the Master Confidentiality and Reconstitution Agreement.

“Cutoff Date” means with respect to each First Tier Receivables Pool and Receivables Pool, the last day of the related Origination Period; provided that for the purpose of this definition, Sunday shall be deemed to be the last day of the calendar week; provided, further, that, with respect to any First Tier Receivables Pool and Receivables Pool sold (i) from and including March 7, 2019 to and including April 4, 2019, respectively, (ii) on March 20, 2020, and (iii) on any other date consented to by the Purchasers in their sole discretion, the “Cutoff Date” shall be the date consented to by the Purchasers.

“Cutoff Date Aggregate Outstanding Principal Balance” means, with respect to a First Tier Receivables Pool or a Receivables Pool and as of the applicable Cutoff Date, the aggregate of the Outstanding Principal Balance of each Receivable in such First Tier Receivables Pool or Receivables Pool as of the applicable Cutoff Date, as applicable.

“Defaulted Receivable” means any Receivable upon the first occurrence of any of the following: (i) all, or any part in excess of 10% of any scheduled payment (the “Default Threshold”) is one hundred and twenty (120) (or such shorter period as shall be specified in the Collection Policy, it being understood that such period in the Collection Policy shall not be lengthened without the prior written consent of the Purchasers) or more days delinquent on the last day of a calendar month (taking into account the application by the Servicer of payments received in any Collection Period to previously unpaid scheduled payments or portions thereof in accordance with the Collection Policy), (ii) only for Receivables charged off on or before December 31, 2022, for which the Financed Vehicle has been surrendered or repossessed and the redemption period granted the Obligor or required by applicable law has expired, or is to be repossessed but is unable to be located or is otherwise subject to being repossessed, (iii) which has been settled for less than the Outstanding Principal Balance, (iv) which has been liquidated by the Servicer through the sale of the related Financed Vehicle, (v) for which proceeds have been received which in the Servicer’s judgment, constitute the final amounts recoverable in respect of such Receivable, or (vi) which has been charged-off (or should have been charged-off) in accordance with the Collection Policy.

“Delinquent Receivable” means any Receivable (other than a Defaulted Receivable) for which all or any part of a scheduled payment (the “Delinquency Threshold”) is thirty-one (31) or more days past due, taking into

account the application by the Servicer of payments received in any Collection Period to previously unpaid scheduled payments or portions thereof in accordance with the Collection Policy. For purposes of determining delinquency, in accordance with the Collection Policy, the Servicer applies payments from Obligors in order of delinquency of outstanding scheduled payments, with payments first applied to the longest overdue and outstanding scheduled payment or portion thereof.

“Deliver” means, (x) With respect to a Tangible Contract or other document in a Receivable File other than an Electronic Contract or an electronic Certificate of Title, to deliver physical possession of such Tangible Contract or other document via reputable overnight delivery service, (y) with respect to an Electronic Contract, to direct Wells Fargo Bank, National Association, to transfer such Electronic Contract to the Forward Flow Vault Partition and (z) with respect to electronic Certificates of Title, to cause the applicable Title Intermediary to provide the Collateral Custodian with full electronic access to view such electronic Certificates of Title on the records of the Title Intermediary. The terms “Delivery” and “Delivered” shall have corollary meanings.

“Disclosure Information” has the meaning set forth in Section 3(a)(iv) of the Master Confidentiality and Reconstitution Agreement.

“Distribution Date” means, with respect to each First Tier Receivables Pool or Receivables Pool, the 15th day of each calendar month or, if such day is not a Business Day, the next succeeding Business Day, beginning on the date specified in the applicable First Step Pool Supplement or Second Step Pool Supplement, as applicable.

“Document Receipt” means the Document Receipt substantially in the form attached as an exhibit to the Collateral Custodian Agreement executed by the Collateral Custodian and delivered to the Purchasers and the Servicer.

“DriveTime” means DriveTime Automotive Group, Inc., a Delaware corporation, and its permitted successors and assigns.

“Effective Date” means, the date upon which all of the conditions described in Section 6.1 to the Master Purchase and Sale Agreement are met.

“Electronic Contract” means a Contract that constitutes “electronic chattel paper” under and as defined in Section 9-102(31) of the UCC.

“Eligible Receivable” means, with respect to each Receivable in a First Tier Receivables Pool or a Receivables Pool, as applicable that such Receivable:

(i)Such Receivable was underwritten by the Seller in its ordinary course of business and in accordance with the Credit Policies of the Seller as approved by the Purchasers;

(ii)Such Receivable was purchased by the Transferor from the Seller in the ordinary course of business and as soon as is practicable after the file with respect to such Receivable is complete;

(iii)Each such sale and assignment of such Receivable was made without any fraud or misrepresentation;

(iv)With respect to each such sale and assignment of such Receivable, the Seller and the Transferor have taken all steps reasonably necessary to ensure that such sale and assignment has been perfected under the relevant UCC;

(v)With respect to such Receivable, the Seller shall have taken all steps necessary to ensure that all filings (including UCC filings) necessary in any jurisdiction to give the Transferor a first priority perfected security interest in the CAR 2016-1 Purchased Property shall have been made and the Transferor shall have taken all steps necessary to ensure that all filings (including UCC filings) necessary in any jurisdiction to give the Purchasers a first priority perfected security interest in the Purchased Property shall have been made;

(vi)The terms of such Receivable (a) create a valid enforceable security interest in favor of the holder thereof, and (b) contain customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for realization against the Financed Vehicle;

(vii)With respect to such Receivable, the related Original Contract Documents are in the possession of the Custodian and the Custodian has issued a collateral receipt to the Purchasers as required under the Collateral Custodian Agreement and the related Servicer Files are in the possession of the Servicer;

(viii)(a) a Title Lien Nominee is named as the first lien holder on the Certificate of Title for the related Financed Vehicle, or if a new or replacement Certificate of Title is being or will be applied for with respect to such Financed Vehicle, documentation has been or will be submitted to obtain title thereto noting such Person as lien holder and such title is free and clear of all Liens and adverse claims that are equal or superior to the Lien of such Person and its assigns and if the Certificate of Title has not been received, the Collateral Custodian will have received a copy of the title application within 45 days of inclusion as part of the Purchased Property or (b) in those states that permit electronic recordation of Liens, such Person is named as the first lien holder on the Certificate of Title for the related Financed Vehicle on the electronic Lien and title system of the applicable state, or the Servicer or the Originator has submitted for electronic recordation, by either a third-party service provider or the relevant state registrar of titles, for such Person to be named as the lien holder on the Certificate of Title on the electronic Lien and title system of the applicable state and if a confirmation has not been received, the Collateral Custodian will have received a copy of the electronic submission within 45 days of inclusion as part of the Purchased Property and such title is free and clear of all Liens and adverse claims that are equal or superior to the Lien of such Person and its assigns;

(ix)Such Receivable (including the related Contract) is currently and was at and all times since origination in compliance with all Requirements of Law;

(x)At the time of origination by the Seller, the related Financed Vehicle was covered by an insurance policy that covers physical loss or damage in at least the minimum amount required by the state in which the related Obligor resides, the related Obligor is required under the terms of the related Contract to maintain such insurance policy, and there are no forced-placed insurance premiums added to the Original Amount Financed;

(xi)Such Receivable arises under a Contract which, together with such Receivable (a) has been executed and delivered (or electronically authenticated) by the related Obligor, (b) is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor, (c) is evidenced by only one executed original copy (or with respect to electronic chattel paper, one Authoritative Copy) (in each case within the meaning of the UCC), (d) contains customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for the realization against the Purchased Property of the benefits of the security provided thereby, including all the rights of a secured party under the relevant UCC, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity, (e) does not require the Obligor under such Contract to consent to the transfer of the rights and duties of the Seller under such Contract, and (f) does not contain a confidentiality provision that purports to restrict the ability of the Purchasers, to exercise their rights under the Basic Documents, including its right to review the Contract. With respect to a Contract that is electronic chattel paper, the record or records composing the electronic chattel paper are created, stored and assigned in such a manner that (A) a single Authoritative Copy of the record or records exists which is unique, identifiable and unalterable (other than a revision that is readily identifiable as an authorized or unauthorized revision) other than with the participation of the Collateral Custodian in the case of an addition or amendment of a permitted and identifiable assignee and), (B) each copy of the Authoritative Copy and any copy of a copy is readily identifiable as a copy that is not the Authoritative Copy, and (C) the Authoritative Copy has been communicated to and is maintained by the Collateral Custodian;

(xii)The maturity date of such Receivable has not been deferred or extended, except in accordance with the Credit Policy and the Collection Policy and no other provision of the related Contract has been waived,

amended or rewritten or amounts due and owing thereunder deferred or waived (except waivers, amendments, rewrites, deferrals or waivers in all material respects in accordance with the Credit Policy and the Collection Policy and alterations and modifications so that such Receivable is an Eligible Receivable (other than clause (ix) hereof, which must have been satisfied at the time of origination)) and such Receivable is enforceable after giving effect thereto;

(xiii)Such Receivable (a) is not subject to any dispute, offset, counterclaim or defense whatsoever (except the discharge in bankruptcy of such Obligor), and (b) with respect thereto (i) there is no material breach, default, violation or event of acceleration existing under the related Contract, and there is no event which, with the passage of time, or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration and (ii) to the best of the its knowledge, no right of rescission, setoff, counterclaim or defense shall have been asserted or threatened;

(xiv)Such Receivable is assignable without notice to or the consent of the related Obligor;

(xv)The Obligor of such Receivable is not a government or government agency, and such Obligor is not an individual that was included on OFAC’s List of Specially Designated Nationals at the time of origination;

(xvi)Such Receivable is denominated and payable only in Dollars by an Obligor with a billing address in any State or territory of the United States or United States military installation;

(xvii)Such Receivable is not, (a) as of the Cutoff Date for the related Receivables Pool, a Delinquent Receivable, or (b) as of the Closing Date for the related Receivables Pool, a Defaulted Receivable or a Liquidating Receivable;

(xviii)Each Receivable constitutes any of “chattel paper,” “an account,” an “instrument” or a “general intangible” as defined in the UCC;

(xix)The Transferor has good and marketable title to such Receivable free and clear of all liens (other than Permitted Liens) and such Receivable, together with the Contract related thereto, has not been satisfied, subordinated or rescinded, nor shall any Financed Vehicle or other related security have been released from the security interest granted under the related Contract in whole or in part;

(xx)The Transferor has acquired a valid and perfected first priority security interest in such Receivable and, upon the sale by the Transferor to the Purchasers pursuant to the Master Purchase and Sale Agreement, the Purchasers have acquired a valid and perfected first priority security interest in such Receivable;

(xxi)The Contract related to such Receivable is a Simple Interest Receivable, and scheduled payments under each Receivable have been applied in accordance with the method for allocating principal and interest set forth in such Receivable;

(xxii)(A) For a Receivable that is not a Flex Receivable, the first scheduled payment in respect of such Receivable is no more than forty-five (45) days from the related contract date or (B) is a Flex Receivable;

(xxiii)If such Receivable is a Receivable newly originated by the Seller, at the time of sale of such Receivable, the first scheduled payment was not past due; provided, that no funds have been advanced by the Transferor or the Seller, or anyone acting on behalf of any of them in order to cause such Receivable to comply with this clause (xxiii);

(xxiv)The Financed Vehicle related to such Receivable (a) was purchased with the proceeds of such Receivable, (b) has all accessories and optional equipment described in the Contract, (c) is not at the time of origination designated for racing or modified for use as a public livery vehicle or any other commercial use, (d) has a history verified by Carvana through an Autocheck report (which may be an

aggregate report in a data tape format) reflecting no disclosed accidents, no title issues or odometer discrepancies with respect to each Financed Vehicle;

(xxv)Such Receivable shall have been originated in the United States of America to an Obligor domiciled in the United States for the retail sale of a Financed Vehicle by the Seller who, at the time of origination, had all material licenses, permits and consents necessary to originate Receivables in the jurisdiction in which such Contract was originated;

(xxvi)Such Receivable shall not have been originated in, or be subject to the laws of, any jurisdiction under which the transfer of such Receivable under the transaction documents shall be unlawful, void or voidable;

(xxvii)With respect to such Receivable, none of the Seller or the Transferor is required to perform any additional service for, or perform or incur any additional obligation to, the related Obligor in order to enforce the related Contract;

(xxviii)With respect to such Receivable there exists a Receivable File that contains, without limitation, each of the items described in the definition of “Receivable File”, including the applicable Original Contract Documents, and the Servicer File and Original Contract Documents are in the possession of the Servicer and the Custodian, respectively, and, with respect to each document contained therein, each form has been correctly prepared in all material respects;

(xxix)The information relating to the Receivables set forth in the related Schedule of Receivables is true and correct;

(xxx)The Financed Vehicle related to such Receivable is not of a model year older than 10 years as of the date of origination;

(xxxi)The Financed Vehicle related to such Receivable does not, as of the date of origination of the related Contract, have mileage in excess of [***] miles;

(xxxii)The original term of such Receivable is not more than seventy-five (75) months;

(xxxiii) (A) for Receivables with a related Cutoff Date on or after February 24, 2019 and on or prior to March 19, 2020, the LTV at origination did not exceed [***]% and (B) for Receivables with a related Cutoff Date after March 19, 2020, where the Obligor has a FICO score (a) greater than or equal to [***], then the LTV at origination is less than or equal to [***]%; (b) greater than or equal to [***] and less than [***], then the LTV at origination is less than or equal to [***]%, (c) greater than or equal to [***] and less than [***], then the LTV at origination is less than or equal to [***]%; and (d) less than [***], then the LTV at origination is less than or equal to [***]%;

(xxxiv)The Obligor has a FICO score of not less than [***] and, not more than the Upper Bound FICO Score, which, except for a Receivable included in the initial Receivables Pool on the initial Closing Date, shall have been obtained by Carvana within the [***] days prior to the origination of the related Receivable, unless otherwise consented to by the Purchasers; provided that, if the Seller exercises a Limited Sale Option on any Closing Date occurring on or after March 7, 2019 through and including April 4, 2019, the maximum FICO score limit described in this clause (xxxiv) shall not apply; provided further that, with respect to any Receivable in the First Tier Receivables Pool and Receivables Pool sold on March 20, 2020, the maximum and minimum FICO score limits described in this clause (xxxiv) shall not apply;

(xxxv)Contract provides for level payments, except for the last payment, which is less than or equal to the amount of the preceding level payments, that fully amortized the financed amount and requires that any prepayment must fully pay the Original Amount Financed plus accrued interest to date;

[***] Redacted for confidentiality purposes.

(xxxvi)Obligor is a natural person, is not an Affiliate of Carvana, is the end user of the Financed Vehicle and the Financed Vehicle is intended for personal, family or household use;

(xxxvii)The Contract does not permit the Obligor to reduce or delay payment or return the Financed Vehicle in lieu or cancellation of payment or to substitute, exchange or add a vehicle as CAR 2016-1 Purchased Property or Purchased Property, respectively;

(xxxviii)Has a governing law provision approved by the Purchasers for use in the jurisdiction where the Obligor (but not any of the Obligor’s agents) took delivery of the vehicle;

(xxxix)No Receivable with a related Cutoff Date on or after the Second Extension Amendment Effective Date and secured by a Financed Vehicle includes Approved Financed Ancillary Products with parameters in excess of the ancillary product Purchasing Guidelines & Parameters;

(xl)For Receivables with a related Cutoff Date on or after the Second Extension Amendment Effective Date, the Obligor has an ID Analytics Credit Optics 5.1 Auto score of not less than 450; and

(xli)No Receivable arises under a Contract that has been executed and delivered (or electronically authenticated) by, and constitutes the legal, valid and binding obligation of, more than one Obligor.

“Eligible Receivables Pool” is as agreed upon by the Parties to the Master Sale Agreement and Master Purchase and Sale Agreement.

“ERISA” means The Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“E-Sign Provider” shall mean DocuSign, Inc.

“E Sign Transition Period” shall mean the period beginning on November 29, 2017 and ending on December 4, 2017 or such other day as the Transferor shall specify in writing to the Purchasers.

“E-Vault Provider” means eOriginal, Inc.

“E-Vault System” shall have the meaning set forth in the Custodial Agreement.

“Event of Servicing Termination” means an event specified in Section 6.1 of the Master Servicing Agreement.

“Exchange Act” means The Securities Exchange Act of 1934.

“Extension Amendment Effective Date” means November 3, 2017.

“FDIC/FFIEC Third Party Vendor Management” means the guidance to address the management by a regulated entity of third and fourth party suppliers issued by the Federal Deposit Insurance Corporation, the Federal Financial Institutions Examination Council or any other regulatory entity that covers a business in which Ally Bank or an Ally Bank Affiliate currently operates or may look to operate in the future.

“FICO Score” means, as of any date of determination, the credit score for the applicable Obligor using the Fair, Isaac & Co. FICO Auto Version 3.0 methodology, as provided to Carvana or the Servicer by Experian or such other version as approved by the Purchasers, which, except for Receivables included in the initial Receivables Pool on the initial Closing Date, shall not, without the consent of the Purchasers, be obtained more than thirty (30) days prior to the applicable origination date.

“Fifth Extension Amendment Effective Date” means March 19, 2021.

“Financed Vehicle” means a used automobile or light truck, together with all accessories thereto, securing an Obligor’s indebtedness under a Receivable.

“First Step Pool Supplement” means the First Step Pool Supplement, in the form of Exhibit A to the Master Sale Agreement, executed by CAR 2016-1 and the Seller on each Closing Date.

“First Step Receivables Assignment” means the document of assignment attached as Schedule 1 to the First Step Pool Supplement.

“First Step Receivables Purchase Price” means, with respect to a First Tier Receivables Pool, an amount equal to the related Second Step Receivables Purchase Price.

“First Tier Receivables Pool” has the meaning set forth in the recitals to the Master Sale Agreement.

“Flex Amount” is as agreed upon by the Parties to the Master Sale Agreement and Master Purchase and Sale Agreement.

“Flex Receivable” means either (x) a Receivable that meets the criteria of an "Eligible Receivable" (other than clause (xxii)(A) thereto) and (i) pursuant to which, at the time of origination of the related Contract, the related Obligor has elected in writing to defer the first scheduled payment in respect of such Receivable, (a) if the APR of the related Receivable is less than 10% per annum, 90 days from the related contract date, or (b) if the APR of the related Receivable is greater than or equal to 10% and less than or equal to 20%, 60 days from the related contract date, (ii) for which interest accrues at the related APR from the date of origination of such related Contract during such deferral period, (iii) for which the related credit application was completed and has a date on or after April 6, 2020 through and including May 31, 2020 (or such other date as agreed to by the Purchasers in their sole discretion), and (iv) as the time of submission of the related credit application, the related Obligor has submitted and signed an employment and income attestation in accordance with the Credit Policies of the Seller, noting that for the avoidance of doubt, a Receivable with an APR greater than 20% shall not be a Flex Receivable, or (y) a Receivable sold on June 30, 2020, September 29, 2020, or December 30, 2020.

“Forward Flow Vault Partition” means the segregated vault partition of the E-Vault System established in the name of the Purchasers.

“Freestyle Selection” means the random order that the Receivables are to be selected in the System of Record, after consideration of the Purchase Percentage, Eligible Receivable criteria and Eligible Receivables Pool criteria. The Receivables to be sold to the Transferor will be based on the contract number of the Receivables. The Seller shall sell to the Transferor all Receivables where the ninth and tenth digits of the contract number (such number, the “randomization code”) are a number from 01 through the number equal to the Purchase Percentage (it being understood that a Purchase Percentage of 100 would have a randomization code of 00) or, with respect to any Previously Originated Receivable that later becomes an Eligible Receivable, such Previously Originated Receivable shall be included in such Eligible Receivables Pool if its randomization code falls within the Purchase Percentage for its related Origination Period. For example, if the Purchase Percentage for an Origination Period is 85%, the Seller would sell Receivables with contract numbers ending in 01 through 85, and retain Receivables with contract numbers ending in 86 through 00. The Seller shall ensure that contract numbers are assigned randomly as they are entered into the System of Record and in no way adverse to the Purchasers.

“GAP Letter” has the meaning set forth in Section 3.13 of the Master Servicing Agreement.

“GLBA” means the Gramm-Leach-Bliley Act and its implementing regulations.

“GLBA Privacy Requirements” has the meaning set forth in Section 2(b) of the Master Confidentiality and Reconstitution Agreement.

“General Change” has the meaning set forth in Section 3.18(d) of the Master Servicing Agreement.

“Governmental Authority” means any government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over the applicable Person.

“Governmental Rules” means any and all laws, statutes, codes, rules, regulations, ordinances, orders, writs, decrees and injunctions, of any Governmental Authority and any and all legally binding conditions, standards, prohibitions, requirements and judgments of any Governmental Authority.

“Indemnified Parties” has the meaning set forth in Section 7.14 of the Master Purchase and Sale Agreement.

“Individual Pre-closing Interest Carry Amount” means, with respect to a Receivable in a Receivables Pool therein and as of the related Closing Date, an amount equal to (i) the Outstanding Principal Balance of such Receivable as of the Cutoff Date, multiplied by (ii) the Pricing Model all-in cost of funds of the Purchasers, for the related FICO band related to such Receivable, multiplied by (iii) (A) with respect to a Receivable for which the last scheduled payment for such Receivable was on or prior to the Cutoff Date, the number of days from the day following such last scheduled payment date through (and including) the related Closing Date for such Receivable and (B) with respect to a Receivable for which the first scheduled payment date for such Receivable does not occur on or prior to the Cutoff Date, the number of days from the day following the date of origination of such Receivable through (and including) the related Closing Date for such Receivable, divided by (iv) 365.

“Information Security Program” has the meaning set forth in Section 3.17(b) of the Master Servicing Agreement.

“Information Recipient” has the meaning set forth in Section 3.28 of the Master Servicing Agreement.

“Insolvency Event” means with respect to a specified Person, such Person shall (A) file a petition or commence a proceeding (1) to take advantage of any Insolvency Law or (2) for the appointment of a trustee, conservator, receiver, liquidator or similar official for or relating to such Person or all or substantially all of its property, or for the winding up or liquidation of its affairs, (B) consent or fail to object to any such petition filed or proceeding commenced against or with respect to it or all or substantially all of its property, or any such involuntary petition or proceeding shall not have been dismissed or stayed within sixty (60) days of its filing or commencement, or a court, agency or other supervisory authority with jurisdiction shall not have decreed or ordered relief with respect to such petition or proceeding, (C) admit in writing its inability to pay its debts generally as they become due, (D) make an assignment for the benefit of its creditors, (E) voluntarily suspend payment of its obligations or (F) take any action in furtherance of any of the foregoing

“Insolvency Laws” means the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, arrangement, rearrangement, receivership, insolvency, reorganization, suspension of payments, marshaling of assets and liabilities or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“Insolvency Proceeding” means with respect to any Person, any bankruptcy, insolvency, arrangement, rearrangement, conservatorship, moratorium, suspension of payments, readjustment of debt, reorganization, receivership, liquidation, marshaling of assets and liabilities or similar proceeding of or relating to such Person under any Insolvency Laws.

“Inspection Standard” has the meaning set forth in Section 3.18(a) of the Master Servicing Agreement.

“Letter Agreement” means the eighteenth amended and restated letter agreement, dated as of March 22, 2022, among the Purchasers, the Seller, the Transferor and the Servicer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Lien” means any security interest, lien, charge, pledge, equity, or encumbrance of any kind.

“Liquidating Receivable” means a Receivable as to which the Servicer (i) has reasonably determined, in accordance with its customary servicing procedures, that eventual payment of amounts owing on such Receivable is unlikely, or (ii) has repossessed and disposed of the Financed Vehicle.

“Liquidation Expenses” means, with respect to a Liquidating Receivable, the actual reasonable out-of-pocket costs of liquidation not to exceed $675 (or such greater amount as the Servicer determines is reasonably necessary in accordance with its customary procedures to refurbish and dispose of a liquidated Financed Vehicle).

“Liquidation Proceeds” means, with respect to a Liquidating Receivable, all amounts realized with respect to such Receivable net of Liquidation Expenses and any amounts that are required to be refunded to the Obligor on such Receivable, but in any event not less than zero.

“Loan-to-Value Ratio” or “LTV” means, with respect to any Receivable, the ratio (expressed as a percentage) of (x) the Original Amount Financed of such Receivable on the date such Receivable was originated by the Seller, to (y) the sum of (a)(i) the KBB Weekly “Good Wholesale” (or “Lending”) value of the Financed Vehicle as determined by Kelly Blue Book as of the date of origination of the related Receivable or (ii) if such value is not available, the clean trade-in value as determined by National Appraisal Guides, Inc. in the most recent NADA guide or such other source as shall be approved in writing by the Purchasers, plus (b) an amount determined by the Purchasers in their sole discretion to account for Seller’s reconditioning process and other factors that enhance vehicle value.

“Master Confidentiality and Reconstitution Agreement” means the Amended and Restated Master Confidentiality and Reconstitution Agreement, dated as of November 1, 2022, by and among Carvana, Bridgecrest, the Transferor and the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Master Purchase and Sale Agreement” means the Second Amended and Restated Master Purchase and Sale Agreement, dated as of November 1, 2022, by and among the Transferor and the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Master Sale Agreement” means the Second Amended and Restated Master Sale Agreement (Flow), dated as of November 1, 2022, by and among the Seller and CAR 2016-1, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Master Servicing Agreement” means the Amended and Restated Master Servicing Agreement (Flow), dated as of November 1, 2022, by and among Carvana, Bridgecrest and the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Material Adverse Effect” means, with respect to any Person and to any event or circumstance, a material adverse effect on (i) the business, financial condition, operations, performance or properties of such Person, (ii) the validity or enforceability of the Master Sale Agreement, Master Purchase and Sale Agreement or any other Basic Document or the validity, enforceability or collectability of (a) a material portion of the Receivables purchased by the Purchasers, or (b) a material portion of the collections of such Receivables or the security interests in the Financed Vehicles, (iii) the rights and remedies of either Purchaser, (iv) the ability of such Person to perform its obligations under the Master Sale Agreement, Master Purchase and Sale Agreement or any other Basic Document to which it is a party or (v) the status, existence, perfection, priority or enforceability of either Purchaser interest in any Purchased Property.

“Monthly Data File” has the meaning set forth in Section 4.3 of the Master Servicing Agreement.

“Monthly Servicer Report” has the meaning set forth in Section 4.3 of the Master Servicing Agreement.

“NAALR” means the net average annualized loss rate for the related FICO band or Eligible Receivables Pool, as applicable, as determined by the Purchasers in accordance with their customary policies and procedures, without specific deviation for the Seller or Transferor other than deviation with respect to performance of the Receivables resulting from the application of such customary policies and procedures applied consistently.

“Net Loss” means, with respect to a Receivables Pool, (i) as of any Distribution Date, for each Liquidating Receivable in such Receivables Pool, the Outstanding Principal Balance of such Liquidating Receivable when it became a Liquidating Receivable minus all Liquidation Proceeds received with respect to such Liquidating Receivable on or before the last day of the related Collection Period and (ii) as of the related Pool Termination Date, and with respect to each Receivable then outstanding within such Receivables Pool, the Outstanding Principal Balance of such Receivable as of the last day of the related Collection Period.

“Nonconforming Receivables Pool” means a Receivables Pool that the Purchasers have agreed to purchase on a Closing Date after waiving (i) one or more of the characteristics contained in the definition of “Eligible Receivables Pool” or (ii) one or more of the characteristics contained in the definition of “Eligible Receivable”.

“Non‑Excluded Taxes” has the meaning set forth in Section 2.5(c) of the Master Purchase and Sale Agreement.

“Notice of Banking Regulatory Change” has the meaning set forth in Section 3.18(a) of the Master Servicing Agreement.

“Notified Total Costs” has the meaning set forth in Section 3.18(b) of the Master Servicing Agreement.

“NPPI” means “non-public personal information” as defined in 16 C.F.R. § 314.2(b) (2003) as well as any information that identifies a customer or consumer (as such terms are defined by the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. § 6801 et seq.), as amended from time to time) and information from which a customer’s or consumer’s identity can be ascertained, either from the information itself or by combining the information with information from other sources. NPPI also includes any information Ally Financial or Ally Bank (including any of their Affiliates) may directly or indirectly disclose to the Servicer or any Servicer agent or which the Servicer or any Servicer agent may collect or otherwise have access to due to the Servicer or the Servicer agents’ relationship with Ally Financial, Ally Bank or any of their Affiliates that relates to an individual. This includes, but is not limited to, financial information; medical or health related information; credit history; income; financial benefits; application, loan or claim information; names or lists of individuals derived from nonpublic personally identifiable information or otherwise derived from Ally Financial, Ally Bank or any of their Affiliates; and the identification of an individual as an Ally Financial or Ally Bank customer or as an individual Ally Financial or Ally Bank claimant.

“Obligor” means the purchaser or co‑purchasers of the Financed Vehicle or any other Person who owes payments under a Receivable.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Officer’s Certificate” means with respect to any Person, a certificate signed by a Responsible Officer of such Person.

“OFSS” has the meaning set forth in Section 3.23 of the Master Servicing Agreement.

“Operations Diligence” has the meaning set forth in Section 3.15(b) of the Master Servicing Agreement.

“Opinion of Counsel” means a written opinion of counsel, which counsel may be internal or external counsel to a Party, reasonably acceptable to the Party receiving such opinion.

“Original Amount Financed” means, with respect to a Receivable and as of the date on which such Receivable was originated, the aggregate amount advanced under the Receivable toward the purchase price of the Financed Vehicle, including accessories, vehicle delivery fees, insurance premiums, service and warranty contracts and other items customarily financed as part of automobile and light truck retail installment sale contracts or direct purchase money loans and related costs.

“Original Contract Documents” means, with respect to each Receivable, (i) the original Contract and (ii) the Certificate of Title or evidence that such Certificate of Title has been applied for. For the avoidance of doubt, an Authoritative Copy of an electronic document shall constitute an original.

“Original Execution Date” means December 22, 2016.

“Origination Period” means, each quarter during the period beginning with the first quarter of 2021 and ending with the quarter containing the last day of the Commitment Period; provided, that, with respect to (i) the initial First Tier Receivables Pool and Receivables Pool, (ii) any First Tier Receivables Pool and Receivables Pool sold from and including March 7, 2019 to and including April 4, 2019, respectively, (iii) any First Tier Receivables Pool and Receivables Pool sold on March 20, 2020, and (iv) any other date consented to by the Purchasers in their sole discretion, the “Origination Period” shall be the period consented to by the Purchasers.

“Other Assets” means any assets (or interests therein) (other than the Purchased Property) conveyed or purported to be conveyed by CAR 2016-1 to another Person or Persons other than the Purchased Property conveyed to the Purchasers under the Master Purchase and Sale Agreement, whether by way of a sale, capital contribution or by virtue of the granting of a lien.

“Other Facility Transaction Documents” means collectively, the “Transaction Documents” or similar term as such term is defined in any purchase agreement or loan and security agreement among Carvana, a bankruptcy remote, special purpose purchaser or borrower formed by Carvana or its Affiliates, the Transferor and Ally Bank.

“Other Information” has the meaning set forth in Section 2(c) of the Master Confidentiality and Reconstitution Agreement.

“Outstanding Principal Balance” means, with respect to a Receivable and as of any date, the Original Amount Financed, less:

(i)payments received from or on behalf of the related Obligor prior to such date allocable to principal;

(ii)any refunded portion of extended warranty protection plan costs, physical damage, credit life or disability, warranties, debt cancellation and other insurance premiums included in the Original Amount Financed and allocable to principal;

(iii)any Administrative Purchase Payment or Warranty Payment to the extent allocable to principal; and

(iv)any Liquidation Proceeds previously received on or prior to the last day of the related Collection Period allocable to principal with respect to such Receivable.

“Outward Facing Supplier Standards” means Ally Bank’s “Outward Facing Supplier Standards” as provided by Ally Bank to the Servicer.

“Party” means, with respect to each Basic Document, each Person that is a party to such Basic Document, and its permitted successors and assigns.

“Patriot Act” has the meaning set forth in Section 2(f) of the Master Confidentiality and Reconstitution Agreement.

“Performance Guarantor” means, DriveTime and its successors and permitted assigns under the Master Servicing Agreement.

“Permitted Disclosures” has the meaning set forth in Section 2(c) of the Master Confidentiality and Reconstitution Agreement.

“Permitted Liens” any of (a) Liens created pursuant to any Basic Document or (b) with respect to any Financed Vehicle, the Lien noted on the Certificate of Title related to the Financed Vehicle in favor of a Title Lien Nominee.

“Person” means any legal person, including any individual, corporation, partnership, joint venture, association, limited liability company, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

“Pool Balance” means, with respect to a First Tier Receivables Pool or a Receivables Pool, as applicable, as of the close of business of the last day of a Collection Period, the Aggregate Outstanding Principal Balance of the Receivables in such First Tier Receivables Pool or Receivables Pool (excluding Administrative Receivables and Warranty Receivables and Liquidating Receivables as of such date).

“Pool Termination Date” means, with respect to each Receivables Pool, the date that occurs on the last day of the sixth (6th) month after the maturity date of the Receivable within such Receivables Pool with the longest original term to maturity as of the Cutoff Date for such Receivables Pool.

“Pre-closing Interest Carry Amount” means, with respect to a Receivables Pool and as of the related Closing Date, an amount equal to the sum of the Individual Pre-closing Interest Carry Amounts for each of the Receivables in such Receivables Pool.

“Previously Originated Receivable” means, for any Closing Date and the related Eligible Receivables Pool, an Eligible Receivable originated in a prior Origination Period that met the eligibility criteria to be included in an Eligible Receivables Pool that could have been sold to the Purchasers pursuant to the Master Purchase and Sale Agreement on a prior Closing Date but for (i) the Seller not having completed ministerial administrative procedures for such Receivable (such as validating receipt of the down payment) or (ii) the failure to satisfy the representations and warranties regarding the information provided for such Receivable on the related Schedule of Receivables in Section 5.2(cc)(iii) of the Master Purchase and Sale Agreement and clause (xxiv) of the definition of “Eligible Receivable” and such Receivables was removed or repurchased from a prior First Tier Receivables Pool or Receivables Pool, as applicable, solely as a result of such failure (and not for any other reason).

“Pricing Date” shall mean, with respect to any Receivables Pool, the date on which the Purchase Price is agreed, which date shall be no more than two (2) Business Days prior to such Closing Date.

“Pricing Model” has the meaning set forth in Section 2.3 of the Master Purchase and Sale Agreement.

“Pricing Model Amendments” has the meaning set forth in Section 2.3(a) of the Master Purchase and Sale Agreement.

“Pricing Model Change Notice” has the meaning set forth in Section 2.3(a) of the Master Purchase and Sale Agreement.

“Pricing Termination Notice” has the meaning set forth in Section 2.3(b) of the Master Purchase and Sale Agreement

“Program” has the meaning set forth in Section 3.27 of the Master Servicing Agreement.

“Protective Measures” means the steps specified in Section 2(d) of the Master Confidentiality and Reconstitution Agreement.

“Public Securitization” means a public offering registered with the Commission or a private offering under Rule 144A of the Securities Act of asset backed securities backed by United States automotive retail installment sale contracts originated or acquired by Carvana or its Affiliates and sponsored by Carvana or any U.S. special purpose subsidiary thereof engaged in such offerings.

“Purchase Percentage” for an Origination Period, means, the percentage equal or greater than to (i) the aggregate Outstanding Principal Balance of all Receivables originated or acquired by the Seller to be sold to the Transferor on the related Closing Date pursuant to the Master Sale Agreement divided by (ii) the aggregate principal balance of all receivables originated or acquired by the Seller that meet the criteria described in the definition of “Eligible Receivable” and such other documented administrative criteria as the Purchasers may agree to from time to time during such Origination Period (which, for purposes of clause (ii) shall be reduced by the aggregate principal

balance of receivables with respect to which the applicable obligor has exercised its right to return the related financed vehicle and terminate the related receivable). In no event shall the Purchase Percentage be less than the value, expressed as a percentage, equal to the minimum sales amount of $300,000,000 for each Closing Date divided by the amount determined in clause (ii) of the preceding sentence, other than during the period from October 1, 2020 through March 22, 2021 when the Purchase Percentage will be 0%, and, in the event the Seller or the Transferor shall fail to notify the Purchasers of the Purchase Percentage for any Origination Period, the Purchase Percentage from the prior Origination Period shall apply.

“Purchase Price” means the price applicable to the Purchased Receivables purchased in any Receivables Pool, which shall be equal to (x) the sum of (i) the price for such Receivables Pool designated by the Pricing Model (for the avoidance of doubt, the Pricing Model will, for each Purchased Receivable in such Receivables Pool, (A) increase the related purchase price for any interest scheduled to accrue (ignoring any non-scheduled payment that may be received by the Seller) for the period from the date of origination (or, if such Purchased Receivable has at least one scheduled monthly payment occurring prior to the related Cutoff Date, from such most recent scheduled monthly payment date) through the related Closing Date and (B) decrease the related purchase price for the portion of any non-scheduled payment received by the Seller prior to the related Cutoff Date allocated to accrued interest) plus (ii) the Pre-closing Interest Carry Amount for such Receivables Pool as of the Closing Date, minus (y) the Flex Amount (if any) for such Receivables Pool.

“Purchased Property” has the meaning set forth in Section 3.1(a) of the Master Purchase and Sale Agreement.

“Purchased Receivables” means, as applicable, all Receivables purchased by CAR 2016-1 in any First Tier Receivables Pool pursuant to the Master Sale Agreement and all Receivables purchased by the Purchaser in any Receivables Pool pursuant to the Master Purchase and Sale Agreement.

“Purchasers” means either Ally Bank or Ally Financial, and its permitted successors and assigns, if the reference to “Purchaser” relates to Receivables purchased by a specified Purchaser, or both Ally Bank and Ally Financial, and their permitted successors and assigns, if the reference to “Purchaser” or “Purchasers” relates to the Receivables or the Receivables Pools as a whole, as the context may require.

“Purchaser Inspection Parties” has the meaning set forth in Section 3.19(a) of the Master Servicing Agreement.

“Purchaser Obligation” has the meaning set forth in Section 2.1(b) of the Master Purchase and Sale Agreement.

“Purchaser Termination Option” has the meaning set forth in Section 2.4(b) of the Master Purchase and Sale Agreement.

“Purchasing Guidelines & Parameters” are as agreed upon by the Parties to the Master Purchase and Sale Agreement.

“Quarterly Operations Review” has the meaning set forth in Section 3.15(a) of the Master Servicing Agreement.

“Quarterly Review Event” has the meaning set forth in Section 3.15(c) of the Master Servicing Agreement.

“Quarterly Selection Standards Meeting” has the meaning set forth in Section 7.11(a) of the Master Purchase and Sale Agreement.

“Receivable” means a Contract for a Financed Vehicle and any amendments, modifications or supplements to such retail installment sale contract that is included in the Schedule of Receivables attached as Schedule 2 to each Second Step Pool Supplement. The term “Receivable” does not include any Repurchased Receivable.

“Receivable Files” means, with respect to each Receivable and the related Contract, collectively, the Original Contract Documents and the Servicer Files.

“Receivable Structure Constraints” is as agreed upon by the Parties to the Master Sale Agreement and Master Purchase and Sale Agreement.

“Receivables Pool” shall have the meaning given to such term in Section 4.1 of the Master Purchase and Sale Agreement.

“Receivables Pool CNL Ratio” means, for any Distribution Date, the ratio of (i) net losses with respect to the Receivables included in a Receivables Pool during the related Collection Period to (ii) the difference between the beginning balance of the Outstanding Principal Balance for such Collection Period and the ending balance of the Outstanding Principal Balance for such Collection Period, in each case with respect to the Receivables included in such Receivables Pool.

“Receivables Pool CNL Ratio Comparison” means, with respect to a Receivables Pool on any Distribution Date, (x) the Receivables Pool CNL Ratio for such Receivables Pool reported on any Distribution Date for the related Collection Period, divided by (y) the Carvana entire portfolio cumulative net loss ratio for the same Collection Period.

“Receivables Pool Schedule” has the meaning set forth in Section 4.1(a) of the Master Purchase and Sale Agreement.

“Receivables Purchase Rate” means, with respect to Receivables, the percentage equivalent of a fraction, the numerator of which is the Purchase Price for such Receivable, and the denominator of which is the Cutoff Date Aggregate Outstanding Principal Balance of such Receivables.

“Receivables System” means the principal computer system of the Servicer used in the servicing of retail installment sales contracts and direct purchase money loans, including back‑up archives.

“Reconstitution” means a direct or indirect encumbrance, risk transfer or disposition of the Purchased Property, or any part thereof, by the Purchaser in the form of a whole loan sale transaction, a securitization transaction funded by securities sold to the public and/or private capital markets or by an asset backed commercial paper conduit, a synthetic transaction where all or a portion of the risk of loss on a reference pool of Receivables is transferred to an investor or counterparty, or any combination of the foregoing; provided, however, that the Purchaser shall not engage in more than three Reconstitutions with respect to the Receivables included in a Receivables Pool sold to the Purchaser under the Master Purchase and Sale Agreement on any Closing Date.

“Reconstitution Assets” has the meaning set forth in Section 3(a)(iii) of the Master Confidentiality and Reconstitution Agreement.

“Reconstitution Assets Servicing Agreement” has the meaning set forth in Section 3(c) of the Master Confidentiality and Reconstitution Agreement.

“Registrar of Titles” means with respect to any State, the governmental agency or body responsible for the registration of, and the issuance of certificates of title relating to, motor vehicles and liens thereon.

“Regulation AB” Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (January 7, 2005)), in the adopting release (Asset-Backed Securities Disclosure and Registration, Securities Act Release 33-9638, 79 Fed. Reg. 57,184 (September 24, 2014)) and in any adopting release in respect of any amendment with respect to any of the foregoing or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

“Regulator Inspection Parties” has the meaning set forth in Section 3.19(a) of the Master Servicing Agreement.

“Re-Liening Expenses” means, any costs associated with the revision of the Certificates of Title pursuant to Section 2.7 of the Master Sale and Purchase Agreement.

“Re-Liening Trigger Event” has the meaning agreed upon by the Parties to the Master Sale Agreement and Master Purchase and Sale Agreement.

“Relationship Manager” has the meaning set forth in Section 3.26 of the Master Servicing Agreement.

“Remediation” has the meaning set forth in Section 5.1(r) of the Master Servicing Agreement.

“Report of Assessment of Compliance with Servicing Criteria” has the meaning set forth in Section 3.12 of the Master Servicing Agreement.

“Reporting Date” means the 10th day of each calendar month or, if such day is not a Business Day, the next succeeding Business Day.

“Repurchased Receivable” means any repurchased Administrative Receivable or repurchased Warranty Receivable.

“Requirements of Law” means all (a) requirements of applicable federal, state and local laws, and regulations thereunder and (b) orders, decrees, directives, rules and binding guidelines of, or agreements, with any Governmental Authority that are directed to or binding on such Person or such Person’s business, operations, services (including, with respect to the Servicer, the Servicer’s obligation to service the Purchased Property on behalf of the Purchasers pursuant to the Master Servicing Agreement) or assets, including, in each case, usury laws, Utah banking laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Consumer Financial Protection Bureau’s Regulations “B” and “Z,” the Servicemembers Civil Relief Act of 2003, the Texas Consumer Credit Code, the United States Foreign Corrupt Practices Act of 1977, the Patriot Act and state adaptations of the National Consumer Act and the Uniform Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure laws; provided, that, in each case with respect to clauses (a) and (b) above, with respect to the Servicer’s obligations described in the Master Servicing Agreement, “Requirements of Law” shall not include any items described in clauses (a) or (b) above that are directed to or binding on Ally Financial or Ally Bank solely as a result of such Peron’s status as a bank holding company or Utah charted bank, respectively, unless otherwise specified on Exhibit E to the Master Servicing Agreement. Following the Original Execution Date during the term of the Master Servicing Agreement, should the Servicer offer or enter into any subsequent agreement with another Person to service assets on behalf of such Person in compliance with, or provide indemnity for breach of, Requirements of Law applicable to Ally Financial or Ally Bank that are excluded from this definition as a result of the preceding proviso, then this definition shall be deemed to be modified to include such broader provision without any further action of the Parties.

“Responsible Officer” means, when used with respect to any Person, any officer of such Person, including any president, vice president, assistant vice president, secretary, assistant secretary or any other officer thereof customarily performing functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any matter is referred because of such officer’s knowledge of or familiarity with the particular subject.

“Rule 193 Receivables” has the meaning set forth in Section 3(a)(iv) of the Master Confidentiality and Reconstitution Agreement.

“Schedule of Receivables” means, the list identifying the Receivables attached as Schedule 2 to each Second Step Pool Supplement (which list may be in the form of electronic file, microfiche, disk or other means acceptable to the Purchaser, or pursuant to the Master Sale Agreement).

“Scheduled Commitment Termination Date” means March 21, 2023.

“SEC Reporting Date” has the meaning set forth in Section 3.18(b) of the Master Servicing Agreement.

“Second Extension Amendment Effective Date” means November 2, 2018.

“Second Step Pool Supplement” means the Second Step Pool Supplement, in the form of Exhibit A to the Master Purchase and Sale Agreement executed by the Seller and the Purchaser on each Closing Date.

“Second Step Receivables Assignment” means the document of assignment attached as Schedule 2 to each Second Step Pool Supplement.

“Second Step Receivables Purchase Price” has the meaning set forth in Section 3.1(b) of the Master Purchase and Sale Agreement.

“Securities Act” means the Securities Act of 1933.

“Selection Procedures” means, the process for selecting Eligible Receivables for inclusion in any First Tier Receivables Pool and Receivables Pool pursuant to Section 3.1(d) of the Master Sale Agreement and Section 2.1(d) of the Master Purchase and Sale Agreement, respectively, whereby such First Tier Receivables Pool and Receivables Pool is selected by the Seller and Transferor utilizing the System of Record under a Freestyle Selection. Such selection shall be made subject to the Eligible Receivable criteria and Eligible Receivables Pool criteria and the sequential contract number assignment described in Section 2.1(d) of the Master Sale Agreement and Section 3.1(d) of the Master Purchase and Sale Agreement.

“Seller” means Carvana, as the seller of the CAR 2016-1 Purchased Property under the Master Sale Agreement, and its permitted successors and assigns.

“Seller Certificate of Title Review Trigger Event” has the meaning set forth in Section 3.16(g) of the Master Servicing Agreement.”

“Seller Indemnified Parties” has the meaning set forth in Section 6.11(a) of the Master Sale Agreement.

“Servicer” means Bridgecrest as the servicer of the Receivables, or any permitted successor or assignee thereto under the Master Servicing Agreement.

“Servicer Coverage” has the meaning set forth in Section 3.22 of the Master Servicing Agreement.

“Servicer Files” means the documents specified in Section 2.1 of the Master Servicing Agreement.

“Servicer Indemnified Parties” has the meaning set forth in Section 5.2(a) of the Master Servicing Agreement.

“Servicer Review Trigger Event” has the meaning set forth in Section 3.15 of the Master Servicing Agreement.

“Servicer Termination Threshold Event” means, with respect to the sold Receivables Pools, on any Distribution Date, the aggregate CNL for such Receivables Pools shall be equal to 150% or greater of the aggregate Purchaser Estimated Cumulative Net Losses for such Receivables Pools on such Distribution Date.

“Servicing Criteria” means “Servicing Criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

“Servicing Exception” means any exceptions or supplements to the Collections Policy specified on Exhibit E to the Servicing Agreement (including any requirement of federal, state or local law, or any regulation or any order, decree, directive, rule and binding guideline of, or agreement, with any Governmental Authority applicable to either Purchaser solely as a result of such Purchaser’s status as a bank holding company or Utah charted bank, as applicable, that the Purchasers determine requires revisions to the existing Collections Policy), as may be amended or supplemented from time to time by the Purchasers.

“Servicing Fee” means, with respect to a Receivables Pool as of any Distribution Date, the fee payable to the Servicer for services rendered during the related Collection Period, which will be equal to one‑twelfth of the

Servicing Fee Rate multiplied by the Pool Balance of such Receivables Pool as of the first day of such Collection Period; provided that in connection with any initial Collection Period that includes days falling in more than one calendar month, the Servicing Fee shall be calculated for such initial Collection Period giving effect to the reduction of the Pool Balance of such Receivables Pool as of the first day of each such calendar month following the related Cutoff Date during such initial Collection Period.

“Servicing Fee Rate” is as agreed upon by the Parties to the Master Servicing Agreement.

“Settlement Date” means with respect to each Origination Period, the third (3rd) Business Day of the last calendar week of such Origination Period; provided that on any date consented to by the Purchasers in their sole discretion, the “Settlement Date” will be the date consented to by the Purchasers.

“Settlement Report” has the meaning set forth in Section 3.1(e) of the Master Purchase and Sale Agreement.

“Simple Interest Method” means the method of allocating each monthly payment (including multiple monthly payments) on a Simple Interest Receivable to principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the Outstanding Principal Balance thereon multiplied by the fixed rate of interest applicable to such Receivable multiplied by the period of time elapsed (expressed as a fraction of a calendar year) since the preceding payment of interest with respect to such Outstanding Principal Balance was made.

“Simple Interest Receivable” means any Receivable under which the portion of each payment allocable to earned interest and the portion allocable to the principal is determined in accordance with the Simple Interest Method. For purposes hereof, all payments with respect to a Simple Interest Receivable shall be allocated to principal and interest in accordance with the Simple Interest Method.

“SOC 1” has the meaning set forth in Section 3.13 of the Master Servicing Agreement.

“Specified Variables” is as agreed upon by the Parties to the Master Sale Agreement and Master Purchase and Sale Agreement.

“State” means any of the 50 states of the United States of America, or the District of Columbia.

“Supplemental Fees” means, with respect to a Receivables Pool as of any Distribution Date, the fee payable to the Purchaser during the related Collection Period, determined pursuant to and defined in Section 3.10(b) of the Master Servicing Agreement.

“Supplemental Servicing Fees” means, with respect to a Receivables Pool as of any Distribution Date, all late fees, prepayment charges and other administrative fees and expenses or similar charges allowed by applicable law with respect to related Receivables, collected (from whatever source) on the Receivables serviced by the Servicer during the related Collection Period.

“System Description” means (a) prior to the E Sign Transition Period, the written description of the eOriginal e-contract system attached to the Master Sale Agreement as Exhibit C and the Master Purchase and Sale Agreement as Exhibit F, (b) during the E-Sign Transition Period, either (i) the written description of the eOriginal e-contract system attached to the Master Sale Agreement as Exhibit C and the Master Purchase and Sale Agreement as Exhibit F or (ii) the written descriptions of the eOriginal, Inc. Authoritative Copy System Description and the DocuSign System Description Authoritative Copy attached to the Master Sale Agreement as Exhibit D and the Master Purchase and Sale Agreement as Exhibit G , and (c) after the E Sign Transition Period, the written descriptions of the eOriginal, Inc. Authoritative Copy System Description and the DocuSign System Description Authoritative Copy attached to the Master Sale Agreement as Exhibit D and the Master Purchase and Sale Agreement as Exhibit G.

“System of Record” means the computer system and programs in place on the date that the Master Sale Agreement and Master Purchase and Sale Agreement become effective (as such system may be updated or otherwise modified) utilized by the Seller to select Receivables for each First Tier Receivables Pool and Receivables Pool

under the Master Sale Agreement and by the Transferor to select Receivables for each Receivables Pool under the Master Purchase and Sale Agreement, respectively.

“TPSM” means Ally Bank’s Third Party Supplier Management team.

“Title Intermediary” means, VINTek or another title administration service provider approved in writing by the Seller and Purchasers.

“Title Lien Nominee” means Carvana or GFC Lending LLC (or any other name approved in writing by the Purchasers).

“Three-Month Average Receivables Pool CNL Ratio Comparison” means, on any Distribution Date, the average of the Receivables Pool CNL Ratio Comparison with respect to a Receivable Pool for such Distribution Date and the two Distribution Dates preceding such Distribution Date.

“Transferor” means Carvana Auto Receivables 2016-1 LLC, a Delaware limited liability company, and its permitted successors and assigns.

“Transferor Obligation” has the meaning set forth in Section 2.1(a) of the Master Purchase and Sale Agreement.

“Transferor Termination Option” has the meaning set forth in Section 2.4(a) of the Master Purchase and Sale Agreement.

“Treasury Regulations” means the regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

“UCC” means the Uniform Commercial Code as in effect in any relevant jurisdiction, from time to time.

“Upper Bound FICO Score” has the meaning agreed upon by the Parties to the Master Sale Agreement and the Master Purchase and Sale Agreement.

“Vehicle Age” with respect to a Financed Vehicle, means the year of origination of the Contract for such Financed Vehicle minus the model year of such Financed Vehicle.

“Warranty Payment” means, with respect to a Warranty Receivable within a First Tier Receivables Pool or a Receivables Pool, as applicable, to be repurchased as of the last day of a Collection Period, a payment equal to the sum of (i) the product of (a) the Outstanding Principal Balance with respect to such Warranty Receivable as of such date and (b) the Receivables Purchase Rate, or solely with respect to any Receivable being repurchased pursuant to Section 7.2(ii) of the Master Sale Agreement or Section 8.2(ii) of the Master Purchase and Sale Agreement, and (ii) the product of (x) the amount set forth in clause (i) above, (y) the APR of such Administrative Receivable and (z) (1) for a Flex Receivable prior to receipt of the first scheduled payment, the actual number of days from the related Cutoff Date through the repurchase date, divided by 360 or (2) (1) for a Flex Receivable prior to receipt of the first scheduled payment, the actual number of days from the related Cutoff Date through the repurchase date, divided by 360 or (2) in all other cases, 30/360.

“Warranty Receivable” means a Receivable which the Transferor has repurchased pursuant to Section 8.2 of the Master Purchase and Sale Agreement or Seller has repurchased pursuant to Section 7.2 of the Master Sale Agreement.

* * * * *

EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer

Pursuant to Rule 13a-14(a)

I, Ernest Garcia III, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Carvana Co.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2022	/s/ Ernest C. Garcia, III
		Ernest C. Garcia, III
		Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Chief Financial Officer

Pursuant to Rule 13a-14(a)

I, Mark Jenkins, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Carvana Co.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2022	/s/ Mark Jenkins
		Mark Jenkins
		Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to Rule 18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Carvana Co. (the “Company”) for the quarter ended September 30, 2022, as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Ernest Garcia III, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 3, 2022	/s/ Ernest C. Garcia, III
		Ernest C. Garcia, III
		Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to Rule18 U.S.C. Section 1350

In connection with the Quarterly Report on Form 10-Q of Carvana Co. (the “Company”) for the quarter ended September 30, 2022, as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Mark Jenkins, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 3, 2022	/s/ Mark Jenkins
		Mark Jenkins
		Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-38073
Entity Registrant Name	CARVANA CO.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-4549921
Entity Address, Address Line One	300 E. Rio Salado Parkway
Entity Address, City or Town	Tempe
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85281
City Area Code	480
Local Phone Number	719-8809
Title of 12(b) Security	Class A Common Stock, Par Value $0.001 Per Share
Trading Symbol	CVNA
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001690820
Current Fiscal Year End Date	--12-31
Class A Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		105,947,745
Class B Common Stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		82,900,276

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 316	$ 403
Restricted cash	161	233
Accounts receivable, net	359	206
Finance receivables held for sale, net	485	356
Vehicle inventory	2,577	3,149
Beneficial interests in securitizations	350	382
Other current assets, including $5 and $12, respectively, due from related parties	221	163
Total current assets	4,469	4,892
Property and equipment, net	3,326	1,560
Operating lease right-of-use assets, including $14 and $17, respectively, from leases with related parties	689	369
Intangible assets, net	76	4
Goodwill	847	9
Other assets, including $1 and $7, respectively, due from related parties	214	181
Total assets	9,621	7,015
Current liabilities:
Accounts payable and accrued liabilities, including $19 and $27, respectively, due to related parties	1,009	656
Short-term revolving facilities	575	2,053
Current portion of long-term debt	213	152
Other current liabilities, including $4 and $3, respectively, from leases with related parties	81	29
Total current liabilities	1,878	2,890
Long-term debt, excluding current portion	6,616	3,208
Operating lease liabilities, excluding current portion, including $10 and $13, respectively, from leases with related parties	669	361
Other liabilities	84	31
Total liabilities	9,247	6,490
Commitments and contingencies (Note 17)
Stockholders' equity:
Preferred stock, $0.01 par value - 50,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021	0	0
Additional paid-in capital	1,544	795
Accumulated deficit	(1,270)	(489)
Total stockholders' equity attributable to Carvana Co.	274	306
Non-controlling interests	100	219
Total stockholders' equity	374	525
Total liabilities & stockholders' equity	9,621	7,015
Class A Common Stock
Stockholders' equity:
Common stock	0	0
Class B Common Stock
Stockholders' equity:
Common stock	$ 0	$ 0

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Other current assets, due from related parties	$ 221	$ 163
Operating lease right-of-use asset, from leases with related party	689	369
Other assets, due from related parties	214	181
Accounts payable and accrued liabilities, due to related parties	1,009	656
Other current liabilities, from leases with related parties	81	29
Operating lease liabilities, excluding current portion, from leases with related parties	$ 669	$ 361
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	105,932,000	89,930,000
Common stock, shares outstanding (in shares)	105,932,000	89,930,000
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	125,000,000	125,000,000
Common stock, shares issued (in shares)	82,900,000	82,900,000
Common stock, shares outstanding (in shares)	82,900,000	82,900,000
Related Party
Other current assets, due from related parties	$ 5	$ 12
Operating lease right-of-use asset, from leases with related party	14	17
Other assets, due from related parties	1	7
Accounts payable and accrued liabilities, due to related parties	19	27
Other current liabilities, from leases with related parties	4	3
Operating lease liabilities, excluding current portion, from leases with related parties	$ 10	$ 13

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Sales and operating revenues:
Net sales and operating revenues		$ 3,386	$ 3,480	$ 10,767	$ 9,061
Cost of sales, including $2, $17, $20 and $21, respectively, to related parties		3,027	2,957	9,714	7,648
Gross profit		359	523	1,053	1,413
Selling, general and administrative expenses, including $7, $7, $20 and $19, respectively, to related parties		656	546	2,104	1,413
Interest expense		153	48	333	121
Other (income) expense, net		58	(3)	68	(16)
Net loss before income taxes		(508)	(68)	(1,452)	(105)
Income tax provision		0	0	1	0
Net loss		(508)	(68)	(1,453)	(105)
Net loss attributable to non-controlling interests		(225)	(36)	(672)	(59)
Net loss attributable to Carvana Co. Class A common stockholders, basic and diluted		$ (283)	$ (32)	$ (781)	$ (46)
Weighted-average shares of Class A common stock, basic (in shares)		105,857	84,779	99,134	81,427
Class A Common Stock
Sales and operating revenues:
Net (loss) earnings per share of Class A common stock, basic (in dollars per share)		$ (2.67)	$ (0.38)	$ (7.88)	$ (0.56)
Net (loss) earnings per share of Class A common stock, diluted (in dollars per share)		$ (2.67)	$ (0.38)	$ (7.88)	$ (0.56)
Weighted-average shares of Class A common stock, basic (in shares)	[1]	105,857	84,779	99,134	81,427
Weighted-average shares of Class A common stock, diluted (in shares)		105,857	84,779	99,134	81,427
Retail vehicle sales, net
Sales and operating revenues:
Net sales and operating revenues		$ 2,492	$ 2,650	$ 8,186	$ 6,954
Wholesale sales and revenues
Sales and operating revenues:
Net sales and operating revenues		697	552	1,976	1,349
Other sales and revenues
Sales and operating revenues:
Net sales and operating revenues		$ 197	$ 278	$ 605	$ 758

[1] Weighted-average shares of Class A common stock outstanding have been adjusted for unvested restricted stock awards.

XML

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Net sales and operating revenues, from related parties	$ 3,386	$ 3,480	$ 10,767	$ 9,061
Cost of sales, to related parties	3,027	2,957	9,714	7,648
Selling, general and administrative expenses, to related parties	656	546	2,104	1,413
Retail vehicle sales, net
Net sales and operating revenues, from related parties	2,492	2,650	8,186	6,954
Wholesale sales and revenues
Net sales and operating revenues, from related parties	697	552	1,976	1,349
Other sales and revenues
Net sales and operating revenues, from related parties	197	278	605	758
Related Party
Cost of sales, to related parties	2	17	20	21
Selling, general and administrative expenses, to related parties	7	7	20	19
Related Party | Wholesale sales and revenues
Net sales and operating revenues, from related parties	6	15	27	37
Related Party | Other sales and revenues
Net sales and operating revenues, from related parties	$ 39	$ 52	$ 137	$ 143

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Total	Carvana Group	Common Stock Class A Common Stock	Common Stock Class A Common Stock Restricted Stock Units	Common Stock Class A Common Stock Restricted Stock Units and Awards	Common Stock Class B Common Stock	Additional Paid-in Capital	Additional Paid-in Capital Follow-On Public Offering	Additional Paid-in Capital Carvana Group	Accumulated Deficit	Non-controlling Interests	Non-controlling Interests Follow-On Public Offering
Beginning Balance (in shares) at Dec. 31, 2020			76,512,000			95,592,000
Beginning Balance at Dec. 31, 2020	$ 802		$ 0			$ 0	$ 742			$ (354)	$ 414
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(82)									(36)	(46)
Issuance of Class A common stock (in shares)				62,000
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							12				(12)
Exchanges of LLC Units (in shares)			3,247,000			3,073,000
Establishment of deferred tax assets related to increases in tax basis in Carvana Group		$ 225							$ 225
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group		(225)							(225)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes (in shares)			(2,000)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(9)						(9)
Options exercised (in shares)			15,000
Equity-based compensation	10						10
Ending Balance (in shares) at Mar. 31, 2021			79,834,000			92,519,000
Ending Balance at Mar. 31, 2021	721		$ 0			$ 0	755			(390)	356
Beginning Balance (in shares) at Dec. 31, 2020			76,512,000			95,592,000
Beginning Balance at Dec. 31, 2020	802		$ 0			$ 0	742			(354)	414
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(105)
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							32				(32)
Ending Balance (in shares) at Sep. 30, 2021			85,569,000			87,200,000
Ending Balance at Sep. 30, 2021	708		$ 0			$ 0	785			(400)	323
Beginning Balance (in shares) at Mar. 31, 2021			79,834,000			92,519,000
Beginning Balance at Mar. 31, 2021	721		$ 0			$ 0	755			(390)	356
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	45									22	23
Issuance of Class A common stock (in shares)				59,000
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							12				(12)
Exchanges of LLC Units (in shares)			3,189,000			3,118,000
Establishment of deferred tax assets related to increases in tax basis in Carvana Group		217							217
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group		(217)							(217)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes (in shares)			(2,000)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(8)						(8)
Options exercised (in shares)			26,000
Options exercised	1						1
Equity-based compensation	11						11
Ending Balance (in shares) at Jun. 30, 2021			83,106,000			89,401,000
Ending Balance at Jun. 30, 2021	770		$ 0			$ 0	771			(368)	367
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(68)									(32)	(36)
Issuance of Class A common stock (in shares)				42,000
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							8				(8)
Exchanges of LLC Units (in shares)			2,400,000			2,201,000
Establishment of deferred tax assets related to increases in tax basis in Carvana Group		199							199
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group		(199)							(199)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes (in shares)			(1,000)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(8)						(8)
Options exercised (in shares)			22,000
Equity-based compensation	14						14
Ending Balance (in shares) at Sep. 30, 2021			85,569,000			87,200,000
Ending Balance at Sep. 30, 2021	708		$ 0			$ 0	785			(400)	323
Beginning Balance (in shares) at Dec. 31, 2021			89,930,000			82,900,000
Beginning Balance at Dec. 31, 2021	525		$ 0			$ 0	795			(489)	219
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(506)									(260)	(246)
Issuance of Class A common stock (in shares)				139,000
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							1				(1)
Exchanges of LLC Units (in shares)			27,000
Establishment of deferred tax assets related to increases in tax basis in Carvana Group		1							1
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group		(1)							(1)
Contribution of Class A common stock from related party (in shares)			(97,000)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(12)						(12)
Options exercised (in shares)			63,000
Options exercised	2						2
Equity-based compensation	43						43
Ending Balance (in shares) at Mar. 31, 2022			90,062,000			82,900,000
Ending Balance at Mar. 31, 2022	52		$ 0			$ 0	829			(749)	(28)
Beginning Balance (in shares) at Dec. 31, 2021			89,930,000			82,900,000
Beginning Balance at Dec. 31, 2021	525		$ 0			$ 0	795			(489)	219
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(1,453)
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units							1	$ (554)			(1)	$ 554
Ending Balance (in shares) at Sep. 30, 2022			105,932,000			82,900,000
Ending Balance at Sep. 30, 2022	374		$ 0			$ 0	1,544			(1,270)	100
Beginning Balance (in shares) at Mar. 31, 2022			90,062,000			82,900,000
Beginning Balance at Mar. 31, 2022	52		$ 0			$ 0	829			(749)	(28)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(439)									(238)	(201)
Issuance of Class A common stock (in shares)			15,625,000	48,000
Issuances of Class A common stock, net of underwriters' discounts and commissions and offering expenses	1,227						1,227
Adjustments to non-controlling interests related to equity offerings / Exchanges of LLC Units												$ 554
Exchanges of LLC Units (in shares)			19,000
Establishment of deferred tax assets related to increases in tax basis in Carvana Group		21							21
Establishment of valuation allowance related to deferred tax assets associated with increases in tax basis in Carvana Group		$ (21)							$ (21)
Contribution of Class A common stock from related party (in shares)			(2,000)
Issuance of Class A common stock under ESPP (in shares)			27,000
Issuance of Class A common stock under ESPP	1						1
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	5						5
Options exercised (in shares)			10,000
Equity-based compensation	18						18
Ending Balance (in shares) at Jun. 30, 2022			105,789,000			82,900,000
Ending Balance at Jun. 30, 2022	864		$ 0			$ 0	1,526			(987)	325
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(508)									(283)	(225)
Issuance of Class A common stock (in shares)					142,000
Contribution of Class A common stock from related party (in shares)			(14,000)
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes (in shares)			0
Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes	(1)						(1)
Options exercised (in shares)			15,000
Options exercised	1						1
Equity-based compensation	18						18
Ending Balance (in shares) at Sep. 30, 2022			105,932,000			82,900,000
Ending Balance at Sep. 30, 2022	$ 374		$ 0			$ 0	$ 1,544			$ (1,270)	$ 100

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash Flows from Operating Activities:
Net loss	$ (1,453)	$ (105)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	179	72
Equity-based compensation expense	57	28
Loss on disposal of property and equipment	3	1
Provision for bad debt and valuation allowance	11	16
Amortization and write-off of debt issuance costs	20	8
Unrealized loss on warrants to acquire Root's Class A common stock	77	0
Unrealized loss (gain) on beneficial interests in securitization	1	(6)
Changes in finance receivable related assets:
Originations of finance receivables	(5,690)	(5,315)
Proceeds from sale of finance receivables, net	5,628	5,375
Gain on loan sales	(361)	(528)
Principal payments received on finance receivables held for sale	146	136
Other changes in assets and liabilities:
Vehicle inventory	638	(1,230)
Accounts receivable	40	(111)
Other assets	(75)	(86)
Accounts payable and accrued liabilities	155	319
Operating lease right-of-use assets	(132)	(117)
Operating lease liabilities	178	121
Other liabilities	(7)	0
Net cash used in operating activities	(585)	(1,422)
Cash Flows from Investing Activities:
Purchases of property and equipment	(451)	(390)
Payments for acquisitions, net of cash acquired	(2,189)	0
Principal payments received on and proceeds from sale of beneficial interests	72	38
Net cash used in investing activities	(2,568)	(352)
Cash Flows from Financing Activities:
Proceeds from short-term revolving facilities	10,596	8,733
Payments on short-term revolving facilities	(12,074)	(8,318)
Proceeds from issuance of long-term debt	3,435	1,525
Payments on long-term debt	(111)	(46)
Payments of debt issuance costs	(75)	(21)
Net proceeds from issuance of Class A common stock	1,227	0
Proceeds from equity-based compensation plans	4	1
Tax withholdings related to restricted stock units and awards	(8)	(25)
Net cash provided by financing activities	2,994	1,849
Net (decrease) increase in cash, cash equivalents and restricted cash	(159)	75
Cash, cash equivalents and restricted cash at beginning of period	636	329
Cash, cash equivalents and restricted cash at end of period	$ 477	$ 404

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Business Organization

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business Organization

NOTE 1 — BUSINESS ORGANIZATION

Description of Business

Carvana Co. and its wholly-owned subsidiary Carvana Co. Sub LLC (collectively, "Carvana Co."), together with its consolidated subsidiaries (the "Company"), is the leading e-commerce platform for buying and selling used cars. The Company is transforming the used car sales experience by giving consumers what they want — a wide selection, great value and quality, transparent pricing, and a simple, no pressure transaction. Using the website, customers can complete all phases of a used vehicle purchase transaction, including financing their purchase, trading in their current vehicle, and purchasing complementary products such as vehicle service contracts ("VSC"), auto insurance, and GAP waiver coverage. Each element of the Company's business, from inventory procurement to fulfillment and overall ease of the online transaction, has been built for this singular purpose.

Organization

Carvana Co. is a holding company that was formed as a Delaware corporation on November 29, 2016 for the purpose of completing its initial public offering ("IPO") and related transactions in order to operate the business of Carvana Group, LLC and its subsidiaries (collectively, "Carvana Group"). Substantially all of the Company’s assets and liabilities represent the assets and liabilities of Carvana Group, except the Company's Senior Notes (as defined in Note 10 — Debt Instruments) which were issued by Carvana Co. and guaranteed by its and Carvana Group's existing domestic restricted subsidiaries.

In accordance with Carvana Group LLC's amended and restated limited liability company agreement (the "LLC Agreement"), Carvana Co. is the sole manager of Carvana Group and conducts, directs and exercises full control over the activities of Carvana Group. There are two classes of common ownership interests in Carvana Group, Class A common units (the "Class A Units") and Class B common units (the "Class B Units"). As further discussed in Note 11 — Stockholders' Equity, the Class A Units and Class B Units (collectively, the "LLC Units") do not hold voting rights, which results in Carvana Group being considered a variable interest entity ("VIE"). Due to Carvana Co.'s power to control and its significant economic interest in Carvana Group, it is considered the primary beneficiary of the VIE and the Company consolidates the financial results of Carvana Group. As of September 30, 2022, Carvana Co. owned approximately 55.7% of Carvana Group and the LLC Unitholders (as defined in Note 11 — Stockholders' Equity) owned the remaining 44.3%.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company's most recent Annual Report on Form 10-K filed on February 24, 2022.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring items) necessary to present fairly the Company’s financial position as of September 30, 2022, results of operations and changes in stockholder's equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 30, 2022 and 2021. Interim results are not necessarily indicative of full year performance because of the impact of seasonal and short-term variations.

As discussed in Note 1 — Business Organization, Carvana Group is considered a VIE and Carvana Co. consolidates its financial results due to the determination that it is the primary beneficiary.

Liquidity

Since inception, the Company has incurred losses, and expects to incur additional losses in the future as it continues to build inspection and reconditioning centers ("IRCs") and vending machines, serve more of the U.S. population, and enhance technology and software. In the second quarter of 2022, the Company completed an equity offering of 15.6 million shares of Class A common stock for net proceeds of $1.2 billion and issued a total of $3.275 billion in aggregate principal amount of 10.25% senior unsecured notes due 2030 (the "2030 Notes"). The Company used a portion of the net proceeds from the Class A common stock offering for general corporate purposes and to pay any costs, fees and expenses incurred by it in connection with the offering. The Company used the net proceeds from the issuance and sale of the 2030 Notes (a) to finance the $2.2 billion acquisition of the U.S. physical auction business of ADESA, Inc. ("ADESA") and other ancillary transactions in connection therewith, and to pay related fees and expenses in connection therewith and (b) for working capital, capital expenditures and other general corporate purposes. In March 2022, the Company's forward flow partner committed to purchase a total of $5.0 billion of the Company's finance receivables through March 2023, and such facility had $1.9 billion of unused capacity as of September 30, 2022. In addition, the Company has a $2.2 billion floor plan facility effective through September 22, 2023, and $2.0 billion thereafter through March 22, 2024. Management believes that current working capital, results of operations, and existing financing arrangements are sufficient to fund operations for at least one year from the financial statement issuance date.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Adoption of New Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 instead of being recorded at fair value. The Company early adopted ASU 2021-08 in the second quarter of 2022 and it did not have a material effect on its condensed consolidated financial statements as there were no business combinations affected by the retrospective application to January 1, 2022.

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Business Combinations

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Business Combinations

NOTE 3 — BUSINESS COMBINATIONS

Acquisition of ADESA U.S. Physical Auction Business

On May 9, 2022, the Company completed its previously announced acquisition of 100% of the equity interests in the U.S. physical auction business of ADESA from KAR Auction Services, Inc. for approximately $2.2 billion in cash. Proceeds from the issuance and sale of the 2030 Notes were used to fund the acquisition. The acquisition included 56 auction sites throughout the U.S. with 6.5 million square feet of buildings on more than 4,000 acres of land, significantly expanding the Company's infrastructure and enhancing its customer offering by facilitating a broader selection of vehicles and faster delivery times.

The following table summarizes the preliminary allocation of the purchase price consideration to identifiable assets acquired and liabilities assumed as of September 30, 2022:

	Preliminary Purchase Price Allocation
	(in millions)
Assets Acquired
Current assets	$	208
Property and equipment	1,281
Operating lease right-of-use assets	188
Intangible assets	79
Other assets	1
Total Assets Acquired	1,757
Liabilities Assumed
Current liabilities	233
Operating lease liabilities	167
Total Liabilities Assumed	400
Net Assets Acquired	1,357
Purchase price consideration	2,195
Goodwill	$	838

Identifiable intangible assets acquired consist of the following:

	Fair Value		Useful Life
Customer relationships	$	50	10 years
Developed technology	$	29	3 years

Preliminary measurements of fair value are subject to change during the measurement period based on the Company's continuing review of matters related to the acquisition and could be material. The Company expects to complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

Customer relationships were valued using the multi-period excess earnings method of the income approach. Developed technology was valued using the replacement cost method of the cost approach. Significant assumptions used in the valuations were revenues and attrition rate and are classified as Level 3 due to the lack of observable market data. No residual values were assigned to the customer relationships and developed technology intangible assets and they are amortized on an economic useful life basis commensurate with future anticipated cash flows and straight line, respectively. As of September 30, 2022, the remaining weighted-average amortization period for the intangible assets acquired was approximately 6.8 years.

Real property was valued using market comparable transactions of the market approach, for which the key assumption is the similarity of the acquired property to market comparable transactions. Personal property was valued using the replacement cost method of the cost approach, for which the key assumptions are the costs of similar personal property in new condition and economic obsolescence rates.

The acquisition resulted in the recognition of $838 million of goodwill, which is deductible for tax purposes and represents the future economic benefits expected to arise from anticipated synergies and intangible assets that do not qualify for separate recognition, including an assembled workforce, non-contractual relationships and other agreements.

For the three and nine months ended September 30, 2022, the Company recognized $193 million and $301 million, respectively, of wholesale sales and revenues, $180 million and $283 million, respectively, of cost of sales, and a net loss of $36 million and $57 million, respectively, from ADESA operations, which includes $31 million and $51 million, respectively, of depreciation and amortization, including acquired intangible assets amortization expense of $6 million and $10 million, respectively.

The following unaudited pro forma combined results of operations information for the three and nine months ended September 30, 2022 and 2021 have been prepared as if the ADESA acquisition occurred on January 1, 2021:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Revenues	$	3,386	$	3,685	$	11,066	$	9,721
Net loss	(508)		(144)		(1,583)		(312)
Net loss attributable to non-controlling interests	(225)		(68)		(703)		(153)
Net loss attributable to Carvana Co.	$	(283)	$	(76)	$	(880)	$	(159)
Net loss per share of Class A common stock - basic and diluted	$	(2.67)	$	(0.76)	$	(8.32)	$	(1.64)
Weighted-average shares of Class A common stock - basic and diluted	105,857		100,404		105,774		97,076

The unaudited pro forma combined results of operations information reflect the following pro forma adjustments:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	Increase/(Decrease) (in millions)
Interest expense	$	—	$	86	$	123	$	259
Lease expense	—		(3)		5		(13)
Depreciation and amortization expense	—		—		13		(4)
Intercompany revenues and cost of sales	—		$	(5)	$	(7)	$	(15)

The unaudited pro forma combined results of operations information is provided for informational purposes only and is not necessarily intended to represent the results that would have been achieved had the ADESA acquisition been consummated on January 1, 2021 or indicative of the results that may be achieved in the future.

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

NOTE 4 — PROPERTY AND EQUIPMENT, NET

The following table summarizes property and equipment, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Land and site improvements	$	1,357	$	303
Buildings and improvements	1,231		643
Transportation fleet	658		347
Software	229		169
Furniture, fixtures and equipment	172		97
Total property and equipment excluding construction in progress	3,647		1,559
Less: accumulated depreciation and amortization on property and equipment	(488)		(294)
Property and equipment excluding construction in progress, net	3,159		1,265
Construction in progress	167		295
Property and equipment, net	$	3,326	$	1,560

Depreciation and amortization expense on property and equipment was $100 million and $33 million for the three months ended September 30, 2022 and 2021, respectively, of which $51 million and $27 million were recorded to selling, general and administrative expense, respectively, $13 million and $6 million were capitalized to vehicle inventory, respectively, and $36 million and $6 million were recorded to cost of sales, respectively, including $13 million and $6 million previously capitalized to vehicle inventory.

Depreciation and amortization expense on property and equipment was $238 million and $91 million for the nine months ended September 30, 2022 and 2021, respectively, of which $132 million and $72 million were recorded to selling, general and administrative expense, respectively, $34 million and $19 million were capitalized to vehicle inventory, respectively, and $72 million and $17 million were recorded to cost of sales, respectively, including $31 million and $17 million previously capitalized to vehicle inventory, respectively.

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Goodwill and Intangible Assets, Net

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Goodwill and Intangible Assets, Net

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS, NET

The following table summarizes goodwill and intangible assets, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Intangible assets:
Customer relationships	$	50	$	—
Developed technology	41		9
Non-compete agreements	1		1
Intangible assets, acquired cost	92		10
Less: accumulated amortization	(16)		(6)
Intangible assets, net	$	76	$	4
Goodwill	$	847	$	9

Amortization expense was $6 million and less than $1 million during the three months ended September 30, 2022 and 2021, respectively, and $10 million and $1 million during the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the remaining weighted-average amortization period for definite-lived intangible assets was approximately 6.3 years. The anticipated annual amortization expense to be recognized in future years as of September 30, 2022, is as follows:

	Expected Future Amortization
	(in millions)
Remainder of 2022	$	6
2023	18
2024	18
2025	14
2026	7
Thereafter	13
Total	$	76

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Accounts Payable and Other Accrued Liabilities

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Accounts Payable and Other Accrued Liabilities

NOTE 6 — ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES

The following table summarizes accounts payable and other accrued liabilities as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Accounts payable, including $19 and $27, respectively, due to related parties	$	292	$	141
Accrued compensation and benefits	78		45
Sales taxes and vehicle licenses and fees	85		102
Accrued interest expense	191		42
Reserve for returns and cancellations	58		44
Accrued property and equipment	32		85
Customer deposits	33		34
Accrued advertising costs	18		40
Other accrued liabilities	222		123
Total accounts payable and accrued liabilities	$	1,009	$	656

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Related Party Transactions

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 7 — RELATED PARTY TRANSACTIONS

Lease Agreements

In November 2014, the Company and DriveTime Automotive Group (together with its consolidated affiliates, collectively, “DriveTime”), a related party of the Company due to Ernest Garcia II, Ernest Garcia III, and entities controlled by one or both of them (collectively the "Garcia Parties") controlling and owning substantially all of the interests in DriveTime, entered into a lease agreement that governs the Company’s access to and utilization of temporary storage, reconditioning, offices and parking space at various DriveTime facilities (the "DriveTime Lease Agreement"). The DriveTime Lease Agreement was most recently amended in December 2018. Lease duration varies by location, with the hub locations having cancellable terms, provided 60 days' prior written notice is given, expiring between 2023 and 2026. The Company has the right to exercise up to two

consecutive one-year renewal options at up to ten of these hub locations, less the number of locations renewed under the DriveTime Hub Lease Agreement described below.

In March 2017, the Company and DriveTime entered into a lease agreement that governs the Company's access to and utilization of office and parking space at various DriveTime facilities (the "DriveTime Hub Lease Agreement"). The DriveTime Hub Lease Agreement was most recently amended in July 2021. Lease expiration varies by location with most having cancellable terms, provided 60 days' prior written notice is given, expiring between 2022 and 2023 and the Company having the right to exercise up to two consecutive one-year renewal options at up to ten of these locations, less the number of locations renewed under the DriveTime Lease Agreement described above.

The DriveTime Lease Agreement and the DriveTime Hub Lease Agreement both have non-cancellable lease terms of less than twelve months with rights to terminate at the Company's election with 60 days' prior written notice and extension options as described above. At non-reconditioning locations, it is not reasonably certain that the Company will exercise its options to extend the leases or abstain from exercising its termination rights within these lease agreements to create a lease term greater than one year and therefore the Company accounts for them as short-term leases. For these locations, the Company makes variable monthly lease payments based on its pro rata utilization of space at each facility plus a pro rata share of each facility’s actual insurance costs and real estate taxes. Management has determined that the costs allocated to the Company are based on a reasonable methodology. The DriveTime Lease Agreement includes the Blue Mound and Delanco IRCs. At both of these locations, the Company expects to extend the lease terms beyond twelve months, therefore those locations are not considered short-term leases. The Company occupies all of the space at these IRCs and makes monthly lease payments based on DriveTime's actual rent expense. In addition, the Company is responsible for the actual insurance costs and real estate taxes at these IRC locations.

At all locations, the Company is additionally responsible for paying for any tenant improvements it requires to conduct its operations. Management has determined that the costs allocated to the Company are based on a reasonable methodology.

In February 2017, the Company entered into a lease agreement with DriveTime for sole occupancy of a fully operational IRC in Winder, Georgia. The lease has an initial term of eight years, subject to the Company's ability to exercise three renewal options of five years each.

In November 2018, the Company entered into a sublease agreement from DriveTime of a fully operational IRC near Cleveland, Ohio. The lease had an initial term of three years, subject to the Company's ability to exercise three renewal options of five years each. In July 2021, the Company exercised the first renewal option to extend through October 2026 and agreed to assume the lease from DriveTime effective October 1, 2021.

Expenses related to these operating lease agreements are allocated based on usage to inventory and selling, general and administrative expenses in the accompanying unaudited condensed consolidated balance sheets and statements of operations. Costs allocated to inventory are recognized as cost of sales when the inventory is sold. Total costs related to these operating lease agreements, including those noted above, were $1 million during each of the three months ended September 30, 2022 and 2021, and $3 million and $4 million during the nine months ended September 30, 2022 and 2021, respectively, allocated between inventory and selling, general and administrative expenses.

In February 2019, the Company entered into an agreement to assume a lease of an IRC near Nashville, Tennessee that DriveTime leased from an unrelated landlord. While the Company solely occupies the IRC, DriveTime is not fully released from the lease obligations by the landlord. The lease expires in October 2023, subject to the ability to exercise three renewal options of five years each.

Office Leases

In September 2016, the Company entered into a lease for office space in Tempe, Arizona. In connection with that lease, the Company entered into a sublease with DriveTime for the use of another floor in the same building. The lease and sublease each have a term of 83 months, subject to the right to exercise three five-year extension options. Pursuant to the sublease, the Company will pay the rent equal to the amounts due under DriveTime's master lease directly to DriveTime's landlord. The rent expense incurred related to this first floor sublease was less than $1 million during each of the three months ended September 30, 2022 and 2021, and $1 million during each of the nine months ended September 30, 2022 and 2021.

In December 2019, Verde Investments, Inc. ("Verde"), a related party of the Company due to the Garcia Parties controlling and owning substantially all of the interests in Verde, purchased an office building in Tempe, Arizona that the Company leased from an unrelated landlord prior to Verde's purchase. In connection with the purchase, Verde assumed that lease. The lease has an initial term of ten years, subject to the right to exercise two five-year extension options. The rent expense incurred under the lease with Verde was less than $1 million during each of the three months ended September 30, 2022 and 2021, and $1 million during each of the nine months ended September 30, 2022 and 2021.

Wholesale Sales and Revenues

DriveTime purchases wholesale vehicles from the Company through competitive online auctions that are managed by an unrelated third party and through the Company's wholesale marketplace platform. The Company recognized $6 million and $15 million of wholesale sales and revenues from DriveTime during the three months ended September 30, 2022 and 2021, respectively, and $27 million and $37 million during the nine months ended September 30, 2022 and 2021, respectively.

Retail Vehicle Acquisitions and Reconditioning

During the second quarter of 2021, the Company began acquiring reconditioned retail vehicles from DriveTime. The purchase price of each vehicle was equal to the wholesale price of the vehicle plus a fee for transportation and reconditioning services. In addition, DriveTime performs reconditioning services for the Company at DriveTime reconditioning centers. As of September 30, 2022, $2 million related to vehicles and reconditioning services were included in vehicle inventory in the accompanying unaudited condensed consolidated balance sheets. The Company also recognized $1 million and $17 million of cost of goods sold during the three months ended September 30, 2022 and 2021, respectively, and $19 million during each of the nine months ended September 30, 2022 and 2021.

Master Dealer Agreement

In December 2016, the Company entered into a master dealer agreement with DriveTime (the "Master Dealer Agreement"), pursuant to which the Company may sell VSCs to customers purchasing a vehicle from the Company. The Company earns a commission on each VSC sold to its customers, and DriveTime is obligated by and subsequently administers the VSCs. The Company collects the retail purchase price of the VSCs from its customers and remits the purchase price net of commission to DriveTime. During the three months ended September 30, 2022 and 2021, the Company recognized $42 million and $47 million, respectively, and during the nine months ended September 30, 2022 and 2021, the Company recognized $138 million and $130 million, respectively of commissions earned on VSCs sold to its customers and administered by DriveTime, net of a reserve for estimated contract cancellations. The commission earned on the sale of these VSCs is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations. In November 2018, the Company amended the Master Dealer Agreement to allow the Company to receive payments for excess reserves based on the performance of the VSCs versus the reserves held by the VSC administrator, once a required claims period for such VSCs has passed. In August 2020 and April 2021, the Company and DriveTime amended the Master Dealer Agreement to adjust excess reserve payment calculations and timing and the scope of DriveTime's after-sale administration services, respectively. The Company recognized expense of $3 million and income of $5 million during the three months ended September 30, 2022 and 2021, respectively, and expense of $1 million and income of $13 million during the nine months ended September 30, 2022 and 2021, respectively, related to payments for excess reserves to which it expects to be entitled, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

Beginning in 2017, DriveTime also administers the Company's limited warranty provided to all customers and a portion of the Company's GAP waiver coverage under the Master Dealer Agreement. The Company pays a per-vehicle fee to DriveTime to administer the limited warranty included with every purchase and prior to the first quarter of 2020 paid a per-contract fee to DriveTime to administer a portion of the GAP waiver coverage it sells to its customers. Since the first quarter of 2020, the Company's GAP waiver coverage sales have been administered by an unrelated party. The Company incurred $5 million during each of the three months ended September 30, 2022 and 2021, and approximately $14 million and $11 million during the nine months ended September 30, 2022 and 2021, respectively, related to the administration of limited warranty and GAP waiver coverage.

Servicing and Administrative Fees

DriveTime provides servicing and administrative functions associated with the Company's finance receivables. The Company incurred expenses of $3 million and $2 million during the three months ended September 30, 2022 and 2021, respectively, and approximately $7 million and $5 million during the nine months ended September 30, 2022 and 2021, respectively, related to these services.

Aircraft Time Sharing Agreement

The Company entered into an agreement to share usage of two aircraft owned by Verde and operated by DriveTime on October 22, 2015, and the agreement was subsequently amended in 2017. Pursuant to the agreement, the Company agreed to reimburse DriveTime for actual expenses for each of its flights. The original agreement was for 12 months, with perpetual 12-month automatic renewals. Either the Company or DriveTime can terminate the agreement with 30 days’ prior written notice. The Company reimbursed DriveTime less than $1 million and $1 million during the three and nine months ended and September 30, 2022, respectively, and less than $1 million during each of the three and nine months ended September 30, 2021 under this agreement.

Shared Services Agreement with DriveTime

In November 2014, the Company and DriveTime entered into a shared services agreement whereby DriveTime provided certain accounting and tax, legal and compliance, information technology, telecommunications, benefits, insurance, real estate, equipment, corporate communications, software and production, and other services primarily to facilitate the transition of these services to the Company on a standalone basis (the "Shared Services Agreement"). The Shared Services Agreement was most recently amended and restated in February 2021 and operates on a year-to-year basis, with the Company having the right to terminate any or all services with 30 days' prior written notice and DriveTime having the right to terminate any or all services with 90 days' prior written notice. Charges allocated to the Company are based on the Company’s actual use of the specific services detailed in the Shared Services Agreement. The Company incurred less than $1 million in expenses related to the Shared Services Agreement during each of the three and nine months ended September 30, 2022 and 2021.

Accounts Payable Due to Related Party

As of September 30, 2022 and December 31, 2021, $19 million and $27 million, respectively, was due to related parties primarily related to the agreements mentioned above, and is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

Contributions of Class A Common Shares From Ernest Garcia III

On January 5, 2022, in recognition of the Company selling its 1 millionth vehicle in Q4 2021, the Company's CEO, Ernest Garcia III ("Mr. Garcia"), committed to giving then-current employees 23 shares of Class A common stock from his personal shareholdings once employees reach their two-year employment anniversary ("CEO Milestone Gift" or "Gift"). As a result and during the three months ended March 31, 2022, the Company granted 23 restricted stock units ("RSUs") to each current employee, which vest after they complete their second year of employment, for a total of 435,035 RSUs granted during the period. For every gift that vests, and pursuant to a contribution agreement (the "Contribution Agreement") entered into by and between the Company and Mr. Garcia on February 22, 2022, Mr. Garcia will contribute to the Company, at the end of each fiscal quarter, the number of shares of Class A common stock, granted pursuant to the CEO Milestone Gift, that have vested during such quarter. The shares contributed shall be shares of Class A common stock that Mr. Garcia individually owns, at no charge. The contribution is intended to fund RSU awards to certain employees of the Company upon their satisfying the applicable employment tenure requirements. During the three and nine months ended September 30, 2022, 14,099 and 113,206 RSUs, respectively, vested and were contributed by Mr. Garcia. Although the Company does not expect Mr. Garcia to incur any tax obligations related to the contribution, the Company has agreed to indemnify Mr. Garcia from any such obligations that may arise.

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Finance Receivable Sale Agreements

9 Months Ended

Sep. 30, 2022

Transfers and Servicing [Abstract]

Finance Receivable Sale Agreements

NOTE 8 — FINANCE RECEIVABLE SALE AGREEMENTS

The Company originates loans for its customers and sells them to partners and investors pursuant to finance receivable sale agreements. Historically, the Company has sold loans through two types of arrangements: forward flow agreements, including a

master purchase and sale agreement and master transfer agreements, and fixed pool loan sales, including securitization transactions.

Master Purchase and Sale Agreement

In December 2016, the Company entered into a master purchase and sale agreement (the "Master Purchase and Sale Agreement" or "MPSA") with Ally Bank and Ally Financial Inc. (collectively the "Ally Parties"). Pursuant to the MPSA, the Company sells finance receivables meeting certain underwriting criteria under a committed forward flow arrangement without recourse to the Company for their post-sale performance. Throughout 2021 and 2022, the Company and the Ally Parties have amended the MPSA to, among other things and subject to the terms of the agreement, broaden the set of finance receivables covered by the MPSA and provide additional flexibility in the timing of sales of finance receivables. In March 2021, the Ally Parties committed to purchase up to a maximum of $4.0 billion of principal balances of finance receivables through March 2022. On each of March 17, 2022 and March 22, 2022, the Ally Parties amended the MPSA to, in aggregate, extend the scheduled commitment termination date to March 21, 2023 and increase the Ally Parties' commitment to purchase finance receivables to $5.0 billion, an increase of $1.0 billion from the previous commitment. Finally, on November 1, 2022, the Company amended and restated the MPSA to, among other things, consolidate and reflect the several previously executed amendments to the MPSA facility and streamline the funding mechanics associated with the sale of finance receivables to the Ally Parties.

During the three months ended September 30, 2022 and 2021, the Company sold $1.3 billion and $594 million, respectively, in principal balances of finance receivables under the MPSA. During the nine months ended September 30, 2022 and 2021, the Company sold $3.1 billion and $1.7 billion, respectively, in principal balances of finance receivables under the MPSA and had $1.9 billion of unused capacity as of September 30, 2022.

Securitization Transactions

The Company sponsors and establishes securitization trusts to purchase finance receivables from the Company. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that the Company sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables. The net proceeds from the sales are the fair value of the assets obtained as part of the transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with the Risk Retention Rules, as further discussed in Note 9 — Securitizations and Variable Interest Entities.

During the three months ended September 30, 2022 and 2021, the Company sold $364 million and $1.5 billion, respectively, in principal balances of finance receivables through securitization transactions. During the nine months ended September 30, 2022 and 2021, the Company sold approximately $2.4 billion and $3.4 billion, respectively, in principal balances of finance receivables through securitization transactions.

Gain on Loan Sales

The total gain related to finance receivables sold to financing partners and pursuant to securitization transactions was $126 million and $191 million during the three months ended September 30, 2022 and 2021, respectively, and $361 million and $529 million during the nine months ended September 30, 2022 and 2021, respectively, which is included in other sales and revenues in the accompanying unaudited condensed consolidated statements of operations.

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Securitizations and Variable Interest Entities

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Securitizations and Variable Interest Entities

NOTE 9 — SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

As noted in Note 8 — Finance Receivable Sale Agreements, the Company sponsors and establishes securitization trusts to purchase finance receivables from the Company. The securitization trusts issue asset-backed securities, some of which are collateralized by the finance receivables that the Company sells to the securitization trusts. Upon sale of the finance receivables to the securitization trusts, the Company recognizes a gain or loss on sales of finance receivables. The net proceeds from the sales are the fair value of the assets obtained as part of the transactions and typically include cash and at least 5% of the beneficial interests issued by the securitization trusts to comply with Regulation RR of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Risk Retention Rules"). The beneficial interests retained by the Company include, but are not limited to, rated notes and certificates of the securitization trusts. The holders of the certificates issued by the securitization trusts have rights to cash flows only after the holders of the notes issued by the securitization trusts have received

their contractual cash flows. The securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company are subject principally to the credit and prepayment risk stemming from the underlying finance receivables.

The securitization trusts established in connection with asset-backed securitization transactions are VIEs. For each VIE that the Company establishes in its role as sponsor of securitization transactions, it performs an analysis to determine whether or not it is the primary beneficiary of the VIE. The Company’s continuing involvement with the VIEs consists of retaining a portion of the securities issued by the VIEs and performing ministerial duties as the trust administrator. As of September 30, 2022, the Company is not the primary beneficiary of these securitization trusts because its retained interests in the VIEs do not have exposures to losses or benefits that could potentially be significant to the VIEs. As such, the Company does not consolidate the securitization trusts.

The assets the Company retains in the unconsolidated VIEs are presented as beneficial interests in securitizations on the accompanying unaudited condensed consolidated balance sheets, which as of September 30, 2022 and December 31, 2021 were $350 million and $382 million, respectively. The Company held no other assets or liabilities related to its involvement with unconsolidated VIEs as of September 30, 2022 and December 31, 2021.

The following table summarizes the carrying value and total exposure to losses of its assets related to unconsolidated VIEs with which the Company has continuing involvement, but is not the primary beneficiary at September 30, 2022 and December 31, 2021. Total exposure represents the estimated loss the Company would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero. The Company believes the possibility of this is remote. As such, the total exposure presented below is not an indication of the Company's expected losses.

	September 30, 2022				December 31, 2021
	Carrying Value		Total Exposure		Carrying Value		Total Exposure
	(in millions)
Rated notes	$	283	$	283	$	282	$	282
Certificates and other assets	67		67		100		100
Total unconsolidated VIEs	$	350	$	350	$	382	$	382

The beneficial interests in securitizations are considered securities available for sale subject to restrictions on transfer pursuant to the Company’s obligations as a sponsor under the Risk Retention Rules. As described in Note 10 — Debt Instruments, the Company has entered into secured borrowing facilities through which it finances certain of these retained beneficial interests in securitizations. These securities are interests in securitization trusts, thus there are no contractual maturities. The amortized cost and fair value of securities available for sale as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Rated notes	$	298	$	283	$	282	$	282
Certificates and other assets	45		67		93		100
Total securities available for sale	$	343	$	350	$	375	$	382

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Debt Instruments

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt Instruments

NOTE 10 — DEBT INSTRUMENTS

Debt instruments, excluding finance leases, which are discussed in Note 16 — Leases, as of September 30, 2022 and December 31, 2021 consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Asset-based financing:
Floor plan facilities	$	575	$	1,877
Finance receivable facilities	—		176
Financing of beneficial interest in securitizations	298		282
Notes payable	4		10
Real estate financing	486		447
Total asset-based financing	1,363		2,792
Senior notes	5,725		2,450
Total debt	7,088		5,242
Less: current portion	(687)		(2,154)
Less: unamortized debt issuance costs (1)	(85)		(34)
Total included in long-term debt, net	$	6,316	$	3,054

(1) The unamortized debt issuance costs related to long-term debt are presented as a reduction of the carrying amount of the

corresponding liabilities on the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs related to revolving debt arrangements are presented within other assets on the accompanying condensed consolidated balance sheets and not included here.

Short-Term Revolving Facilities

Floor Plan Facilities

The Company previously entered into a floor plan facility with a lender to finance its vehicle inventory (the "Original Floor Plan Facility"), which was secured by Carvana LLC's vehicle inventory, general intangibles, accounts receivable, and finance receivables. The Original Floor Plan Facility was amended at various times and effective September 22, 2022, the Company amended and restated the facility (the "12-Month Floor Plan Facility") to extend the maturity date to September 22, 2023 with a line of credit of $2.2 billion and tie the interest rate to a prime rate plus 1.00%.

On September 22, 2022, the Company also entered into a separate floor plan facility (the "18-Month Floor Plan Facility", and together with the 12-Month Floor Plan Facility, the "Floor Plan Facilities") with a lender. The line of credit under the 18-Month Floor Plan Facility is $2.0 billion, which becomes available following the maturity and repayment of the 12-Month Floor Plan Facility, and its maturity date is March 22, 2024. The interest rate under the 18-Month Floor Plan Facility is tied to a prime rate plus 1.00%.

Under the Floor Plan Facilities, repayment of amounts drawn for the purchase of a vehicle should generally be made within several days after selling or otherwise disposing of the vehicle. Outstanding balances related to vehicles held in inventory for more than 150 days require monthly principal payments equal to 10% of the original principal amount of that vehicle until the remaining outstanding balance is the lesser of (i) 50% of the original principal amount or (ii) 50% of the wholesale value. Prepayments may be made without incurring a premium or penalty. Additionally, the Company is permitted to make prepayments to the lender to be held as principal payments under the Floor Plan Facilities and subsequently reborrow such

amounts. The Floor Plan Facilities also require monthly interest payments and that at least 12.5% of the total principal amount owed to the lender is held as restricted cash.

The Company is also required to pay the lender an availability fee based on the average unused capacity during the prior calendar quarter under the Floor Plan Facilities.

As of September 30, 2022, the Company had $575 million outstanding under the 12-Month Floor Plan Facility, unused capacity of $1.6 billion, and held $72 million in restricted cash related to this facility. As of September 30, 2022, the Company had no amount outstanding under the 18-Month Floor Plan Facility, unused capacity of $2 billion, which becomes available following the maturity and repayment of the 12-Month Floor Plan Facility, and held no amount in restricted cash related to this facility. During the three months ended September 30, 2022, the Company's effective interest rate on the 12-Month Floor Plan Facility was approximately 4.53%.

As of December 31, 2021, the Company had $1.9 billion outstanding under the Original Floor Plan Facility, unused capacity of $373 million, and held $141 million in restricted cash related to this facility. For the year ended December 31, 2021, the Company's effective interest rate on the Original Floor Plan Facility was approximately 2.55%.

Active Finance Receivable Facilities

The Company has various short-term revolving credit facilities to fund certain automotive finance receivables originated by the Company prior to selling them, which are typically secured by the finance receivables pledged to them (the "Finance Receivable Facilities").

In January 2020, the Company entered into an agreement pursuant to which a lender agreed to provide a revolving credit facility, which was subsequently increased to $500 million, to fund certain automotive finance receivables originated by the Company. In June 2021, the Company amended its agreement to, among other things, extend the maturity date to January 24, 2023.

In February 2020, the Company entered into an agreement pursuant to which a second lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. In December 2021, the Company amended its agreement to, among other things, increase the line of credit to $600 million, and extend the maturity date to December 8, 2023.

On April 30, 2021, the Company entered into an agreement pursuant to which a third lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. In December 2021, the Company amended its agreement to, among other things, increase this line of credit to $600 million. In September 2022, the Company amended its agreement to extend the maturity date to March 30, 2024.

On October 15, 2021, the Company entered into an agreement pursuant to which a fourth lender agreed to provide a $350 million revolving credit facility to fund certain automotive finance receivables originated by the Company. The Company can draw upon this facility until April 15, 2023.

On March 18, 2022, the Company entered into an agreement pursuant to which a fifth lender agreed to provide a $500 million revolving credit facility to fund certain automotive finance receivables originated by the Company. The Company can draw upon this facility until September 18, 2023.

The Finance Receivable Facilities require that any undistributed amounts collected on the pledged finance receivables be held as restricted cash. The Finance Receivable Facilities require monthly payments of interest and fees based on usage and unused facility amounts. The Finance Receivable Facilities self-amortize from the end of the draw period until maturity, offer full prepayment rights, and have no credit sublimits or aging restrictions, subject to negotiated concentration limits. The subsidiaries that entered into these Finance Receivable Facilities are each wholly-owned, special purpose entities whose assets are not available to the general creditors of the Company. As of September 30, 2022 and December 31, 2021, the Company had zero and $176 million, respectively, outstanding under these Finance Receivable Facilities, unused capacity of $2.6 billion and $1.9 billion, respectively, and held $41 million and $67 million, respectively, in restricted cash related to these Finance Receivable Facilities. During the three months ended September 30, 2022, the Company's effective interest rate on these

Finance Receivable Facilities was approximately 4.33%. For the year ended December 31, 2021, the Company's effective interest rate on these Finance Receivable Facilities was approximately 1.64%.

Long-Term Debt

Senior Unsecured Notes

The Company has issued various tranches of senior unsecured notes (collectively, the "Senior Notes") each under a separate indenture (collectively, the "Indentures"), as further described below.

The following table summarizes components of the Company's senior unsecured notes:

	September 30, 2022		December 31, 2021		Interest Rate
	(in millions, except percentages)
2025 Senior Unsecured Notes due October 1, 2025 ("2025 Notes")	$	500	$	500	5.625	%
2027 Senior Unsecured Notes due April 15, 2027 ("2027 Notes")	600		600		5.500	%
2028 Senior Unsecured Notes due October 1, 2028 ("2028 Notes")	600		600		5.875	%
2029 Senior Unsecured Notes due September 1, 2029 ("2029 Notes")	750		750		4.875	%
2030 Senior Unsecured Notes due May 1, 2030 ("2030 Notes")	3,275		—		10.250	%
Total principal amount	5,725		2,450
Less: unamortized debt issuance cost	(79)		(28)
Total debt	$	5,646	$	2,422

Each of the 2025 Notes, the 2027 Notes, the 2028 Notes and the 2029 Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S. Bank National Association, as trustee. The 2030 Notes were issued pursuant to an indenture entered into by and among the Company, each of the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The interest on each of the Senior Notes is payable semi-annually, beginning on April 1, 2021 for the 2025 Notes and 2028 Notes, October 15, 2021 for the 2027 Notes, March 1, 2022 for the 2029 Notes, and November 1, 2022 for the 2030 Notes. The Senior Notes mature as specified in the table above unless earlier repurchased or redeemed and are guaranteed by the Company's existing domestic restricted subsidiaries (other than the subsidiaries formed for inventory, finance receivables, securitization facilities, or immaterial subsidiaries).

The Company may redeem some or all of each issuance of Senior Notes at redemption prices set forth in each respective indenture, plus any accrued and unpaid interest to the redemption date. Prior to those redemption dates, the Company may redeem up to 35% of the aggregate principal amount at a redemption price equal to 100% plus the respective interest rate specified in the table above, together with accrued and unpaid interest to, but not including, the date of redemption, with the net cash proceeds of certain equity offerings. With respect to the 2030 Notes, the Company may, at its option, redeem in the aggregate of up to 10% of the original aggregate principal amount of the 2030 Notes during the period from, and including, May 1, 2025 to, but excluding May 1, 2027, at a redemption price equal to 105.125% of the 2030 Notes to be redeemed, plus accrued and unpaid interest thereon to the relevant redemption rate. In addition, the Company may, at its option, redeem some or all of the Senior Notes prior to its redemption date, by paying a make-whole premium plus any accrued and unpaid interest to, but not including, the redemption date. If the Company experiences certain change of control events, it must make an offer to purchase all of the Senior Notes at 101% of the principal amount thereof, plus any accrued and unpaid interest, to the repurchase date.

The Indentures contain restrictive covenants that limit the ability of the Company and certain of its subsidiaries to, among other things and subject to certain exceptions, incur additional debt or issue preferred stock, create new liens, make intercompany payments, pay dividends and make other distributions in respect of the Company's capital stock, redeem or repurchase the Company’s capital stock or prepay subordinated indebtedness, make certain investments or certain other restricted payments, guarantee indebtedness, designate unrestricted subsidiaries, sell certain kinds of assets, enter into certain types of transactions with affiliates, and effect mergers or consolidations. Certain of these covenants will be suspended if any of the Senior Notes are assigned an investment grade rating from any two of Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, and Fitch Ratings, Inc., and there is no continuing default.

Notes Payable

The Company has entered into promissory note and disbursement agreements to finance certain equipment for its transportation fleet and building improvements. The assets financed with the proceeds from these notes serve as the collateral for each note and certain security agreements related to these assets have cross collateralization and cross default provisions with respect to one another. Each note has a fixed annual interest rate, a two- to five-year term and requires monthly payments. As of September 30, 2022 and December 31, 2021, the outstanding principal of these notes had a weighted-average interest rate of 7.0% and 6.4%, respectively, and totaled $4 million and $10 million, respectively, net of unamortized debt issuance costs, of which $2 million and $7 million as of September 30, 2022 and December 31, 2021, respectively, was due within the next twelve months and is included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Real Estate Financing

The Company finances certain purchases and construction of its property and equipment through various sale and leaseback transactions. As of September 30, 2022, none of these transactions have qualified for sale accounting due to meeting the criteria for finance leases, or forms of continuing involvement, such as repurchase options or renewal periods that extend the lease for substantially all of the asset's remaining useful life, and are therefore accounted for as financing transactions. These arrangements require monthly payments and have initial terms of 20 to 25 years. Some of the agreements are subject to renewal options of up to 25 years and some are subject to base rent increases throughout the term. As of September 30, 2022 and December 31, 2021, the outstanding liability associated with these sale and leaseback arrangements, net of unamortized debt issuance costs, was $483 million and $444 million, respectively, and was included in long-term debt in the accompanying unaudited condensed consolidated balance sheets.

Financing of Beneficial Interests in Securitizations

As discussed in Note 9 — Securitizations and Variable Interest Entities, the Company has retained certain beneficial interests in securitizations pursuant to the Company’s obligations as a sponsor under the Risk Retention Rules. Beginning in June 2019, the Company entered into secured borrowing facilities through which it finances certain retained beneficial interests in securitizations whereby the Company sells such interests and agrees to repurchase them for their fair value at a stated time of repurchase.

As of September 30, 2022 and December 31, 2021, the Company has pledged $298 million and $282 million, respectively, of its beneficial interests in securitizations as collateral under the repurchase agreements with expected repurchases ranging from July 2024 to September 2029. The securitization trusts distribute payments related to the Company's pledged beneficial interests in securitizations directly to the lenders, which reduces the beneficial interests in securitizations and the related debt balance. Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral, the repurchase price of the pledged collateral will be increased by the amount of the decline.

The outstanding balance of these facilities, net of unamortized debt issuance costs, was $295 million and $279 million as of September 30, 2022 and December 31, 2021, respectively, of which $109 million and $93 million, respectively, was included in current portion of long-term debt in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2022, the Company was in compliance with all debt covenants.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Stockholders' Equity

NOTE 11 — STOCKHOLDERS' EQUITY

Organizational Transactions

Carvana Co.'s amended and restated certificate of incorporation, among other things, authorizes (i) 50 million shares of Preferred Stock, par value $0.01 per share, (ii) 500 million shares of Class A common stock, par value $0.001 per share, and (iii) 125 million shares of Class B common stock, par value $0.001 per share. Each share of Class A common stock generally entitles its holder to one vote on all matters to be voted on by stockholders. Each share of Class B common stock held by the

Garcia Parties generally entitles its holder to ten votes on all matters to be voted on by stockholders, for so long as the Garcia Parties maintain direct or indirect beneficial ownership of at least 25% of the outstanding shares of Carvana Co.'s Class A common stock, determined on an as-exchanged basis, assuming that all of the Class A Units and Class B Units were exchanged for Class A common stock. All other shares of Class B common stock generally entitle their holders to one vote per share on all matters to be voted on by stockholders. Holders of Class B common stock are not entitled to receive dividends and would not be entitled to receive any distributions upon the liquidation, dissolution or winding down of the Company. Holders of Class A and Class B common stock vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by applicable law.

Carvana Group's amended and restated LLC Agreement provides for two classes of common ownership interests in Carvana Group: (i) Class A Units and (ii) Class B Units (together, the "LLC Units"). Carvana Co. is required to, at all times, maintain (i) a four-to-five ratio between the number of shares of Class A common stock issued and outstanding by Carvana Co. and the number of Class A Units owned by Carvana Co. (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities and subject to adjustment as set forth in the exchange agreement (the "Exchange Agreement") further discussed below, and taking into account Carvana Co. Sub, LLC's 0.1% ownership interest in Carvana, LLC) and (ii) a four-to-five ratio between the number of shares of Class B common stock owned by the original holders of LLC units prior to the IPO (the "Original LLC Unitholders") and the number of Class A Units owned by the Original LLC Unitholders. The Company may issue shares of Class B common stock only to the extent necessary to maintain these ratios. Shares of Class B common stock are transferable only if an Original LLC Unitholder elects to exchange them, together with 1.25 times as many LLC Units, for consideration from the Company. Such consideration from the Company can be, at the Company’s election, either shares of Class A common stock or cash.

As of September 30, 2022 and December 31, 2021, there were 236 million and 216 million Class A Units, and 2 million and 3 million Class B Units, respectively, (as adjusted for the participation thresholds and closing price of Class A common stock on September 30, 2022 and December 31, 2021), issued and outstanding. As discussed in Note 13 — Equity-Based Compensation, Class B Units were issued under the Company’s LLC Equity Incentive Plan (the "LLC Equity Incentive Plan") and are subject to a participation threshold, and are earned over the requisite service period.

Equity Offerings

On April 26, 2022, the Company completed a public offering of 15.625 million shares of its Class A common stock for total net proceeds of $1.2 billion, after deducting underwriting discounts and offering expenses. The Garcia Parties purchased an aggregate of 5.4 million shares of the Class A common stock offered at the public offering price. The Company used the net proceeds to purchase 19.5 million newly-issued LLC Units in Carvana Group.

Exchange Agreement

Carvana Co. and the Original LLC Unitholders together with any holders of LLC Units issued subsequent to the IPO (together, the "LLC Unitholders") entered into an Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to (i) conversion ratio adjustments for stock splits, stock dividends, reclassifications and similar transactions, (ii) vesting for certain LLC Units, and (iii) the respective participation threshold for Class B Units. To the extent such owners also hold Class B common stock, they are required to deliver to Carvana Co. a number of shares of Class B common stock equal to the number of shares of Class A common stock being exchanged for. Any shares of Class B common stock so delivered are canceled. The number of exchangeable Class B Units is determined based on the value of Carvana Co.'s Class A common stock and the applicable participation threshold.

During the three months ended September 30, 2022 and 2021, certain LLC Unitholders exchanged zero and 3 million LLC Units and zero and 2 million shares of Class B common stock for zero and 3 million newly-issued shares of Class A common stock, respectively. During the nine months ended September 30, 2022 and 2021, certain LLC Unitholders exchanged less than 1 million and 11 million LLC Units and zero and 8 million shares of Class B common stock for less than 1 million and 9 million newly-issued shares of Class A common stock, respectively. Simultaneously, and in connection with these exchanges, Carvana Co. received zero and 3 million LLC Units during the three months ended September 30, 2022 and 2021, respectively, and less than 1 million and 11 million LLC Units during the nine months ended September 30, 2022 and 2021, respectively, increasing its total ownership interest in Carvana Group, and canceled the exchanged shares of Class B common stock.

Class A Non-Convertible Preferred Units

On October 2, 2018, Carvana Group, LLC amended its LLC Agreement to create a class of non-convertible preferred units (the "Class A Non-Convertible Preferred Units"), effective September 21, 2018. The Class A Non-Convertible Preferred Units were created in connection with Carvana Co.'s issuance of its Senior Notes, as discussed further and defined in Note 10 — Debt Instruments. On October 2, 2020, Carvana Group, LLC amended and restated its LLC Agreement to, among other things, authorize the issuance of 1.1 million Class A Non-Convertible Preferred Units to be sold to Carvana Co. in connection with the issuance of its 2025 and 2028 Notes and authorize the issuance of additional Class A Non-Convertible Preferred Units, in each case in consideration for the capital contribution made or deemed to have been made by Carvana Co. of the net proceeds of senior unsecured notes issuances. On March 29, 2021, Carvana Group, LLC issued 0.6 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2027 Notes. On August 16, 2021, Carvana Group LLC issued 0.8 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2029 Notes. On May 6, 2022, Carvana Group LLC issued 3.3 million Class A Non-Convertible Preferred Units in connection with the issuance of its 2030 Notes. Carvana Co. used its net proceeds from the 2023 Notes (which have since been repurchased), the 2025 and 2028 Notes, the 2027 Notes, the 2029 Notes and the 2030 Notes, to purchase 0.6 million, 1.1 million, 0.6 million, 0.8 million, and 3.3 million, respectively, of Class A Non-Convertible Preferred Units.

When Carvana Co. makes payments on the Senior Notes, Carvana Group makes an equal cash distribution, as necessary, to the Class A Non-Convertible Preferred Units. For each $1,000 principal amount of Senior Notes that Carvana Co. repays or otherwise retires, one Class A Non-Convertible Preferred Unit is canceled and retired.

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Non-Controlling Interests

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Non-Controlling Interests

NOTE 12 — NON-CONTROLLING INTERESTS

As discussed in Note 1 — Business Organization, Carvana Co. consolidates the financial results of Carvana Group and reports a non-controlling interest related to the portion of Carvana Group owned by the LLC Unitholders. Changes in the ownership interest in Carvana Group while Carvana Co. retains its controlling interest will be accounted for as equity transactions. Exchanges of LLC Units result in a change in ownership and reduce the amount recorded as non-controlling interests and increase additional paid-in capital.

Upon the issuance of shares of Class A common stock by Carvana Co. related to the Company’s equity compensation plans such as the exercise of options, issuance of restricted or non-restricted stock, payment of bonuses in stock or settlement of stock appreciation rights in stock, Carvana Group is required to issue to Carvana Co. a number of Class A Units equal to 1.25 times the number of shares of Class A common stock being issued in connection with the exercise of such options or issuance of other types of equity compensation, subject to adjustment for stock splits, stock dividends, reclassifications and similar transactions. Activity related to the Company's equity compensation plans may result in a change in ownership which will impact the amount recorded as non-controlling interest and additional paid-in capital.

The non-controlling interest related to the Class B Units is determined based on the respective participation thresholds and the share price of Class A common stock on an as-converted basis. To the extent that the number of as-converted Class B Units change or Class B Units are forfeited, the resulting difference in ownership will be accounted for as equity transactions adjusting the non-controlling interest and additional paid-in capital.

During the nine months ended September 30, 2022 and 2021, the total adjustments related to exchanges of LLC Units were a decrease in non-controlling interests and a corresponding increase in additional paid-in capital of $1 million and $32 million, respectively, which have been included in exchanges of LLC Units in the accompanying unaudited condensed consolidated statements of stockholders' equity. During the nine months ended September 30, 2022, Carvana Co. utilized its net proceeds from its equity offering to purchase LLC Units, which resulted in adjustments to increase non-controlling interests and to decrease additional paid-in capital by $554 million, which have been included in adjustment to non-controlling interests related to equity offerings in the accompanying unaudited condensed consolidated statements of stockholders' equity.

As of September 30, 2022, Carvana Co. owned approximately 55.7% of Carvana Group with the LLC Unitholders owning the remaining 44.3%. The net loss attributable to the non-controlling interests on the accompanying unaudited condensed consolidated statements of operations represents the portion of the net loss attributable to the economic interest in Carvana Group held by the non-controlling LLC Unitholders calculated based on the weighted average non-controlling interests' ownership during the periods presented.

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Transfers from (to) non-controlling interests:
Decrease as a result of issuances of Class A common stock	$	(554)	$	—
Increase as a result of exchanges of LLC Units	1		32
Total transfers from (to) non-controlling interests	$	(553)	$	32

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Equity-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation

NOTE 13 — EQUITY-BASED COMPENSATION

Equity-based compensation is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures. A summary of equity-based compensation recognized during the three and nine months ended September 30, 2022 and 2021 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Restricted Stock Units and Awards excluding those granted in relation to the CEO Milestone Gift	$	12	$	11	$	29	$	26
Restricted Stock Units granted in relation to the CEO Milestone Gift	3		—		40		—
Options	3		3		10		8
Class A Units	—		—		—		1
Total equity-based compensation	18		14		79		35
Equity-based compensation capitalized to property and equipment	(3)		(3)		(7)		(6)
Equity-based compensation capitalized to inventory	(1)		(1)		(16)		(1)
Equity-based compensation, net of capitalized amounts	$	14	$	10	$	56	$	28

As of September 30, 2022, the total unrecognized compensation related to outstanding equity awards was $167 million, which the Company expects to recognize over a weighted-average period of approximately 3.0 years. Total unrecognized equity-based compensation will be adjusted for actual forfeitures.

2017 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan"). Under the 2017 Incentive Plan, 14 million shares of Class A common stock were initially available for issuance, which the Company may grant as stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors, officers and consultants. The majority of equity granted by the Company, other than equity granted in relation to the CEO Milestone Gift, vests over four year periods based on continued employment with the Company. As of September 30, 2022, approximately 7 million shares remain available for future equity-based award grants under this plan.

Employee Stock Purchase Plan

In May 2021, the Company adopted an employee stock purchase plan (the "ESPP"). On July 1, 2021, the ESPP went into effect. The ESPP allows substantially all employees, excluding members of senior management, to acquire shares of the Company’s Class A common stock through payroll deductions over six-month offering periods, commencing on January 1 and July 1 of each year. The per share purchase price is equal to 90% of the fair market value of a share of the Company’s Class A common stock on the last day of the offering period. Participant purchases are limited to maximums that may vary between

$10,000 and $25,000 of stock per calendar year. The Company is authorized to grant up to 0.5 million shares of Class A common stock under the ESPP.

As of September 30, 2022, the Company issued 27,462 shares of Class A common stock and 470,044 shares remained available for future issuance. During the three and nine months ended September 30, 2022, the Company incurred less than $1 million of equity-based compensation expense related to the ESPP.

Class A Units

During 2018, the Company granted certain employees Class A Units with service-based vesting over two- to four-year periods and a grant-date fair value of $18.58 per Class A Unit. The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting.

Class B Units

In March 2015, Carvana Group adopted the LLC Equity Incentive Plan. Under the LLC Equity Incentive Plan, Carvana Group could grant Class B Units to eligible employees, non-employee officers, consultants and directors with service-based vesting, typically four- to five-years. In connection with the completion of the IPO, Carvana Group discontinued the grant of new awards under the LLC Equity Incentive Plan, however the LLC Equity Incentive Plan will continue in connection with administration of existing awards that remain outstanding. Grantees may receive shares of the Company's Class A common stock in exchange for their Class B Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting and the respective participation threshold for Class B Units. Class B Units do not expire. There were no Class B Units issued during the three and nine months ended September 30, 2022 or 2021. As of September 30, 2022, outstanding Class B Units had participation thresholds between $0.00 to $12.00. During the three and nine months ended September 30, 2022 and 2021, the Company incurred less than $1 million of equity-based compensation expense related to the Class B Units.

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Net Loss Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

NOTE 14 — NET LOSS PER SHARE

Basic and diluted net loss per share is computed by dividing the net loss attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive shares. For all periods presented, potentially dilutive shares are excluded from diluted net loss per share because they have an anti-dilutive impact. Therefore, basic and diluted net loss per share attributable to Class A common stockholders are the same for all periods presented. Net loss for all periods presented is attributable only to Class A common stockholders, due to no activity related to convertible preferred stock during those periods.

The following table presents the calculation of basic and diluted net loss per share during the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except number of shares, which are reflected in thousands, and per share amounts)
Numerator:
Net loss	$	(508)	$	(68)	$	(1,453)	$	(105)
Net loss attributable to non-controlling interests	(225)		(36)		(672)		(59)
Net loss attributable to Carvana Co. Class A common stockholders, basic and diluted	$	(283)	$	(32)	$	(781)	$	(46)
Denominator:
Weighted-average shares of Class A common stock outstanding	105,878		84,815		99,141		81,468
Nonvested weighted-average restricted stock awards	(21)		(36)		(7)		(41)
Weighted-average shares of Class A common stock, basic and diluted	105,857		84,779		99,134		81,427
Net loss per share of Class A common stock, basic and diluted	$	(2.67)	$	(0.38)	$	(7.88)	$	(0.56)

Shares of Class B common stock do not share in the losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted net loss per share of Class B common stock under the two-class method has not been presented.

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted net loss per share of Class A common stock for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	(in thousands)
Options (1)	1,265	1,101	1,265	1,101
Restricted Stock Units and Awards (1)	826	688	826	710
Class A Units (2)	82,963	87,912	82,963	91,060
Class B Units (2)	1,580	2,150	1,580	2,271

_________________________

(1) Represents number of instruments outstanding at the end of the period that were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

(2) Represents the weighted-average as-converted LLC units that were evaluated under the if-converted method for potentially dilutive effects and were determined to be anti-dilutive.

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 15 — INCOME TAXES

As described in Note 1 — Business Organization and Note 11 — Stockholders' Equity, as a result of the IPO, Carvana Co. began consolidating the financial results of Carvana Group. Carvana Group is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Carvana Group is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Carvana Group is passed through to and included in the taxable income or loss of its members, including Carvana Co., based on its economic interest held in Carvana Group. Carvana Co. was formed on November 29, 2016 and did not engage in any operations prior to the IPO. Carvana Co. is taxed as a

corporation and is subject to U.S. federal, state, and local income taxes with respect to its allocable share of any taxable income or loss of Carvana Group, as well as any stand-alone income or loss generated by Carvana Co.

As described in Note 11 — Stockholders' Equity, the Company did not acquire any LLC units during the three months ended September 30, 2022. The Company acquired 3 million LLC Units during the three months ended September 30, 2021. The Company acquired less than 1 million and 11 million LLC Units during the nine months ended September 30, 2022 and 2021, respectively, in connection with exchanges with LLC Unitholders. During the three months ended September 30, 2022, the Company did not record a gross deferred tax asset. During the three months ended September 30, 2021, the Company recorded a gross deferred tax asset of $199 million. During the nine months ended September 30, 2022, and 2021, the Company recorded a gross deferred tax asset of $1 million and $641 million, respectively, associated with the basis difference in its investment in Carvana Group related to the acquisition of these LLC Units which is reflected as an increase to additional paid-in capital in the accompanying unaudited condensed consolidated statements of stockholders' equity.

As described in Note 11 — Stockholders' Equity, during the nine months ended September 30, 2022, the Company issued 15.625 million shares of its Class A common stock and received net proceeds from the offering of $1.2 billion. The Company utilized the proceeds to purchase 19.5 million newly issued Class A units in Carvana Group. The Company recognized a gross deferred tax asset of $20 million from the offering, associated with a portion of the basis difference resulting from this purchase of Carvana Group units, which is reflected as an increase to addition paid-in capital in the accompanying unaudited condensed consolidated statements of stockholders’ equity.

As described in Note 5 — Goodwill and Intangible Assets, Net, the Company acquired various intangible assets in connection with the acquisition of Car360 in 2018. As a result, the Company recognized a deferred tax liability of $2 million which is reflected within other liabilities in the accompanying unaudited condensed consolidated balance sheets. The deferred tax liability will be amortized over five to seven years and less than $1 million was amortized during each of the nine months ended September 30, 2022 and 2021.

During the nine months ended September 30, 2022, management performed an assessment of the recoverability of deferred tax assets. Management determined, based on the accounting standards applicable to such assessment, that there was sufficient evidence as a result of the Company’s cumulative losses to conclude it was more likely than not that its deferred tax assets would not be realized and has recorded a full valuation allowance against its deferred tax assets. In the event that management was to determine that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be made which would reduce the provision for income taxes.

The Company recognizes uncertain income tax positions when it is more-likely-than-not the position will be sustained upon examination. As of September 30, 2022 and December 31, 2021, the Company has not identified any uncertain tax positions and has not recognized any related reserves.

The Company's effective tax rate for the three months ended September 30, 2022 and 2021 was an expense of 0.1% and 0.3%, respectively, and for the nine months ended September 30, 2022 and 2021 was an expense of 0.1% and 0.2%, respectively, related to its wholly-owned subsidiaries.

Tax Receivable Agreement

Carvana Co. expects to obtain an increase in its share of the tax basis in the net assets of Carvana Group when LLC Units are exchanged by the LLC Unitholders and other qualifying transactions. As described in Note 11 — Stockholders' Equity, each change in outstanding shares of Class A common stock results in a corresponding increase or decrease in Carvana Co.'s ownership of LLC Units. The Company intends to treat any exchanges of LLC Units as direct purchases of LLC interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that Carvana Co. would otherwise pay in the future to various taxing authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the IPO, the Company entered into a Tax Receivable Agreement ("TRA"). Under the TRA, the Company generally will be required to pay to the Original LLC Unitholders 85% of the amount of cash savings, if any, in U.S. federal, state or local tax that the Company actually realizes directly or indirectly (or are deemed to realize in certain circumstances) as a result of (i) certain tax attributes created as a result of any sales or exchanges (as determined for U.S. federal income tax purposes) to or with the Company of their interests in Carvana Group for shares of Carvana Co.'s Class A

common stock or cash, including any basis adjustment relating to the assets of Carvana Group and (ii) tax benefits attributable to payments made under the TRA (including imputed interest). The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

If the Internal Revenue Service or a state or local taxing authority challenges the tax basis adjustments that give rise to payments under the TRA and the tax basis adjustments are subsequently disallowed, the recipients of payments under the agreement will not reimburse the Company for any payments the Company previously made to them. Any such disallowance would be taken into account in determining future payments under the TRA and would, therefore, reduce the amount of any such future payments. Nevertheless, if the claimed tax benefits from the tax basis adjustments are disallowed, the Company’s payments under the TRA could exceed its actual tax savings, and the Company may not be able to recoup payments under the TRA that were calculated on the assumption that the disallowed tax savings were available.

The TRA provides that if (i) certain mergers, asset sales, other forms of business combinations, or other changes of control were to occur, (ii) there is a material breach of any material obligations under the TRA; or (iii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any LLC Units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination.

As of September 30, 2022, the Company has concluded based on applicable accounting standards, that it was more likely than not that its deferred tax assets subject to the TRA would not be realized; therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such deferred tax assets. As of September 30, 2022, the total unrecorded TRA liability is $1.6 billion. If utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations.

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Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

NOTE 16 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of September 30, 2022, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, IRCs, storage, parking and corporate offices. The initial terms expire at various dates between 2022 and 2038. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

Refer to Note 7 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in long-term debt on the accompanying unaudited condensed consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets	$	27	$	11	$	68	$	26
Interest obligations under finance leases	5		2		13		5
Total finance lease costs	$	32	$	13	$	81	$	31
Operating leases:
Fixed lease costs to non-related parties	$	26	$	14	$	78	$	35
Fixed lease costs to related parties	1		1		3		4
Variable short-term lease costs to related parties	—		1		—		1
Total operating lease costs	$	27	$	16	$	81	$	40
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties					$	56	$	23
Operating lease liabilities to related parties					$	4	$	4
Interest payments on finance lease liabilities					$	13	$	5
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities					$	106	$	35

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of September 30, 2022:

			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total
	(in millions)
Remainder of 2022	$	32	$	1	$	25	$	26	$	58
2023	117		5		106		111		228
2024	105		3		114		117		222
2025	91		2		115		117		208
2026	71		2		112		114		185
Thereafter	32		4		510		514		546
Total minimum lease payments	448		17		982		999		1,447
Less: amount representing interest	(47)		(3)		(266)		(269)		(316)
Total lease liabilities	$	401	$	14	$	716	$	730	$	1,131

_________________________

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of September 30, 2022 and December 31, 2021, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of September 30, 2022 and 2021 were as follows, excluding short-term operating leases:

	As of September 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	8.6		9.2
Finance leases	4.3		4.4
Weighted-average discount rate
Operating leases	7.1	%	7.5	%
Finance leases	5.6	%	5.4	%

Leases

NOTE 16 — LEASES

The Company is party to various lease agreements for real estate and transportation equipment. For each lease agreement, the Company determines its lease term as the non-cancellable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company also assesses whether each lease is an operating or finance lease at the lease commencement date. Rent expense of operating leases is recognized on a straight-line basis over the lease term and includes scheduled rent increases as well as amortization of tenant improvement allowances.

Operating Leases

As of September 30, 2022, the Company is a tenant under various operating leases related to certain of its hubs, vending machines, IRCs, storage, parking and corporate offices. The initial terms expire at various dates between 2022 and 2038. Many of the leases include one or more renewal options ranging from one to twenty years and some contain purchase options.

The Company's operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the accompanying unaudited condensed consolidated balance sheets.

Refer to Note 7 — Related Party Transactions for further discussion of operating leases with related parties.

Finance Leases

The Company has finance leases for certain equipment in its transportation fleet. The leases have initial terms of two to five years, some of which include extension options for up to four additional years, and require monthly payments. The Company's finance leases are included in long-term debt on the accompanying unaudited condensed consolidated balance sheets.

Lease Costs and Activity

The Company's lease costs and activity during the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets	$	27	$	11	$	68	$	26
Interest obligations under finance leases	5		2		13		5
Total finance lease costs	$	32	$	13	$	81	$	31
Operating leases:
Fixed lease costs to non-related parties	$	26	$	14	$	78	$	35
Fixed lease costs to related parties	1		1		3		4
Variable short-term lease costs to related parties	—		1		—		1
Total operating lease costs	$	27	$	16	$	81	$	40
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties					$	56	$	23
Operating lease liabilities to related parties					$	4	$	4
Interest payments on finance lease liabilities					$	13	$	5
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities					$	106	$	35

Maturity Analysis of Lease Liabilities

The following table summarizes maturities of lease liabilities as of September 30, 2022:

			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total
	(in millions)
Remainder of 2022	$	32	$	1	$	25	$	26	$	58
2023	117		5		106		111		228
2024	105		3		114		117		222
2025	91		2		115		117		208
2026	71		2		112		114		185
Thereafter	32		4		510		514		546
Total minimum lease payments	448		17		982		999		1,447
Less: amount representing interest	(47)		(3)		(266)		(269)		(316)
Total lease liabilities	$	401	$	14	$	716	$	730	$	1,131

_________________________

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

As of September 30, 2022 and December 31, 2021, none of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of September 30, 2022 and 2021 were as follows, excluding short-term operating leases:

	As of September 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	8.6		9.2
Finance leases	4.3		4.4
Weighted-average discount rate
Operating leases	7.1	%	7.5	%
Finance leases	5.6	%	5.4	%

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 17 — COMMITMENTS AND CONTINGENCIES

Accrued Limited Warranty

As part of its retail strategy, the Company provides a 100-day or 4,189-mile limited warranty to customers to repair certain broken or defective components of each retail vehicle sold. As such, the Company accrues for such repairs based on actual claims incurred to-date and repair reserves based on historical trends. The liability was $21 million and $16 million as of September 30, 2022 and December 31, 2021, respectively, and is included in accounts payable and other accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.

Purchase Obligations

The Company has purchase obligations for certain customary services related to operating a wholesale auction business of $174 million in aggregate over the next seven years, as of September 30, 2022. These purchase obligations are recorded as liabilities when the services are rendered.

Legal Matters

From time to time, the Company is involved in various claims and legal actions that arise in the ordinary course of business. The Company is currently involved in matters related to, among other topics, its title and registration process, including requests for information from government agencies, class actions and shareholder derivative lawsuits. The Company believes the claims in these matters are not material or are without merit and intends to defend the matters vigorously. The Company also continues to work closely with government agencies to respond to their requests for information. It is not possible to determine the probability of loss or estimate damages, if any, for any of the above matters, and therefore, the Company has not established reserves for any of these proceedings. If the Company determines that a loss is both probable and reasonably estimable, the Company will record a liability, and, if the liability is material, disclose the amount of the liability reserved. If an unfavorable ruling or development were to occur, there exists the possibility of a material adverse impact on the Company's business, results of operations, financial condition or cash flows.

Future litigation may be necessary to defend the Company and its partners by determining the scope, enforceability and validity of third party proprietary rights or to establish its proprietary rights. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 18 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company holds certain assets that are required to be measured at fair value on a recurring basis, and beneficial interests in securitizations for which it elected the fair value option. A description of the fair value hierarchy and the Company's methodologies are included in Note 2 — Summary of Significant Accounting Policies in its most recent Annual Report on Form 10-K.

The following tables are a summary of fair value measurements and hierarchy level at September 30, 2022 and December 31, 2021:

	September 30, 2022
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	139	$	139	$	—	$	—
Beneficial interests in securitizations	350		—		—		350

	December 31, 2021
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	154	$	154	$	—	$	—
Beneficial interests in securitizations	382		—		—		382

_________________________

(1) Consists of highly liquid investments with original maturities of three months or less and classified in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

As of September 30, 2022 and December 31, 2021, the Company has purchase price adjustment receivables of $41 million and $34 million, respectively, which are carried at fair value and classified as other assets in the accompanying consolidated balance sheets. Under the MPSA, the purchaser will make future cash payments to the Company based on the performance of the finance receivables sold. The fair value of the purchase price adjustment receivables are determined based on the extent to which the Company’s estimated performance of the underlying finance receivables exceeds a mutually agreed upon performance threshold of the underlying finance receivables as of measurement dates specified in the MPSA. The Company develops its estimate of future cumulative losses based on the historical performance of finance receivables it originated with similar characteristics as well as general macro-economic trends. The Company then utilizes a discounted cash flow model to calculate the present value of the expected future payment amounts. Due to the lack of observable market data these receivables are classified as Level 3. The adjustments to the fair value of the purchase price adjustment receivables were a gain of $5 million and $3 million during the three months ended September 30, 2022 and 2021, respectively, and a gain of $11 million and $17 million during the nine months ended September 30, 2022 and 2021, respectively, and are reflected in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

Beneficial Interests in Securitizations

Beneficial interests in securitizations include notes and certificates of the securitization trusts, the same securities as issued to other investors as described in Note 9 — Securitizations and Variable Interest Entities. Beneficial interests in securitizations are initially treated as Level 2 assets when the securitization transaction occurs in close proximity to the end of the period and there is a lack of observable changes in the economic inputs. When the securitization transaction does not occur in close proximity to the end of the period and there have been observable changes in the economic inputs, beneficial interests in securitizations are classified as Level 3.

The Company's beneficial interests in securitizations include rated notes and certificates and other assets, all of which are classified as Level 3 due to the lack of observable market data. The Company determines the fair value of its rated notes based on non-binding broker quotes. The non-binding broker quotes are based on models that consider the prevailing interest rates, recent market transactions, and current business conditions. The Company determines the fair value of its certificates and other assets using a combination of non-binding market quotes and internally developed discounted cash flow models. The discounted cash flow models use discount rates based on prevailing interest rates and the characteristics of the specific instruments. As of September 30, 2022 and December 31, 2021, the discount rates were 4.7% to 10.0% and 1.1% to 10.0%, respectively. Significant increases or decreases in the inputs to the models could result in a significantly higher or lower fair value measurement. The Company elected the fair value option on its beneficial interests in securitizations, which allows it to

recognize changes in the fair value of these assets in the period the fair value changes. Changes in the fair value of the beneficial interests in securitizations are reflected in other expense (income), net in the accompanying unaudited condensed consolidated statements of operations.

For beneficial interests in securitizations measured at fair value on a recurring basis, the Company's transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period on a quarterly basis. There were no transfers into or out of Level 3 during the three and nine months ended September 30, 2022 or 2021.

In December 2021, the Company began selling certain of its beneficial interests in securitizations that meet the criteria for sale set forth in the Risk Retention Rules. For the three and nine months ended September 30, 2022, the Company sold beneficial interests in securitizations for a purchase price totaling $40 million and $43 million, respectively.

The following table presents additional information about Level 3 beneficial interests in securitizations measured at fair value on a recurring basis for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Opening Balance	$	401	$	239	$	382	$	131
Received in securitization transactions	24		33		148		170
Cash receipts	(44)		(27)		(136)		(60)
Change in fair value	9		2		(1)		6
Sales of beneficial interests	(40)		—		(43)		—
Ending Balance	$	350	$	247	$	350	$	247

Fair Value of Financial Instruments

The carrying amounts of restricted cash, accounts receivable, accounts payable and accrued liabilities, and accounts payable to related party approximate fair value due to their respective short-term maturities. The carrying value of the short-term revolving facilities were determined to approximate fair value due to their short-term duration and variable interest rates that approximate prevailing interest rates as of each reporting period. The carrying value of notes payable and sale leasebacks were determined to approximate fair value as each of the transactions were entered into at prevailing interest rates during each respective period and they have not materially changed as of or during the periods ended September 30, 2022 and December 31, 2021. The carrying value of the financing of beneficial interests in securitizations was determined to approximate fair value because in the event of a decline in the fair value of the pledged collateral of the financing, the repurchase price of the pledged collateral will be increased by the amount of the decline.

The fair value of the Senior Notes, which are not carried at fair value on the accompanying unaudited condensed consolidated balance sheets, was determined using Level 2 inputs based on quoted market prices for the identical liability. The fair value of the Senior Notes as of September 30, 2022 and December 31, 2021 was as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value, net of unamortized debt issuance costs	$	5,646	$	2,422
Fair value	3,465		2,411

The fair value of finance receivables, which are not carried at fair value on the accompanying unaudited condensed consolidated balance sheets, was determined utilizing the estimated sales price based on the historical experience of the

Company. Such fair value measurement of the finance receivables, net is considered Level 2 under the fair value hierarchy. The carrying value and fair value of the finance receivables as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value	$	485	$	356
Fair value	520		392

Investment in Equity Securities

During October 2021, the Company purchased Series A convertible preferred shares in Root, Inc. ("Root"), an equity security that does not have a readily determinable fair value. The Company elected to measure this investment using a measurement alternative pursuant to the accounting standards and recorded the investment at its cost of $126 million which will subsequently be adjusted for observable price changes. The Company considered all relevant transactions since the date of its investment and has not recorded any impairments or upward or downward adjustments to the carrying amount of its investment in Root, as there have not been changes in the observable price of its equity interest through September 30, 2022. On August 12, 2022, Root effected a reverse stock split of its Class A common stock and Class B common stock at a ratio of 18:1, whereby each 18 shares of Root’s Class A common stock and Class B common stock were automatically combined into one share of Class A common stock or Class B common stock, respectively (the “Reverse Stock Split”). The shares of Root's Class A common stock issuable to the Company on the conversion of the Series A convertible preferred shares were adjusted proportionally.

Also in October 2021, the Company entered into a commercial agreement with Root, under which the Root auto insurance products were to be embedded into the Company's e-commerce platform. In accordance with the provisions of the commercial agreement, the Company received eight tranches of warrants to purchase shares of Root's Class A common stock (the "Warrants"). On September 1, 2022, the integrated auto insurance solution, which embedded into the Company's e-commerce platform (the "Integrated Platform"), was completed. One tranche of the Warrants, consisting of 2.4 million shares, as adjusted pursuant to the Reverse Stock Split, became exercisable upon completion of the Integrated Platform, and is considered a derivative instrument. The other tranches vest based on insurance product sales through the Integrated Platform and are considered a derivative instrument. The Company used a Monte Carlo simulation to estimate the fair value of these Warrants, which are classified as Level 3. At contract inception, the Company recognized an asset of $30 million for the Warrants and deferred revenue, classified in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets. During the three months ended September 30, 2022, the Company determined it was probable that the volume of insurance products required to earn the Warrants would be achieved and recorded an additional $75 million of Warrants and deferred revenue based on the contract inception date fair value as determined by the Monte Carlo simulation. The Warrants and deferred revenue are classified in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets.

The following table presents changes in the Company's Level 3 Warrants measured at fair value:

	2022
	(in millions)
Balance at December 31, 2021	$	6
Warrants to acquire Root's Class A common stock	75
Total unrealized loss (1)	(77)
Balance at September 30, 2022	$	4

(1) The Company recognized the decrease in fair value in relation to the Warrants to acquire Root's Class A common stock through other expense (income), net in the accompanying consolidated statements of operations. The Company recognized a

decrease in fair value of $72 million and $77 million during the three and nine months ended September 30, 2022, respectively. No amounts were recorded during the three and nine months ended September 30, 2021.

Derivative Instruments

As of September 30, 2022 and December 31, 2021, the Company had no other outstanding derivative instruments.

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

NOTE 19 — SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes supplemental cash flow information for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Supplemental cash flow information:
Cash payments for interest	$	178	$	82
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	43	$	74
Property and equipment acquired under finance leases	$	300	$	81
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	371	$	139
Warrants to acquire Root's Class A common stock	$	75	$	—
Equity-based compensation expense capitalized to property and equipment	$	6	$	6
Fair value of beneficial interests received in securitization transactions	$	148	$	235
Reductions of beneficial interests in securitizations and associated long-term debt	$	105	$	22

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the accompanying unaudited condensed consolidated statements of cash flows for all periods presented:

	September 30, 2022		December 31, 2021		September 30, 2021
	(in millions)
Cash and cash equivalents	$	316	$	403	$	297
Restricted cash (1)	161		233		107
Total cash, cash equivalents and restricted cash	$	477	$	636	$	404

_________________________

(1) Amounts included in restricted cash primarily represent the deposits required under the Company's short-term revolving facilities. Refer to Note 10 — Debt Instruments for additional information. Remaining restricted cash represents certain cash held for corporate insurance purposes.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. All intercompany balances and transactions have been eliminated. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. However, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included within the Company's most recent Annual Report on Form 10-K filed on February 24, 2022.

Use of Estimates

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Certain accounting estimates involve significant judgments, assumptions and estimates by management that have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period, which management considers to be critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ materially from these judgments and estimates, which could have a material impact on the carrying values of the Company’s assets and liabilities and the results of operations.

Adoption of New Accounting Standards

Adoption of New Accounting StandardsIn October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606 instead of being recorded at fair value. The Company early adopted ASU 2021-08 in the second quarter of 2022 and it did not have a material effect on its condensed consolidated financial statements as there were no business combinations affected by the retrospective application to January 1, 2022.

Net (Loss) Earnings Per Share

Basic and diluted net loss per share is computed by dividing the net loss attributable to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive shares.

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Summary of Identifiable Assets and Liabilities Assumed and Intangible Assets Acquired

The following table summarizes the preliminary allocation of the purchase price consideration to identifiable assets acquired and liabilities assumed as of September 30, 2022:

	Preliminary Purchase Price Allocation
	(in millions)
Assets Acquired
Current assets	$	208
Property and equipment	1,281
Operating lease right-of-use assets	188
Intangible assets	79
Other assets	1
Total Assets Acquired	1,757
Liabilities Assumed
Current liabilities	233
Operating lease liabilities	167
Total Liabilities Assumed	400
Net Assets Acquired	1,357
Purchase price consideration	2,195
Goodwill	$	838

Identifiable intangible assets acquired consist of the following:

	Fair Value		Useful Life
Customer relationships	$	50	10 years
Developed technology	$	29	3 years

Summary of Unaudited Pro Forma Results

The following unaudited pro forma combined results of operations information for the three and nine months ended September 30, 2022 and 2021 have been prepared as if the ADESA acquisition occurred on January 1, 2021:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Revenues	$	3,386	$	3,685	$	11,066	$	9,721
Net loss	(508)		(144)		(1,583)		(312)
Net loss attributable to non-controlling interests	(225)		(68)		(703)		(153)
Net loss attributable to Carvana Co.	$	(283)	$	(76)	$	(880)	$	(159)
Net loss per share of Class A common stock - basic and diluted	$	(2.67)	$	(0.76)	$	(8.32)	$	(1.64)
Weighted-average shares of Class A common stock - basic and diluted	105,857		100,404		105,774		97,076

The unaudited pro forma combined results of operations information reflect the following pro forma adjustments:

	Unaudited
	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	Increase/(Decrease) (in millions)
Interest expense	$	—	$	86	$	123	$	259
Lease expense	—		(3)		5		(13)
Depreciation and amortization expense	—		—		13		(4)
Intercompany revenues and cost of sales	—		$	(5)	$	(7)	$	(15)

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

The following table summarizes property and equipment, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Land and site improvements	$	1,357	$	303
Buildings and improvements	1,231		643
Transportation fleet	658		347
Software	229		169
Furniture, fixtures and equipment	172		97
Total property and equipment excluding construction in progress	3,647		1,559
Less: accumulated depreciation and amortization on property and equipment	(488)		(294)
Property and equipment excluding construction in progress, net	3,159		1,265
Construction in progress	167		295
Property and equipment, net	$	3,326	$	1,560

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Goodwill and Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Schedule of Intangible Assets and Goodwill

The following table summarizes goodwill and intangible assets, net as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Intangible assets:
Customer relationships	$	50	$	—
Developed technology	41		9
Non-compete agreements	1		1
Intangible assets, acquired cost	92		10
Less: accumulated amortization	(16)		(6)
Intangible assets, net	$	76	$	4
Goodwill	$	847	$	9

Schedule of Anticipated Future Annual Amortization Expense

The anticipated annual amortization expense to be recognized in future years as of September 30, 2022, is as follows:

	Expected Future Amortization
	(in millions)
Remainder of 2022	$	6
2023	18
2024	18
2025	14
2026	7
Thereafter	13
Total	$	76

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Accounts Payable and Other Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Summary of Accounts Payable and Other Accrued Liabilities

The following table summarizes accounts payable and other accrued liabilities as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(in millions)
Accounts payable, including $19 and $27, respectively, due to related parties	$	292	$	141
Accrued compensation and benefits	78		45
Sales taxes and vehicle licenses and fees	85		102
Accrued interest expense	191		42
Reserve for returns and cancellations	58		44
Accrued property and equipment	32		85
Customer deposits	33		34
Accrued advertising costs	18		40
Other accrued liabilities	222		123
Total accounts payable and accrued liabilities	$	1,009	$	656

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Securitizations and Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities Total Exposure and Amortized Cost and Fair Value of Securities Available for Sale

The following table summarizes the carrying value and total exposure to losses of its assets related to unconsolidated VIEs with which the Company has continuing involvement, but is not the primary beneficiary at September 30, 2022 and December 31, 2021. Total exposure represents the estimated loss the Company would incur under severe, hypothetical circumstances, such as if the value of the interests in the securitization trusts and any associated collateral declined to zero. The Company believes the possibility of this is remote. As such, the total exposure presented below is not an indication of the Company's expected losses.

	September 30, 2022				December 31, 2021
	Carrying Value		Total Exposure		Carrying Value		Total Exposure
	(in millions)
Rated notes	$	283	$	283	$	282	$	282
Certificates and other assets	67		67		100		100
Total unconsolidated VIEs	$	350	$	350	$	382	$	382

The amortized cost and fair value of securities available for sale as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in millions)
Rated notes	$	298	$	283	$	282	$	282
Certificates and other assets	45		67		93		100
Total securities available for sale	$	343	$	350	$	375	$	382

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Debt Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt Instruments, Excluding Finance Leases

Debt instruments, excluding finance leases, which are discussed in Note 16 — Leases, as of September 30, 2022 and December 31, 2021 consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Asset-based financing:
Floor plan facilities	$	575	$	1,877
Finance receivable facilities	—		176
Financing of beneficial interest in securitizations	298		282
Notes payable	4		10
Real estate financing	486		447
Total asset-based financing	1,363		2,792
Senior notes	5,725		2,450
Total debt	7,088		5,242
Less: current portion	(687)		(2,154)
Less: unamortized debt issuance costs (1)	(85)		(34)
Total included in long-term debt, net	$	6,316	$	3,054

(1) The unamortized debt issuance costs related to long-term debt are presented as a reduction of the carrying amount of the

corresponding liabilities on the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs related to revolving debt arrangements are presented within other assets on the accompanying condensed consolidated balance sheets and not included here.

The following table summarizes components of the Company's senior unsecured notes:

	September 30, 2022		December 31, 2021		Interest Rate
	(in millions, except percentages)
2025 Senior Unsecured Notes due October 1, 2025 ("2025 Notes")	$	500	$	500	5.625	%
2027 Senior Unsecured Notes due April 15, 2027 ("2027 Notes")	600		600		5.500	%
2028 Senior Unsecured Notes due October 1, 2028 ("2028 Notes")	600		600		5.875	%
2029 Senior Unsecured Notes due September 1, 2029 ("2029 Notes")	750		750		4.875	%
2030 Senior Unsecured Notes due May 1, 2030 ("2030 Notes")	3,275		—		10.250	%
Total principal amount	5,725		2,450
Less: unamortized debt issuance cost	(79)		(28)
Total debt	$	5,646	$	2,422

Schedule of Components of Senior Unsecured Notes

Debt instruments, excluding finance leases, which are discussed in Note 16 — Leases, as of September 30, 2022 and December 31, 2021 consisted of the following:

	September 30, 2022		December 31, 2021
	(in millions)
Asset-based financing:
Floor plan facilities	$	575	$	1,877
Finance receivable facilities	—		176
Financing of beneficial interest in securitizations	298		282
Notes payable	4		10
Real estate financing	486		447
Total asset-based financing	1,363		2,792
Senior notes	5,725		2,450
Total debt	7,088		5,242
Less: current portion	(687)		(2,154)
Less: unamortized debt issuance costs (1)	(85)		(34)
Total included in long-term debt, net	$	6,316	$	3,054

(1) The unamortized debt issuance costs related to long-term debt are presented as a reduction of the carrying amount of the

corresponding liabilities on the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs related to revolving debt arrangements are presented within other assets on the accompanying condensed consolidated balance sheets and not included here.

The following table summarizes components of the Company's senior unsecured notes:

	September 30, 2022		December 31, 2021		Interest Rate
	(in millions, except percentages)
2025 Senior Unsecured Notes due October 1, 2025 ("2025 Notes")	$	500	$	500	5.625	%
2027 Senior Unsecured Notes due April 15, 2027 ("2027 Notes")	600		600		5.500	%
2028 Senior Unsecured Notes due October 1, 2028 ("2028 Notes")	600		600		5.875	%
2029 Senior Unsecured Notes due September 1, 2029 ("2029 Notes")	750		750		4.875	%
2030 Senior Unsecured Notes due May 1, 2030 ("2030 Notes")	3,275		—		10.250	%
Total principal amount	5,725		2,450
Less: unamortized debt issuance cost	(79)		(28)
Total debt	$	5,646	$	2,422

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Non-Controlling Interest (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Summary of Effects of Changes in Ownership in Carvana Group on Equity

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Transfers from (to) non-controlling interests:
Decrease as a result of issuances of Class A common stock	$	(554)	$	—
Increase as a result of exchanges of LLC Units	1		32
Total transfers from (to) non-controlling interests	$	(553)	$	32

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Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Equity-Based Compensation Expense

A summary of equity-based compensation recognized during the three and nine months ended September 30, 2022 and 2021 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Restricted Stock Units and Awards excluding those granted in relation to the CEO Milestone Gift	$	12	$	11	$	29	$	26
Restricted Stock Units granted in relation to the CEO Milestone Gift	3		—		40		—
Options	3		3		10		8
Class A Units	—		—		—		1
Total equity-based compensation	18		14		79		35
Equity-based compensation capitalized to property and equipment	(3)		(3)		(7)		(6)
Equity-based compensation capitalized to inventory	(1)		(1)		(16)		(1)
Equity-based compensation, net of capitalized amounts	$	14	$	10	$	56	$	28

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Summary of the Calculation of Basic and Diluted Net (Loss) Earnings Per Share

The following table presents the calculation of basic and diluted net loss per share during the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions, except number of shares, which are reflected in thousands, and per share amounts)
Numerator:
Net loss	$	(508)	$	(68)	$	(1,453)	$	(105)
Net loss attributable to non-controlling interests	(225)		(36)		(672)		(59)
Net loss attributable to Carvana Co. Class A common stockholders, basic and diluted	$	(283)	$	(32)	$	(781)	$	(46)
Denominator:
Weighted-average shares of Class A common stock outstanding	105,878		84,815		99,141		81,468
Nonvested weighted-average restricted stock awards	(21)		(36)		(7)		(41)
Weighted-average shares of Class A common stock, basic and diluted	105,857		84,779		99,134		81,427
Net loss per share of Class A common stock, basic and diluted	$	(2.67)	$	(0.38)	$	(7.88)	$	(0.56)

Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss Per Share

The following table presents potentially dilutive securities, as of the end of the period, excluded from the computations of diluted net loss per share of Class A common stock for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
	(in thousands)
Options (1)	1,265	1,101	1,265	1,101
Restricted Stock Units and Awards (1)	826	688	826	710
Class A Units (2)	82,963	87,912	82,963	91,060
Class B Units (2)	1,580	2,150	1,580	2,271

_________________________

(1) Represents number of instruments outstanding at the end of the period that were evaluated under the treasury stock method for potentially dilutive effects and were determined to be anti-dilutive.

(2) Represents the weighted-average as-converted LLC units that were evaluated under the if-converted method for potentially dilutive effects and were determined to be anti-dilutive.

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Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Lease Cost and Activity

The Company's lease costs and activity during the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Lease costs:
Finance leases:
Amortization of finance lease assets	$	27	$	11	$	68	$	26
Interest obligations under finance leases	5		2		13		5
Total finance lease costs	$	32	$	13	$	81	$	31
Operating leases:
Fixed lease costs to non-related parties	$	26	$	14	$	78	$	35
Fixed lease costs to related parties	1		1		3		4
Variable short-term lease costs to related parties	—		1		—		1
Total operating lease costs	$	27	$	16	$	81	$	40
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities to non-related parties					$	56	$	23
Operating lease liabilities to related parties					$	4	$	4
Interest payments on finance lease liabilities					$	13	$	5
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities					$	106	$	35

Schedule of Finance Lease, Maturity

The following table summarizes maturities of lease liabilities as of September 30, 2022:

			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total
	(in millions)
Remainder of 2022	$	32	$	1	$	25	$	26	$	58
2023	117		5		106		111		228
2024	105		3		114		117		222
2025	91		2		115		117		208
2026	71		2		112		114		185
Thereafter	32		4		510		514		546
Total minimum lease payments	448		17		982		999		1,447
Less: amount representing interest	(47)		(3)		(266)		(269)		(316)
Total lease liabilities	$	401	$	14	$	716	$	730	$	1,131

_________________________

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

Schedule of Operating Lease, Maturity

The following table summarizes maturities of lease liabilities as of September 30, 2022:

			Operating Leases (1)
	Finance Leases		Related Party (2)		Non-Related Party		Total Operating		Total
	(in millions)
Remainder of 2022	$	32	$	1	$	25	$	26	$	58
2023	117		5		106		111		228
2024	105		3		114		117		222
2025	91		2		115		117		208
2026	71		2		112		114		185
Thereafter	32		4		510		514		546
Total minimum lease payments	448		17		982		999		1,447
Less: amount representing interest	(47)		(3)		(266)		(269)		(316)
Total lease liabilities	$	401	$	14	$	716	$	730	$	1,131

_________________________

(1) Leases that are on a month-to-month basis, short-term leases, and lease extensions that the Company does not expect to exercise are not included.

(2) Related party lease payments exclude rent payments due under the DriveTime Lease Agreement and the DriveTime Hub Lease Agreement for locations where the Company shares space with DriveTime, as those are variable lease payments contingent upon the Company's utilization of the leased assets.

Schedule of Weighted-Average Remaining Lease Terms and Discount Rates

The weighted-average remaining lease terms and discount rates as of September 30, 2022 and 2021 were as follows, excluding short-term operating leases:

	As of September 30,
	2022		2021
Weighted-average remaining lease terms (years)
Operating leases	8.6		9.2
Finance leases	4.3		4.4
Weighted-average discount rate
Operating leases	7.1	%	7.5	%
Finance leases	5.6	%	5.4	%

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Carrying Value and Fair Value of Finance Receivables

The following tables are a summary of fair value measurements and hierarchy level at September 30, 2022 and December 31, 2021:

	September 30, 2022
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	139	$	139	$	—	$	—
Beneficial interests in securitizations	350		—		—		350

	December 31, 2021
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Money market funds (1)	$	154	$	154	$	—	$	—
Beneficial interests in securitizations	382		—		—		382

_________________________

(1) Consists of highly liquid investments with original maturities of three months or less and classified in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

The carrying value and fair value of the finance receivables as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value	$	485	$	356
Fair value	520		392

Scheduled of Additional Information of Beneficial Interests in Securitizations

The following table presents additional information about Level 3 beneficial interests in securitizations measured at fair value on a recurring basis for the three and nine months ended September 30, 2022 and 2021:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in millions)
Opening Balance	$	401	$	239	$	382	$	131
Received in securitization transactions	24		33		148		170
Cash receipts	(44)		(27)		(136)		(60)
Change in fair value	9		2		(1)		6
Sales of beneficial interests	(40)		—		(43)		—
Ending Balance	$	350	$	247	$	350	$	247

Schedule of Fair Value Senior Notes

The fair value of the Senior Notes as of September 30, 2022 and December 31, 2021 was as follows:

	September 30, 2022		December 31, 2021
	(in millions)
Carrying value, net of unamortized debt issuance costs	$	5,646	$	2,422
Fair value	3,465		2,411

Schedule of Changes in Warrants

The following table presents changes in the Company's Level 3 Warrants measured at fair value:

	2022
	(in millions)
Balance at December 31, 2021	$	6
Warrants to acquire Root's Class A common stock	75
Total unrealized loss (1)	(77)
Balance at September 30, 2022	$	4

(1) The Company recognized the decrease in fair value in relation to the Warrants to acquire Root's Class A common stock through other expense (income), net in the accompanying consolidated statements of operations. The Company recognized a

decrease in fair value of $72 million and $77 million during the three and nine months ended September 30, 2022, respectively. No amounts were recorded during the three and nine months ended September 30, 2021.

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Summary of Supplemental Cash Flow Information

The following table summarizes supplemental cash flow information for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended September 30,
	2022		2021
	(in millions)
Supplemental cash flow information:
Cash payments for interest	$	178	$	82
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	43	$	74
Property and equipment acquired under finance leases	$	300	$	81
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	371	$	139
Warrants to acquire Root's Class A common stock	$	75	$	—
Equity-based compensation expense capitalized to property and equipment	$	6	$	6
Fair value of beneficial interests received in securitization transactions	$	148	$	235
Reductions of beneficial interests in securitizations and associated long-term debt	$	105	$	22

Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the accompanying unaudited condensed consolidated balance sheets that sum to the total of the same amounts shown in the accompanying unaudited condensed consolidated statements of cash flows for all periods presented:

	September 30, 2022		December 31, 2021		September 30, 2021
	(in millions)
Cash and cash equivalents	$	316	$	403	$	297
Restricted cash (1)	161		233		107
Total cash, cash equivalents and restricted cash	$	477	$	636	$	404

_________________________

(1) Amounts included in restricted cash primarily represent the deposits required under the Company's short-term revolving facilities. Refer to Note 10 — Debt Instruments for additional information. Remaining restricted cash represents certain cash held for corporate insurance purposes.

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Business Organization - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 class
Subsidiary, Sale of Stock [Line Items]
Number of classes of common ownership interests	2
Carvana Group
Subsidiary, Sale of Stock [Line Items]
Ownership percentage by Carvana Co.	55.70%
Ownership percentage by LLC Unitholders	44.30%

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Summary of Significant Accounting Policies - Liquidity (Details) - USD ($) shares in Millions		3 Months Ended
	May 09, 2022	Jun. 30, 2022	Sep. 23, 2023	Sep. 30, 2022	Mar. 22, 2022	Dec. 31, 2021	Mar. 31, 2021
Debt Instrument [Line Items]
Stock sold during period, net proceeds		$ 1,227,000,000
MPSA | Consumer Loan
Debt Instrument [Line Items]
Commitment of purchaser, current availability financing, principal balances of finance receivables				$ 5,000,000,000	$ 5,000,000,000		$ 4,000,000,000
Receivable purchase agreement, remaining unused capacity				1,900,000,000
ADESA
Debt Instrument [Line Items]
Consideration transferred	$ 2,200,000,000
Senior notes
Debt Instrument [Line Items]
Debt issued, aggregate principal amount				5,725,000,000		$ 2,450,000,000
Floor plan facilities | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity				2,200,000,000
Floor plan facilities | Line of Credit | Forecast
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity			$ 2,000,000,000
2030 Senior Unsecured Notes ("2030 Notes") | Senior notes
Debt Instrument [Line Items]
Debt issued, aggregate principal amount				$ 3,275,000,000		$ 0
Interest Rate				10.25%
Equity Offering
Debt Instrument [Line Items]
Stock sold during period, net proceeds		$ 1,200,000,000
Class A Common Stock | Equity Offering
Debt Instrument [Line Items]
Sale of stock, number of shares issued in transaction (in shares)		15.6

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Business Combinations - Narrative (Details) ft² in Millions, $ in Millions		3 Months Ended	9 Months Ended
	May 09, 2022 USD ($) a ft² site	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Business Combination, Separately Recognized Transactions [Line Items]
Acres of land acquired (more than) | a	4,000
Goodwill		$ 847	$ 847	$ 9
ADESA
Business Combination, Separately Recognized Transactions [Line Items]
Percentage of equity interests acquired	100.00%
Consideration transferred	$ 2,200
Number of sites acquired throughout the U.S. | site	56
Square feet of buildings acquired | ft²	6.5
Weighted average amortization period, intangible assets acquired	6 years 9 months 18 days
Goodwill	$ 838
Cost of sales		180	283
Net loss		36	57
Depreciation and amortization		31	51
Amortization expense		6	10
ADESA | Wholesale sales and revenues
Business Combination, Separately Recognized Transactions [Line Items]
Revenue recognized		$ 193	$ 301

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Business Combinations - Assets Acquired and Liabilities Assumed and Intangible Assets Acquired (Details) - USD ($) $ in Millions	May 09, 2022	Sep. 30, 2022	Dec. 31, 2021
Liabilities Assumed
Goodwill		$ 847	$ 9
ADESA
Assets Acquired
Current assets	$ 208
Property and equipment	1,281
Operating lease right-of-use assets	188
Intangible assets	79
Other assets	1
Total Assets Acquired	1,757
Liabilities Assumed
Current liabilities	233
Operating lease liabilities	167
Total Liabilities Assumed	400
Net Assets Acquired	1,357
Purchase price consideration	2,195
Goodwill	$ 838
Useful Life	6 years 9 months 18 days
ADESA | Customer relationships
Liabilities Assumed
Fair Value	$ 50
Useful Life	10 years
ADESA | Developed technology
Liabilities Assumed
Fair Value	$ 29
Useful Life	3 years

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Business Combinations - Pro Forma Information (Details) - ADESA - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Acquisition [Line Items]
Revenues	$ 3,386	$ 3,685	$ 11,066	$ 9,721
Net loss	(508)	(144)	(1,583)	(312)
Net loss attributable to non-controlling interests	(225)	(68)	(703)	(153)
Net loss attributable to Carvana Co.	$ (283)	$ (76)	$ (880)	$ (159)
Net loss per share of Class A common stock - basic (in dollars per share)	$ (2.67)	$ (0.76)	$ (8.32)	$ (1.64)
Net loss per share of Class A common stock - diluted (in dollars per share)	$ (2.67)	$ (0.76)	$ (8.32)	$ (1.64)
Weighted-average shares of Class A common stock - basic (in shares)	105,857	100,404	105,774	97,076
Weighted-average shares of Class A common stock - diluted (in shares)	105,857	100,404	105,774	97,076
Interest expense	$ 0	$ 86	$ 123	$ 259
Lease expense	0	(3)	5	(13)
Depreciation and amortization expense	0	0	13	(4)
Intercompany revenues and cost of sales	$ 0	$ (5)	$ (7)	$ (15)

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Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation and amortization on property and equipment	$ (488)	$ (294)
Property and equipment, net	3,326	1,560
Land and site improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	1,357	303
Buildings and improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	1,231	643
Transportation fleet
Property, Plant and Equipment [Line Items]
Total property and equipment	658	347
Software
Property, Plant and Equipment [Line Items]
Total property and equipment	229	169
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	172	97
Property and equipment excluding construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	3,647	1,559
Property and equipment, net	3,159	1,265
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	167	295
Property and equipment including construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 3,326	$ 1,560

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Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense			$ 179	$ 72
Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 100	$ 33	238	91
Property, Plant and Equipment | Vehicle Inventory
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	13	6	34	19
Property, Plant and Equipment | Selling, general and administrative
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	51	27	132	72
Property, Plant and Equipment | Cost of sales
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	36	6	72	17
Property, Plant and Equipment | Cost of sales, previously capitalized to vehicle inventory
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 13	$ 6	$ 31	$ 17

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Goodwill and Intangible Assets, Net - Summary of Fair Value of Acquired Intangible Assets (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Intangible assets:
Total	$ 76	$ 4
Goodwill	847	9
Car360
Intangible assets:
Intangible assets, acquired cost	92	10
Less: accumulated amortization	(16)	(6)
Total	76	4
Goodwill	847	9
Car360 | Customer relationships
Intangible assets:
Intangible assets, acquired cost	50	0
Car360 | Developed technology
Intangible assets:
Intangible assets, acquired cost	41	9
Car360 | Non-compete agreements
Intangible assets:
Intangible assets, acquired cost	$ 1	$ 1

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Goodwill and Intangible Assets, Net - Narrative (Details) - Car360 - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Acquisition [Line Items]
Amortization expense (less than for three months ended June 30, 2021)	$ 6	$ 1	$ 10	$ 1
Useful Life			6 years 3 months 18 days

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Goodwill and Intangible Assets, Net - Schedule of Future Amortization Expense (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Total	$ 76	$ 4
Car360
Business Acquisition [Line Items]
Remainder of 2022	6
2023	18
2024	18
2025	14
2026	7
Thereafter	13
Total	$ 76	$ 4

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Accounts Payable and Other Accrued Liabilities - Summary of Accounts Payable and Other Accrued Liabilities (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Payables And Accruals [Line Items]
Accounts payable, including $19 and $27, respectively, due to related parties	$ 292	$ 141
Accrued compensation and benefits	78	45
Sales taxes and vehicle licenses and fees	85	102
Accrued interest expense	191	42
Reserve for returns and cancellations	58	44
Accrued property and equipment	32	85
Customer deposits	33	34
Accrued advertising costs	18	40
Other accrued liabilities	222	123
Total accounts payable and accrued liabilities	1,009	656
Related Party
Payables And Accruals [Line Items]
Accounts payable, including $19 and $27, respectively, due to related parties	19	27
Total accounts payable and accrued liabilities	$ 19	$ 27

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Related Party Transactions - Lease Agreements (Details) $ in Millions	1 Months Ended					3 Months Ended		9 Months Ended
	Feb. 28, 2019 renewal_option	Nov. 30, 2018 renewal_option	Mar. 31, 2017 renewal_option location	Feb. 28, 2017 renewal_option	Nov. 30, 2014 renewal_option location	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) renewal_option	Sep. 30, 2021 USD ($)
Building
Related Party Transaction [Line Items]
Operating lease, number of renewal options								1
Related Party | DriveTime Automotive Group, Inc. | Related Party Lease Agreements | Building
Related Party Transaction [Line Items]
Operating lease, cancellation terms, number of days prior written notice					60 days
Operating lease, number of renewal options			2		2
Operating leases, renewal term			1 year		1 year
Renewal options, number of locations | location			10		10
Termination rights, prior written notice period			60 days
Operating lease term			12 months
Related Party | DriveTime Automotive Group, Inc. | Lease Agreement for Fully-Operational Inspection and Reconditioning Center | Building | Winder, Georgia
Related Party Transaction [Line Items]
Operating lease, number of renewal options				3
Operating leases, renewal term				5 years
Operating lease term				8 years
Related Party | DriveTime Automotive Group, Inc. | Sublease Agreement for Fully-Operational Inspection and Reconditioning Center | Building | Cleveland, Ohio
Related Party Transaction [Line Items]
Operating sublease, initial term		3 years
Operating sublease, number of renewal options		3
Operating sublease, renewal term		5 years
Related Party | DriveTime Automotive Group, Inc. | Lease Agreement for Inspection and Reconditioning Center | Leasehold Improvements and Equipment | Nashville, Tennessee
Related Party Transaction [Line Items]
Operating lease, number of renewal options	3
Operating leases, renewal term	5 years
Related Party | Verde Investments, Inc. and DriveTime Automotive Group Inc. | Related Party Lease Agreements
Related Party Transaction [Line Items]
Expenses from transactions with related party | $						$ 1	$ 1	$ 3	$ 4

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Related Party Transactions - Corporate Office Leases (Details) - Related Party $ in Millions	1 Months Ended		3 Months Ended		9 Months Ended
	Dec. 31, 2019 renewal_option	Sep. 30, 2016 renewal_option	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2016
DriveTime Automotive Group, Inc. | Corporate Headquarters, Office Lease and Subleased Office Space, First Floor
Related Party Transaction [Line Items]
Operating lease term							83 months
Operating lease, number of renewal options | renewal_option		3
Operating leases, renewal term							5 years
DriveTime Automotive Group, Inc. | Subleased Office Space, First Floor
Related Party Transaction [Line Items]
Expenses from transactions with related party | $			$ 1	$ 1	$ 1	$ 1
Verde Investments, Inc. | Office Building Lease | Tempe, Arizona
Related Party Transaction [Line Items]
Operating lease term	10 years
Operating lease, number of renewal options | renewal_option	2
Operating leases, renewal term	5 years
Expenses from transactions with related party | $			$ 1	$ 1	$ 1	$ 1

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Related Party Transactions - Wholesale Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Related Party Transaction [Line Items]
Net sales and operating revenues, from related parties	$ 3,386	$ 3,480	$ 10,767	$ 9,061
Wholesale sales and revenues
Related Party Transaction [Line Items]
Net sales and operating revenues, from related parties	697	552	1,976	1,349
Wholesale sales and revenues | DriveTime Automotive Group, Inc. | Related Party
Related Party Transaction [Line Items]
Net sales and operating revenues, from related parties	$ 6	$ 15	$ 27	$ 37

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Related Party Transactions - Retail Vehicle Acquisitions and Reconditioning (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Related Party Transaction [Line Items]
Vehicle inventory	$ 2,577		$ 2,577		$ 3,149
Cost of sales, to related parties	3,027	$ 2,957	9,714	$ 7,648
Used Vehicles | DriveTime Automotive Group, Inc. | Related Party
Related Party Transaction [Line Items]
Vehicle inventory	2		2
Used Vehicle Sales | DriveTime Automotive Group, Inc. | Related Party
Related Party Transaction [Line Items]
Cost of sales, to related parties	$ 1	$ 17	$ 19	$ 19

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Related Party Transactions - Master Dealer Agreement (Details) - DriveTime Automotive Group, Inc. - Related Party - Master Dealer Agreement - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Related Party Transaction [Line Items]
Revenue from related parties	$ 42	$ 47	$ 138	$ 130
Revenue related to excess cash reserves on contracts	(3)	5	(1)	13
Expenses related to administration of GAP waiver coverage	$ 5	$ 5	$ 14	$ 11

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Related Party Transactions - Servicing and Administrative Fees (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
DriveTime Automotive Group, Inc. | Servicing and Administrative Fees | Related Party
Related Party Transaction [Line Items]
Expenses from transactions with related party	$ 3	$ 2	$ 7	$ 5

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Related Party Transactions - Aircraft Time Sharing Agreement (Details) - Related Party - Aircraft Time Sharing Agreement - Air Transportation Equipment $ in Millions		3 Months Ended		9 Months Ended
	Oct. 22, 2015 aircraft	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2017 aircraft
DriveTime Automotive Group, Inc.
Related Party Transaction [Line Items]
Contractual agreement term	12 months
Contractual agreement, perpetual automatic renewal	12 months
Number of allowable days prior to contract termination with written notice	30 days
Verde Investments, Inc.
Related Party Transaction [Line Items]
Expenses from transactions with related party (less than) | $		$ 1	$ 1	$ 1	$ 1
Verde Investments, Inc. | DriveTime Automotive Group, Inc.
Related Party Transaction [Line Items]
Number of aircrafts | aircraft	2					2

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Related Party Transactions - Shared Services Agreement with DriveTime (Details) - DriveTime Automotive Group, Inc. - Related parties - Shared Services Agreement with DriveTime - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Related Party Transaction [Line Items]
Number of allowable days prior to contract termination with written notice	30 days
Number of allowable days prior to contract termination with written notice from service provider	90 days
Payments to acquire GAP waiver insurance policy (less than)		$ 1	$ 1	$ 1	$ 1

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Related Party Transactions - Accounts Payable Due to Related Party (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Related Party
Related Party Transaction [Line Items]
Due to related parties	$ 19	$ 27

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Related Party Transactions - Contributions of Class A Common Shares From Ernest Garcia III (Details) - Contribution Agreement, CEO Milestone Gift - USD ($)		3 Months Ended		9 Months Ended
	Jan. 05, 2022	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2022
Ernest Garcia III | Chief Executive Officer
Related Party Transaction [Line Items]
Vesting period	2 years
Ernest Garcia III | Restricted Stock Units | Chief Executive Officer
Related Party Transaction [Line Items]
Shares granted during period, per employee (in shares)			23
Shares granted during period, (in shares)	435,035
Shares vested during period (in shares)		14,099		113,206
Ernest Garcia III | Class A Common Stock | Chief Executive Officer
Related Party Transaction [Line Items]
Stock contribution commitment, shares per employee (in shares)	23
Chief Executive Officer | Restricted Stock Units
Related Party Transaction [Line Items]
Contribution of Class A common stock from related party, fee charged	$ 0

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Finance Receivable Sale Agreements - Narrative (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) agreementType	Sep. 30, 2021 USD ($)	Mar. 22, 2022 USD ($)	Mar. 31, 2021 USD ($)
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items]
Number of agreement types | agreementType			2
Consumer Loan | MPSA
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items]
Commitment of purchaser, current availability financing, principal balances of finance receivables	$ 5,000,000,000		$ 5,000,000,000		$ 5,000,000,000	$ 4,000,000,000
Commitment of purchaser, current availability financing, principal balances of finance receivables, amount increased from previous commitment					$ 1,000,000,000
Principal balances of finance receivables sold	1,300,000,000	$ 594,000,000	3,100,000,000	$ 1,700,000,000
Receivable purchase agreement, remaining unused capacity	1,900,000,000		1,900,000,000
Consumer Loan | Master Purchase Sale Agreement, 2017 Master Transfer Agreement and Other Partners
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items]
Gain on loan sales	126,000,000	191,000,000	361,000,000	529,000,000
Securitization Transaction
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items]
Principal balances of finance receivables sold	$ 364,000,000	$ 1,500,000,000	$ 2,400,000,000	$ 3,400,000,000

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Securitizations and Variable Interest Entities - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Beneficial interests in securitizations	$ 350	$ 382
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Beneficial interests in securitizations	$ 350	$ 382

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Securitizations and Variable Interest Entities - Schedule of Expected Losses (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Carrying Value	$ 350	$ 382
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Carrying Value	350	382
Total Exposure	350	382
Rated notes | Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Carrying Value	283	282
Total Exposure	283	282
Certificates and other assets | Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Carrying Value	67	100
Total Exposure	$ 67	$ 100

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Securitizations and Variable Interest Entities - Schedule of Cost and Fair Value of Securities (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Fair Value	$ 350	$ 382
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Amortized Cost	343	375
Fair Value	350	382
Rated notes | Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Amortized Cost	298	282
Fair Value	283	282
Certificates and other assets | Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Amortized Cost	45	93
Fair Value	$ 67	$ 100

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Debt Instruments - Schedule of Debt Instruments, Excluding Finance Leases (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total debt	$ 7,088	$ 5,242
Total asset-based financing	1,363	2,792
Less: current portion	(687)	(2,154)
Less: unamortized debt issuance cost	(85)	(34)
Total included in long-term debt, net	6,316	3,054
Financing of beneficial interest in securitizations
Debt Instrument [Line Items]
Total debt	298	282
Real estate financing
Debt Instrument [Line Items]
Total debt	486	447
Senior notes
Debt Instrument [Line Items]
Less: unamortized debt issuance cost	(79)	(28)
Floor plan facilities | Line of Credit
Debt Instrument [Line Items]
Total debt	575	1,877
Finance receivable facilities | Line of Credit
Debt Instrument [Line Items]
Total debt	0	176
Notes payable | Notes payable
Debt Instrument [Line Items]
Total debt	4	10
Senior notes | Senior notes
Debt Instrument [Line Items]
Total debt	$ 5,725	$ 2,450

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Debt Instruments - Floor Plan Facility (Details) - USD ($)		1 Months Ended
	Sep. 22, 2022	Nov. 30, 2019	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
Line of Credit Facility [Line Items]
Line of credit, outstanding			$ 575,000,000	$ 2,053,000,000
Held in restricted cash			161,000,000	233,000,000	$ 107,000,000
Floor plan facilities | Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity (up to)			2,200,000,000
Outstanding balance, days held in inventory threshold		150 days
Outstanding balance, held in inventory, percentage of original principal amount due		10.00%
Outstanding balance, held in inventory, original principal amount, threshold		50.00%
Outstanding balance, held in inventory, wholesale value, threshold		50.00%
Deposit required under floor plan facility, percentage of principal balance		12.50%
Floor Plan Facility, 12-Month | Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity (up to)	$ 2,200,000,000
Line of credit, outstanding			575,000,000	1,900,000,000
Line of credit facility, remaining borrowing capacity			1,600,000,000	373,000,000
Held in restricted cash			$ 72,000,000	$ 141,000,000
Interest rate			4.53%	2.55%
Floor Plan Facility, 12-Month | Line of Credit | Prime Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.00%
Floor Plan Facility, 18-Month | Line of Credit
Line of Credit Facility [Line Items]
Current borrowing capacity	$ 2,000,000,000
Line of credit, outstanding			$ 0
Line of credit facility, remaining borrowing capacity			2,000,000,000
Held in restricted cash			$ 0
Floor Plan Facility, 18-Month | Line of Credit | Prime Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.00%

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Debt Instruments - Active Finance Receivable Facilities (Details) - USD ($)	Sep. 30, 2022	Mar. 18, 2022	Dec. 31, 2021	Oct. 15, 2021	Sep. 30, 2021	Apr. 30, 2021	Feb. 29, 2020	Jan. 31, 2020
Debt Instrument [Line Items]
Line of credit, outstanding	$ 575,000,000		$ 2,053,000,000
Held in restricted cash	161,000,000		233,000,000		$ 107,000,000
Revolving Credit Facility | SPVANA I Credit Facility
Debt Instrument [Line Items]
Current commitment								$ 500,000,000
Revolving Credit Facility | SPVANA II Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity			600,000,000				$ 500,000,000
Revolving Credit Facility | SPVANA III Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity			600,000,000			$ 500,000,000
Revolving Credit Facility | SPVANA IV Credit Facility
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 500,000,000		$ 350,000,000
Line of credit, outstanding	0		176,000,000
Line of credit facility, remaining borrowing capacity	$ 2,600,000,000		$ 1,900,000,000
Interest rate	4.33%		1.64%
Revolving Credit Facility | Finance receivable facilities
Debt Instrument [Line Items]
Held in restricted cash	$ 41,000,000		$ 67,000,000

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Debt Instruments - Schedule of Long-Term Debt Outstanding (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Less: unamortized debt issuance cost	$ (85)	$ (34)
Senior notes
Debt Instrument [Line Items]
Total principal amount	5,725	2,450
Less: unamortized debt issuance cost	(79)	(28)
Total debt	5,646	2,422
2025 Senior Unsecured Notes ("2025 Notes") | Senior notes
Debt Instrument [Line Items]
Total principal amount	$ 500	500
Interest Rate	5.625%
2027 Senior Unsecured Notes ("2027 Notes") | Senior notes
Debt Instrument [Line Items]
Total principal amount	$ 600	600
Interest Rate	5.50%
2028 Senior Unsecured Notes ("2028 Notes") | Senior notes
Debt Instrument [Line Items]
Total principal amount	$ 600	600
Interest Rate	5.875%
2029 Senior Unsecured Notes ("2029 Notes") | Senior notes
Debt Instrument [Line Items]
Total principal amount	$ 750	750
Interest Rate	4.875%
2030 Senior Unsecured Notes ("2030 Notes") | Senior notes
Debt Instrument [Line Items]
Total principal amount	$ 3,275	$ 0
Interest Rate	10.25%

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Debt Instruments - Long-Term Debt (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Notes payable, current portion	$ 213	$ 152
Beneficial interests in securitization, pledged assets as collateral	9,621	7,015
Long-term debt, current portion	687	2,154
Variable Interest Entity, Not Primary Beneficiary
Debt Instrument [Line Items]
Outstanding principal, net of debt issuance costs	295	279
Long-term debt, current portion	109	93
Variable Interest Entity, Not Primary Beneficiary | Asset Pledged as Collateral
Debt Instrument [Line Items]
Beneficial interests in securitization, pledged assets as collateral	298	282
Leased Properties and Construction Improvements
Debt Instrument [Line Items]
Sale leaseback liability, net, included in long-term debt	$ 483	444
Minimum | Leased Properties and Construction Improvements
Debt Instrument [Line Items]
Sale leaseback transaction, expiration period	20 years
Maximum | Leased Properties and Construction Improvements
Debt Instrument [Line Items]
Sale leaseback transaction, expiration period	25 years
Sale leaseback transaction, renewal period (up to)	25 years
Senior notes
Debt Instrument [Line Items]
Outstanding principal, net of debt issuance costs	$ 5,646	$ 2,422
Senior Unsecured Notes | Senior notes | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, percentage of principal amount redeemed (up to)	35.00%
Redemption price, percentage	100.00%
Senior Unsecured Notes | Senior notes | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, percentage	101.00%
2030 Senior Unsecured Notes ("2030 Notes") | Senior notes | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, percentage of principal amount redeemed (up to)	10.00%
Redemption price, percentage	105.125%
Promissory Note | Notes Payable, Other Payables
Debt Instrument [Line Items]
Weighted average interest rate	7.00%	6.40%
Notes payable	$ 4	$ 10
Notes payable, current portion	$ 2	$ 7
Promissory Note | Notes Payable, Other Payables | Minimum
Debt Instrument [Line Items]
Debt instrument, term	2 years
Promissory Note | Notes Payable, Other Payables | Maximum
Debt Instrument [Line Items]
Debt instrument, term	5 years

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Stockholders' Equity - Organizational Transactions (Details)			1 Months Ended	3 Months Ended	9 Months Ended
	May 03, 2017 vote $ / shares shares	May 02, 2017	Mar. 31, 2015	Mar. 31, 2019	Sep. 30, 2022 class $ / shares shares	Dec. 31, 2021 $ / shares shares
Limited Partners' Capital Account [Line Items]
Preferred stock, shares authorized (in shares)	50,000,000				50,000,000	50,000,000
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.01				$ 0.01	$ 0.01
Number of classes of common ownership interests | class					2
Conversion ratio					1.25
Common unit, multiplier used for conversion ratio					1.25
Class A Units
Limited Partners' Capital Account [Line Items]
Conversion ratio				0.8
Class B Units
Limited Partners' Capital Account [Line Items]
Conversion ratio			0.8
Carvana Group
Limited Partners' Capital Account [Line Items]
Number of classes of common ownership interests | class					2
Carvana Group | Class A Units
Limited Partners' Capital Account [Line Items]
Common units, issued (in shares)					236,000,000	216,000,000
Common units, outstanding (in shares)					236,000,000	216,000,000
Carvana Group | Class B Units
Limited Partners' Capital Account [Line Items]
Common units, issued (in shares)					2,000,000	3,000,000
Common units, outstanding (in shares)					2,000,000	3,000,000
Garcia Parties
Limited Partners' Capital Account [Line Items]
Ownership percentage of outstanding shares, minimum requirement		25.00%
Carvana Sub
Limited Partners' Capital Account [Line Items]
Percentage of voting power		0.10%
Class A Common Stock
Limited Partners' Capital Account [Line Items]
Common stock, shares authorized (in shares)	500,000,000				500,000,000	500,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.001				$ 0.001	$ 0.001
Number of votes | vote	1
Required ratio between shares issued and shares owned of subsidiary	0.8
Required ratio between shares outstanding and shares owned of subsidiary	0.8
Class A Common Stock | Exchange Agreement
Limited Partners' Capital Account [Line Items]
Conversion ratio	0.8
Class B Common Stock
Limited Partners' Capital Account [Line Items]
Common stock, shares authorized (in shares)	125,000,000				125,000,000	125,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.001				$ 0.001	$ 0.001
Number of votes | vote	1
Conversion ratio	0.8
Class B Common Stock | Garcia Parties
Limited Partners' Capital Account [Line Items]
Number of votes | vote	10

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Stockholders' Equity - Equity Offerings (Details) - Class A Common Stock - Follow-On Public Offering $ in Billions	Apr. 26, 2022 USD ($) shares
Limited Partners' Capital Account [Line Items]
Sale of stock, number of shares issued in transaction (in shares)	15,625,000
Sale of stock, net proceeds received | $	$ 1.2
Carvana Group
Limited Partners' Capital Account [Line Items]
LLC units purchased (in shares)	19,500,000
Garcia Parties
Limited Partners' Capital Account [Line Items]
Investment, number of shares purchased in transaction (in shares)	5,400,000

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Stockholders' Equity - Exchange Agreement (Details) - Exchange Agreement - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Limited Partners' Capital Account [Line Items]
LLC units acquired (less than for the nine months ended 09/30/2022) (in shares)			1,000,000	11,000,000
Class B Common Stock
Limited Partners' Capital Account [Line Items]
Exchange of stock, LLC Units exchanged (less than for the nine months ended 09/30/2022 Class A) (in shares)	0	2,000,000	0	8,000,000
Class A Common Stock
Limited Partners' Capital Account [Line Items]
Exchange of stock, shares issued (less than for the nine months ended 9/30/2022) (in shares)	0	3,000,000	1,000,000	9,000,000
Class A Units
Limited Partners' Capital Account [Line Items]
Exchange of stock, LLC Units exchanged (less than for the nine months ended 09/30/2022 Class A) (in shares)	0	3,000,000	1,000,000	11,000,000
LLC units acquired (less than for the nine months ended 09/30/2022) (in shares)	0	3,000,000

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Stockholders' Equity - Class A Non-Convertible Preferred Units (Details) - USD ($)	May 06, 2022	Aug. 16, 2021	Mar. 29, 2021	Oct. 02, 2020	Oct. 02, 2018
Senior notes
Limited Partners' Capital Account [Line Items]
Repayment or retirement of debt, equity cancellation and retirement criteria					$ 1,000
Carvana Group | Class A Non-Convertible Preferred Units
Limited Partners' Capital Account [Line Items]
Repayment of debt, number of shares canceled and retired (in shares)					1
Carvana Group | Class A Non-Convertible Preferred Units | Senior notes | 2027 Notes
Limited Partners' Capital Account [Line Items]
Issuance of stock (in shares)			600,000
Carvana Group | Class A Non-Convertible Preferred Units | Senior notes | 2023 Notes
Limited Partners' Capital Account [Line Items]
Issuance of stock (in shares)			600,000
Carvana Group | Class A Non-Convertible Preferred Units | Senior notes | 2025 Notes and 2028 Notes
Limited Partners' Capital Account [Line Items]
Issuance of stock (in shares)				1,100,000
Carvana Group | Class A Non-Convertible Preferred Units | Senior notes | 2029 Notes
Limited Partners' Capital Account [Line Items]
Issuance of stock (in shares)		800,000
Carvana Group | Class A Non-Convertible Preferred Units | Senior notes | 2030 Notes
Limited Partners' Capital Account [Line Items]
Issuance of stock (in shares)	3,300,000

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Non-Controlling Interests - Narrative (Details) $ in Millions	3 Months Ended					9 Months Ended
	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)
Noncontrolling Interest [Line Items]
Conversion ratio						1.25
Carvana Group
Noncontrolling Interest [Line Items]
Ownership percentage by Carvana Co.						55.70%
Ownership percentage by LLC Unitholders						44.30%
Non-controlling Interests
Noncontrolling Interest [Line Items]
Exchanges of LLC Units		$ 1	$ 8	$ 12	$ 12	$ 1	$ 32
Non-controlling Interests | Follow-On Public Offering
Noncontrolling Interest [Line Items]
Exchanges of LLC Units	$ (554)					(554)
Additional Paid-in Capital
Noncontrolling Interest [Line Items]
Exchanges of LLC Units		$ (1)	$ (8)	$ (12)	$ (12)	(1)	$ (32)
Additional Paid-in Capital | Follow-On Public Offering
Noncontrolling Interest [Line Items]
Exchanges of LLC Units						$ 554

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Non-Controlling Interests - Changes in Ownership (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Transfers from (to) non-controlling interests:
Increase as a result of exchanges of LLC Units	$ 1	$ 32
Total transfers from (to) non-controlling interests	$ (553)	32
Class A Common Stock
Transfers from (to) non-controlling interests:
Decrease as a result of issuances of Class A common stock		$ 0

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Equity-Based Compensation - Equity-Based Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation	$ 18	$ 14	$ 79	$ 35
Equity-based compensation, net of capitalized amounts	14	10	56	28
Unrecognized compensation expense	167		$ 167
Unrecognized compensation expense, period for recognition			3 years
Property and Equipment
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation capitalized	(3)	(3)	$ (7)	(6)
Inventories
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation capitalized	(1)	(1)	(16)	(1)
Restricted Stock Units and Awards excluding those granted in relation to the CEO Milestone Gift
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation	12	11	29	26
Restricted Stock Units granted in relation to the CEO Milestone Gift
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation	3	0	40	0
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation	3	3	10	8
Class A Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total equity-based compensation	$ 0	$ 0	$ 0	$ 1

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Equity-Based Compensation - 2017 Omnibus Incentive Plan (Details)	9 Months Ended
	Sep. 30, 2022 shares
2017 Omnibus Incentive Plan | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Maximum number of awards authorized for grant (in shares)	14,000,000
Number of shares available for grant (in shares)	7,000,000
2017 Omnibus Incentive Plan, Excluding CEO Milestone Gift
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Service-based vesting period	4 years

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Equity-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	May 31, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, equity-based compensation expense (less than)		$ 14,000	$ 10,000	$ 56,000	$ 28,000
Employee Stock | Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, equity-based compensation expense (less than)		$ 1,000		$ 1,000
Employee Stock | Employee Stock Purchase Plan | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, purchase period	6 months
ESPP purchase price of common stock, percent of fair market value	90.00%
ESPP, number of shares available (in shares)	500,000
ESPP, number of shares issued (in shares)				27,462
Number of shares available for grant (in shares)		470,044		470,044
ESPP, per share price of shares purchased after discount (in dollars per share)		$ 20.32		$ 20.32
ESPP, per share price of shares purchased, discount (in dollars per share)		$ 2.26		$ 2.26
Employee Stock | Employee Stock Purchase Plan | Class A Common Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, contribution amount	$ 10
Employee Stock | Employee Stock Purchase Plan | Class A Common Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, contribution amount	$ 25

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Equity-Based Compensation - Class A Units (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2019	Sep. 30, 2022	Dec. 31, 2018 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Conversion ratio		1.25
Class A Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units granted in the period (in dollars per share)			$ 18.58
Conversion ratio	0.8
Minimum | Class A Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service-based vesting period			2 years
Maximum | Class A Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service-based vesting period			4 years

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Equity-Based Compensation - Class B Units (Details) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 USD ($) shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, equity-based compensation expense (less than) | $		$ 14	$ 10	$ 56	$ 28
Conversion ratio				1.25
Class B Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of units issued in the period (in shares) | shares		0	0	0	0
ESPP, equity-based compensation expense (less than) | $		$ 1	$ 1	$ 1	$ 1
Conversion ratio	0.8
Class B Units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service-based vesting period	4 years
Participation threshold (in dollars per share) | $ / shares				$ 0
Class B Units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service-based vesting period	5 years
Participation threshold (in dollars per share) | $ / shares				$ 12

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Net Loss Per Share - Calculation of Basic and Diluted Net (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions		3 Months Ended						9 Months Ended
		Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator:
Net loss		$ (508)	$ (439)	$ (506)	$ (68)	$ 45	$ (82)	$ (1,453)	$ (105)
Net loss attributable to non-controlling interests		(225)			(36)			(672)	(59)
Net loss attributable to Carvana Co. Class A common stockholders, basic and diluted		$ (283)			$ (32)			$ (781)	$ (46)
Denominator:
Weighted-average shares of Class A common stock, basic (in shares)		105,857			84,779			99,134	81,427
Class A Common Stock
Denominator:
Weighted-average shares of Class A common stock outstanding (in shares)		105,878			84,815			99,141	81,468
Weighted-average shares of Class A common stock, basic (in shares)	[1]	105,857			84,779			99,134	81,427
Weighted-average shares of Class A common stock, diluted (in shares)		105,857			84,779			99,134	81,427
Net (loss) earnings per share of Class A common stock, basic (in dollars per share)		$ (2.67)			$ (0.38)			$ (7.88)	$ (0.56)
Net (loss) earnings per share of Class A common stock, diluted (in dollars per share)		$ (2.67)			$ (0.38)			$ (7.88)	$ (0.56)
Class A Common Stock | Restricted Stock
Denominator:
Nonvested weighted-average restricted stock awards (in shares)		(21)			(36)			(7)	(41)

[1] Weighted-average shares of Class A common stock outstanding have been adjusted for unvested restricted stock awards.

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Net Loss Per Share - Schedule of Potentially Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,265	1,101	1,265	1,101
Restricted Stock Units and Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	826	688	826	710
Class A Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	82,963	87,912	82,963	91,060
Class B Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,580	2,150	1,580	2,271

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Income Taxes - Narrative (Details)		3 Months Ended			9 Months Ended
	Apr. 26, 2022 USD ($) shares	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 USD ($) shares	Mar. 31, 2019	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 USD ($) shares	Dec. 31, 2021 USD ($)	Dec. 31, 2018 USD ($)
Income Tax Contingency [Line Items]
Uncertain tax positions		$ 0			$ 0		$ 0
Related reserves		$ 0			$ 0		$ 0
Effective income tax rate, expense		0.10%	0.30%		0.10%	0.20%
Amount of cash savings as a result of tax attributes created from sales/exchanges, percent		0.85			0.85
Remaining tax benefits, percent		0.15			0.15
Deferred tax liability, unrecorded, tax receivable agreements		$ 1,600,000,000			$ 1,600,000,000
Class A Common Stock | Follow-On Public Offering
Income Tax Contingency [Line Items]
Sale of stock, number of shares issued in transaction (in shares) | shares	15,625,000
Sale of stock, net proceeds received	$ 1,200,000,000
Car360
Income Tax Contingency [Line Items]
Deferred tax liability								$ 2,000,000
Deferred tax liability, amortization expense (less than)					1,000,000	$ 1,000,000
Car360 | Minimum
Income Tax Contingency [Line Items]
Deferred tax liability, amortization period				5 years
Car360 | Maximum
Income Tax Contingency [Line Items]
Deferred tax liability, amortization period				7 years
Carvana Group
Income Tax Contingency [Line Items]
Gross deferred tax asset, acquired during period		0	$ 199,000,000		$ 1,000,000	$ 641,000,000
Carvana Group | Class A Common Stock | Follow-On Public Offering
Income Tax Contingency [Line Items]
Gross deferred tax asset, acquired during period		$ 20,000,000
LLC units purchased (in shares) | shares	19,500,000
Exchange Agreement
Income Tax Contingency [Line Items]
LLC units acquired (less than for the nine months ended 09/30/2022) (in shares) | shares					1,000,000	11,000,000
Exchange Agreement | Class A Units
Income Tax Contingency [Line Items]
LLC units acquired (less than for the nine months ended 09/30/2022) (in shares) | shares		0	3,000,000

XML

Income Taxes - Tax Receivable Agreement (Details) $ in Billions	Sep. 30, 2022 USD ($)
Income Tax Disclosure [Abstract]
Deferred tax liability, unrecorded, tax receivable agreements	$ 1.6

XML

Leases - Narrative (Details)	9 Months Ended
	Sep. 30, 2022 renewal_option
Lessee, Lease, Description [Line Items]
Finance lease, extension term	4 years
Building
Lessee, Lease, Description [Line Items]
Operating lease, number of renewal options	1
Minimum
Lessee, Lease, Description [Line Items]
Finance lease, term of contract	2 years
Minimum | Building
Lessee, Lease, Description [Line Items]
Operating lease, renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Finance lease, term of contract	5 years
Maximum | Building
Lessee, Lease, Description [Line Items]
Operating lease, renewal term	20 years

XML

Leases - Schedule of Lease Cost and Activity (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Finance leases:
Amortization of finance lease assets	$ 27	$ 11	$ 68	$ 26
Interest obligations under finance leases	5	2	13	5
Total finance lease costs	32	13	81	31
Operating leases:
Fixed lease costs	26	14	78	35
Total operating lease costs	27	16	81	40
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities			56	23
Interest payments on finance lease liabilities			13	5
Cash payments related to lease liabilities included in financing cash flows:
Principal payments on finance lease liabilities			106	35
Related parties
Operating leases:
Fixed lease costs	1	1	3	4
Variable short-term lease costs to related parties	$ 0	$ 1	0	1
Cash payments related to lease liabilities included in operating cash flows:
Operating lease liabilities			$ 4	$ 4

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Leases - Schedule of Operating and Finance Lease Maturities (Details) $ in Millions	Sep. 30, 2022 USD ($)
Finance Leases
Remainder of 2022	$ 32
2023	117
2024	105
2025	91
2026	71
Thereafter	32
Total minimum lease payments	448
Less: amount representing interest	(47)
Total lease liabilities	401
Operating Leases
Remainder of 2022	26
2023	111
2024	117
2025	117
2026	114
Thereafter	514
Total minimum lease payments	999
Less: amount representing interest	(269)
Total lease liabilities	730
Total
Remainder of 2022	58
2023	228
2024	222
2025	208
2026	185
Thereafter	546
Total minimum lease payments	1,447
Less: amount representing interest	$ (316)
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Notes Payable, Current And Long-Term Debt, Excluding Current Maturities [Member]
Total lease liabilities	$ 1,131
Related Party
Operating Leases
Remainder of 2022	1
2023	5
2024	3
2025	2
2026	2
Thereafter	4
Total minimum lease payments	17
Less: amount representing interest	(3)
Total lease liabilities	14
Non-Related Party
Operating Leases
Remainder of 2022	25
2023	106
2024	114
2025	115
2026	112
Thereafter	510
Total minimum lease payments	982
Less: amount representing interest	(266)
Total lease liabilities	$ 716

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Leases - Schedule of Lease Terms and Discount Rates (Details)	Sep. 30, 2022	Sep. 30, 2021
Weighted-average remaining lease terms (years)
Operating leases	8 years 7 months 6 days	9 years 2 months 12 days
Finance leases	4 years 3 months 18 days	4 years 4 months 24 days
Weighted-average discount rate
Operating leases	7.10%	7.50%
Finance leases	5.60%	5.40%

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Commitments and Contingencies - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) mi	Dec. 31, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Limited warranty, period	100 days
Limited warranty, miles | mi	4,189
Accrued limited warranty	$ 21	$ 16
Purchase obligation for services	$ 174
Purchase obligation, term	7 years

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Fair Value of Financial Instruments - Fair Value Assets Measured on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Assets:
Beneficial interests in securitizations	$ 350	$ 382
Money market funds
Assets:
Money market funds	139	154
Level 1
Assets:
Beneficial interests in securitizations	0	0
Level 1 | Money market funds
Assets:
Money market funds	139	154
Level 2
Assets:
Beneficial interests in securitizations	0	0
Level 2 | Money market funds
Assets:
Money market funds	0	0
Level 3
Assets:
Beneficial interests in securitizations	350	382
Level 3 | Money market funds
Assets:
Money market funds	$ 0	$ 0

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Fair Value of Financial Instruments - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 01, 2022 shares	Dec. 31, 2021 USD ($)	Oct. 31, 2021 USD ($) tranche
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Stockholders' equity note, stock split, conversion ratio			0.0556
Warrant or right, exercisable | shares					2,400,000
Root, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, not readily determinable fair value							$ 126
Root, Inc. | Warrant
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, number of tranches | tranche							8
Level 3 | Root, Inc. | Warrant
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities, fair value							$ 30
Deferred revenue							$ 30
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Purchase price adjustment receivable	$ 41		$ 41			$ 34
Purchase price adjustment receivable (gain) loss, fair value adjustment	(5)	$ (3)	(11)	$ (17)
Fair Value, Measurements, Recurring | Level 3 | Variable Interest Entity, Not Primary Beneficiary
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from sale of beneficial interests	$ 40		$ 43
Fair Value, Measurements, Recurring | Minimum | Level 3 | Variable Interest Entity, Not Primary Beneficiary | Measurement Input, Discount Rate | Valuation Technique, Discounted Cash Flow
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Measurement input, discount rate	0.047		0.047			0.011
Fair Value, Measurements, Recurring | Maximum | Level 3 | Variable Interest Entity, Not Primary Beneficiary | Measurement Input, Discount Rate | Valuation Technique, Discounted Cash Flow
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Measurement input, discount rate	0.10		0.10			0.10

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Fair Value of Financial Instruments - Reconciliation Level Three, Beneficial Interests in Securitizations (Details) - Variable Interest Entity, Not Primary Beneficiary - Level 3 - Fair Value, Measurements, Recurring - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Opening Balance	$ 401	$ 239	$ 382	$ 131
Received in securitization transactions	24	33	148	170
Cash receipts	(44)	(27)	(136)	(60)
Change in fair value	9	2	(1)	6
Sales of beneficial interests	(40)	0	(43)	0
Ending Balance	$ 350	$ 247	$ 350	$ 247

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Fair Value of Financial Instruments - Carrying Value and Fair Value, Senior Notes (Details) - Level 2 - Senior Unsecured Notes Effective September 2018 - Senior notes - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Carrying value, net of unamortized debt issuance costs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior Notes	$ 5,646	$ 2,422
Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior Notes	$ 3,465	$ 2,411

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Fair Value of Financial Instruments - Carrying Value and Fair Value, Finance Receivables (Details) - Level 2 - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Carrying value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finance receivables	$ 485	$ 356
Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finance receivables	$ 520	$ 392

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Fair Value of Financial Instruments - Changes in Warrants (Details) - Root, Inc. - Level 3 - Warrant - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Opening Balance		$ 6
Warrants to acquire Root's Class A common stock		75
Total unrealized loss	$ (72)	(77)
Ending Balance	$ 4	$ 4

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Supplemental Cash Flow Information - Summary of Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Supplemental cash flow information:
Cash payments for interest	$ 178	$ 82
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	43	74
Property and equipment acquired under finance leases	300	81
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	371	139
Warrants to acquire Root's Class A common stock	75	0
Equity-based compensation expense capitalized to property and equipment	6	6
Fair value of beneficial interests received in securitization transactions	148	235
Reductions of beneficial interests in securitizations and associated long-term debt	$ 105	$ 22

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Supplemental Cash Flow Information - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
Supplemental Cash Flow Elements [Abstract]
Cash and cash equivalents	$ 316	$ 403	$ 297
Restricted cash	161	233	107
Total cash, cash equivalents and restricted cash	$ 477	$ 636	$ 404	$ 329