Mach-E Financing and RCL Leasing Program Announced

[JTK44]

Part of the problem here is that the current Mach-E price reflects the $7500 credit. Specifically, Ford can mark up the price, (and make additional profit on each vehicle sold,) because they know that consumers will take the tax credit into consideration while making their purchase decision.

As the way things stand, we know that this tax credit will phase out over the next several years and we can expect that Ford will accordingly lower the price of the Mach-E. The residual price of the vehicle will be diminished by a decline in the new vehicle price. It is not that Ford is unwilling to stand by the future value of the Mach-E, rather, they know that they will be reducing the new vehicle price.

I think you are missing something.

The only reason The premium LR AWD is competitive with the Model Y is because of the $7,500 Federal Tax Credit.

If you lease and do not get the $7,500 credit then the lease on the premium is not competitive with the Model Y.

Numbers do not lie: the price of Model Y is $49,990. The premium is AWD LR is $54,700.

It really doesn't matter how much you "tweak" either the residual or the interest rate, you will not be able to make up that $4,700 difference.

We already know that the Model Y, 36 months, 10.5K miles per year, with ZERO money down leases for $633.

Without the $7,500 credit the MME leases out for hundred of dollars more.

For example: residual of 55% MF 2.5% the monthly payment is $788.

That payment of $788 is using a residual of 55%

See: https://www.leaseguide.com/mobcalc/#result

When you drop the residual to 44% and include the $7,500 as a cap cost reduction the payments are $730, better but still a $100 a month more than the Model Y.

To be truly competitive you need both:

• A realistic residual - above 54%
• The Federal tax credit of $7,500 included as a cap cost reduction

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[efisher]

?

Did you read the thread? We are discussing a hypothetical where someone whose tax owed is only $750.

That was the point I was trying to make. Assume over the course of the year someone has $7,000 deducted in taxes from their paycheck but then at the end of the year still owes $750 in additional taxes to the government. They could still benefit from the full 7,500 dollar credit by applying for a refund.

 

[kdryden99]

I think you are missing something.

The only reason The premium LR AWD is competitive with the Model Y is because of the $7,500 Federal Tax Credit.

If you lease and do not get the $7,500 credit then the lease on the premium is not competitive with the Model Y.

Numbers do not lie: the price of Model Y is $49,990. The premium is AWD LR is $54,700.

It really doesn't matter how much you "tweak" either the residual or the interest rate, you will not be able to make up that $4,700 difference.

We already know that the Model Y, 36 months, 10.5K miles per year, with ZERO money down leases for $633.

Without the $7,500 credit the MME leases out for hundred of dollars more.

For example: residual of 55% MF 2.5% the monthly payment is $788.

That payment of $788 is using a residual of 55%

See: https://www.leaseguide.com/mobcalc/#result

When you drop the residual to 44% and include the $7,500 as a cap cost reduction the payments are $730, better but still a $100 a month more than the Model Y.

To be truly competitive you need both:

• A realistic residual - above 54%
• The Federal tax credit of $7,500 included as a cap cost reduction

1000000000000000%

 

[efisher]

So why are we buying this car then??? It's almost like a big F U to us as first adopters and I think its total BS. We have been the most patient. I hope this gets to the CFO cause there needs to be some revisions done before we get it. Having people put more money down upfront to cover the depreciation is like Ford saying "ya we know it'll go down in price so since you guys want the car now pay the extra up front cause" As first adopters we get screwed twice, more upfront and more depreciation.

This is just the way markets behave. Early adopters are willing to pay more money and put up with more aggravation than the typical consumer. (Just look at Tesla buyers.) We early adopters are a little bit crazy, any rational mind, would wait a year before buying, we are not being ripped off, we are just paying more to be among the first.

 

[kdryden99]

This is just the way markets behave. Early adopters are willing to pay more money and put up with more aggravation than the typical consumer. (Just look at Tesla buyers.) We early adopters are a little bit crazy, any rational mind, would wait a year before buying, we are not being ripped off, we are just paying more to be among the first.

I understand but you cant compare your car to a budget ev for residual but charge me the price of a Y. They cant have it both ways. I may be jumping the gun here but I have actual numbers. Before the leak the proposed lease was roughly 1000$ a month so something changed. I've been nothing but optimistic since day 1 and pushing this car to many friends and on here too. Its like a slap in the face. At the lease price suggested i wouldn't even get all my taxes back on the lease since I'm capped at roughly 800$ a month for lease cost by the government.

 

[efisher]

I think you are missing something.

The only reason The premium LR AWD is competitive with the Model Y is because of the $7,500 Federal Tax Credit.

If you lease and do not get the $7,500 credit then the lease on the premium is not competitive with the Model Y.

Numbers do not lie: the price of Model Y is $49,990. The premium is AWD LR is $54,700.

It really doesn't matter how much you "tweak" either the residual or the interest rate, you will not be able to make up that $4,700 difference.

We already know that the Model Y, 36 months, 10.5K miles per year, with ZERO money down leases for $633.

Without the $7,500 credit the MME leases out for hundred of dollars more.

For example: residual of 55% MF 2.5% the monthly payment is $788.

That payment of $788 is using a residual of 55%

See: https://www.leaseguide.com/mobcalc/#result

When you drop the residual to 44% and include the $7,500 as a cap cost reduction the payments are $730, better but still a $100 a month more than the Model Y.

To be truly competitive you need both:

• A realistic residual - above 54%
• The Federal tax credit of $7,500 included as a cap cost reduction

• It is true that the reason the Mach-E is price competitive with the Model Y is the tax credit. I am sure that this tax credit was a particularly important factor that Ford used when specifying the price for the Mach-E.
• Numbers do not lie but you must take all the numbers into account. In this case the $54,700 MSRP is not the only number. You need to include the -7,500 tax credit too! So, the appropriate basis for comparison is ($54,700 -$7500) $47,200 far less than the Model Y's $49,990. A savings of $2,790. I would argue that there is at least one more number, which is the difference in delivery charges ($1,200 for the Tesla vs. $1,100 for the Mach-E) pushing the Mach-E's advantage up to $2,890.

I really do not understand why you persist is excluding the tax credit from the analysis unless you want to bias the results towards the Tesla.

 

[efisher]

1000000000000000%

This might be an appropriate analysis for Canadians where the tax credit is not a factor but it is a very important factor for Americans looking to purchase an EV!

 

[efisher]

I understand but you cant compare your car to a budget ev for residual but charge me the price of a Y. They cant have it both ways. I may be jumping the gun here but i have actual numbers. Before the leak the propsed lease was rougly 1000$ a month so something changed. Ive been nothing but optimistic since day 1 and pushing this car to many friends and on here too. Its like a slap in the face. At the lease price suggested i would even get all my taxes back on the lease since im capped at roughly 800$ a month for lease cost by the government.

I have never said anything about comparing the Mach-E to a budget EV. Just that the tax credit must be factored in as it impacts both the initial transaction cost. (A big offset to the upfront cost.) and the projected residual, since its expiration will be offset, at least in part, by a price reduction.

I really have nothing to say about whether you can deduct the cost of a lease. I know I cannot.

 

[efisher]

I understand but you cant compare your car to a budget ev for residual but charge me the price of a Y. They cant have it both ways. I may be jumping the gun here but i have actual numbers. Before the leak the propsed lease was rougly 1000$ a month so something changed. Ive been nothing but optimistic since day 1 and pushing this car to many friends and on here too. Its like a slap in the face. At the lease price suggested i would even get all my taxes back on the lease since im capped at roughly 800$ a month for lease cost by the government.

I just realized that you are Canadian. So of course, your analysis would be different. Sorry.

 

[kdryden99]

I have never said anything about comparing the Mach-E to a budget EV. Just that the tax credit must be factored in as it impacts both the initial transaction cost. (A big offset to the upfront cost.) and the projected residual, since its expiration will be offset, at least in part, by a price reduction.

I really have nothing to say about whether you can deduct the cost of a lease. I know I cannot.

Not you Ford did, otherwise why would they think it would depreciate so fast. Other premium EV's have not depreciated at the same rate as the budget ones.

 

[JTK44]

• It is true that the reason the Mach-E is price competitive with the Model Y is the tax credit. I am sure that this tax credit was a particularly important factor that Ford used when specifying the price for the Mach-E.
• Numbers do not lie but you must take all the numbers into account. In this case the $54,700 MSRP is not the only number. You need to include the -7,500 tax credit too! So, the appropriate basis for comparison is ($54,700 -$7500) $47,200 far less than the Model Y's $49,990. A savings of $2,790. I would argue that there is at least one more number, which is the difference in delivery charges ($1,200 for the Tesla vs. $1,100 for the Mach-E) pushing the Mach-E's advantage up to $2,890.

I really do not understand why you persist is excluding the tax credit from the analysis unless you want to bias the results towards the Tesla.

What part of:

"When you are leasing where did the Federal tax credit go?"​

do you not understand.

I clearly stated that if you buy the MM, with the $7,500 it is competitive with the Model Y.

But any way you slice it, and regardless of how you play with either the residual or MF, without a cap cost reduction in the lease equal to the Fed Tax credit, the MM is not competitive with the Model Y.

For the last time: every other manufacturer of expensive EV passes on the Fed Tax credit of $7,500 in the form of a cap cost deduction.

Ford is the only one pocketing it.

And "NO", those manufacturers do not have a residual in the 40% range because of the cap cost reduction.

 

[efisher]

What part of:

"When you are leasing where did the Federal tax credit go?"​

do you not understand.

I clearly stated that if you buy the MM, with the $7,500 it is competitive with the Model Y.

But any way you slice it, and regardless of how you play with either the residual or MF, without a cap cost reduction in the lease equal to the Fed Tax credit, the MM is not competitive with the Model Y.

For the last time: every other manufacturer of expensive EV passes on the Fed Tax credit of $7,500 in the form of a cap cost deduction.

Ford is the only one pocketing it.

And "NO", those manufacturers do not have a residual in the 40% range because of the cap cost reduction.

I'm sorry, but maybe I missed something. Where did you see that Ford was pocketing the tax credit in a lease transaction?

 

[JTK44]

I'm sorry, but maybe I missed something. Where did you see that Ford was pocketing the tax credit in a lease transaction?

We know there is a Federal Tax Credit:

We know it is not in the lease.

Unless the good fairy took it, it must be with Ford!

 

[DBC]

What part of:

"When you are leasing where did the Federal tax credit go?"​

do you not understand.

I clearly stated that if you buy the MM, with the $7,500 it is competitive with the Model Y.

But any way you slice it, and regardless of how you play with either the residual or MF, without a cap cost reduction in the lease equal to the Fed Tax credit, the MM is not competitive with the Model Y.

What part of "It's in the residual" don't you understand? ? Maybe this will help. The lease payment is based on the difference between purchase price and residual. You can state it as (MSRP - $7500 - Residual) or you can state it as (MSRP - (Residual + $7500)). It's no more complicated than (10 - 6 - 2) = 2 = (10 -(6 + 2)). Same thing. Just a matter of where you put the parenthesis.

It does make a difference if you want to keep the car after the lease period. In this case go with Options. With Options you even get more of a discount.

At the end of the day if the MME is competitive with the Model Y with the tax credit subtracted from the purchase price it's competitive with the tax credit added to the residual.

 

[Woeo]

This is Spot on. The purpose of the tax credit is to lower the price temporarily to give the manufacturers the opportunity to reach economies of scale. The tax credit is not designed to incentivize buyers to chose one vehicle over another. We have seen already seen this at work at Tesla...the vehicle price dropped in concert with the declining tax credits over time. The true lease will probably residualize around 48-50% for a 36m/10k lease with the tax credit as a cap cost reduction...do not expect heavily subvented leases like you would at BMW.

The credit isn’t meant to lower the price. The credit is a mechanism for distributing federal support for companies‘ investment in bringing EVs to market.

The price for my ER AWD Premium is $48,700. I am paying 56,200 and recovering 7,500, netting out at 48,700. I fully expect Ford to reduce the price of the MME (all other variables remaining constant) by $3,750 when the credit is reduced by half.

Ford is collecting the price of the car and 7,500. Eventually it will collect the price of the car and 3,750.

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