$TERM only gets set for units which have Standard{Output,Error}=tty. By
default services only have a stdout/err pipe to the journal, and rc-
local.service uses journal+console which is still a pipe. So it would be
actively wrong to set $TERM there as it is not actually a terminal. (See
man systemd.exec).

You can create your own unit with Standard{Output,Error}=tty and a
setterm call, of course.

** Changed in: systemd (Ubuntu)
       Status: New => Invalid

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  $TERM is not set for /etc/rc.local

Status in systemd package in Ubuntu:

Bug description:
  I'm using Ubuntu 16.10 dev with systemd 231-6 and after upgrading from
  upstart to systemd I'm noticing that a setterm command fails that I
  have put into /etc/rc.local in the past (to make specific settings on
  the console without requiring a login). On making a look at this I
  figured out that $TERM is not set at default anymore and maybe it
  makes sense to set it at default again.

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