Not to turn this into the leasing thread again but I must give this slight correction.
Not really. Not only is Ford offering to lease the MME, the history of the Ford Options type product makes clear it is a lease. These products were designed to allow leasing in states that held the lessor vicariously liable for injury or damage caused by the lessee. To get around the issue of vicarious liability companies devised a lease where the "lessee" holds title, which eliminated any possibility of vicarious liability. While the issue of vicarious liability and leasing has been resolved, Ford just dusted off the concept to deal with the tax credit. Quite clever IMO because it puts someone interested in leasing or lower payments in the same position as someone buying the MME.
You are correct that I was not saying the tax credit was applied at the POS as cap reduction. However, that is essentially what happens. In fact the tax credit essentially reduces MSRP by $7500. This is, BTW, exactly how Tesla treated it. If a vehicle cost $77, 500 the web site would list the MSRP as $70,000.
That's as bad as not making your own batteriesFCA sues auto supplier over breach of contract, faces $100M loss
Fiat Chrysler Automobiles NV is suing a Canadian auto supplier in federal court over an alleged breach of contract because it cannot provide enough engine blocks needed to build popular Jeep SUVs, Ram trucks and Chrysler minivans — a decision the automaker says could cost it more than $100 million.
Martinrea International Inc. "improperly and unilaterally" reallocated one of its engine-block manufacturing machines in Mexico to another customer, according to FCA. The Italian American automaker says the change will leave it with "irreparable harm" — thousands of units short of the critical piece for which Martinrea is the only external supplier and is needed to build the vehicles that boosted FCA to record-high profits in North America last quarter.
"Martinrea's decision will imminently cause a shortfall in parts from which FCA US will not be able to recover within any reasonable length of time, resulting in extraordinary monetary damages that could quickly eclipse $100,000,000.00 as well as plant shutdowns, layoffs, and reputational harm," FCA's attorney Moheeb Murray said in the lawsuit that moved Monday from Oakland County's Circuit Court to the federal U.S. District Court for the Eastern District of Michigan.
The auto supplier agreed to manufacture 13,021 engine blocks weekly for FCA on its 3,500-ton aluminum die casting machines at its facility in Quereataro, Mexico, according to the automaker. After reallocating one of the machines for another customer, Martinrea is promising a maximum of only 6,247 engine blocks per week, FCA says.
"The insufficient supply will inevitably require FCA US to shut down production of six top-selling vehicle platforms in at least six of its plants," Murray wrote. "Each hour Martinrea fails to meet fully FCA US's releases is already resulting in monetary damages to FCA US of thousands of dollars, plus other incidental and consequential damages. And this amount could continue to climb to hundreds of thousands of dollars per hour."
Martinrea did not immediately respond to request for comment. The supplier, however, blamed Fiat Chrysler for the part shortage in a Dec. 11 letter sent in reply to FCA that was included in the case.
The automaker in October insourced approximately 30% of the casting production it says it needs at a plant in Kokomo, Indiana, Rob Fairchild, the supplier's executive vice president of sales and engineering, wrote in the letter. Fiat Chrysler in January also authorized Martinrea to refurbish six instead of eight dies that left the supplier without sufficient tooling, he added.
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FCA then "abruptly changed course" from producing the casts itself, Fairchild wrote, "apparently in response to another supplier's situation."
"Martinrea was disappointed that FCA chose to in-source a significant portion of the casting production but, Martinrea relied on, and reallocated, the open casting production capacity created by FCA's decision," he wrote. "Martinrea wanted to keep this business, but FCA took it away anyway.
"FCA is now suddenly demanding that Martinrea produce 13,000 Parts per week — for a period of time — a weekly volume that FCA has never come close to demanding for many years."
He added that due to the conditions amid the COVID-19 pandemic, Martrinea's Mexican operations lacks the skilled labor needed to perform at that output.
The automaker does not address the October insourcing change in its legal complaint. It says it learned of the decision made by Martinrea CEO Pat D'Eramo during phone conversations on Dec. 2 and Dec. 3, one month after receiving confirmation that Martinrea could meet full capacity, Murray wrote. Martinrea has refused to engage or pay for a third party to make up the capacity shortfall, he added.
Fiat Chrysler is requesting a temporary restraining order and order to show cause to compel Martinrea to fulfill its contractual obligations, a monetary award for any economic damages and legal fees.
"FCA US is pursuing this matter to ensure Martinrea meets its contractual obligations to our business," the company said in a statement. "FCA US will pursue all necessary steps to minimize any potential impact to our production
