Mach-E Financing and RCL Leasing Program Announced

[jdmrc93]

Yes that would be nice, but like you I doubt that would happen.

As we now know that the First Edition will not be first production, main reason I ordered, and that even the select models have production dates ahead of the First Edition, if you had it over to do again, would you ordered the FE?

I really expected to have my FE for several months before other MME arrived - that would have been "cool" to have the exclusivity for a few months.

Not having that exclusivity, if I had it to over again, I would have just ordered a premium LR AWD and saved $3600.

What about you?

I'm referring to the "service", but I doubt it as well.

And I wouldn't change my FE order, considering I also have a Premium ordered that I will probably give up to the dealer. Ever since I was a kid and I saw my first Grabber Blue Mustang, I told myself I would have one someday. And here we are. I would pay $3600 for that paint job alone, considering it would probably be more to wrap the car as well.. And you get some exclusive added touches. Do I think it's "worth" the added cost? No. But there's a sentimentality for me that I can't get over. I NEED that Grabber Blue. My first Mustang WILL BE Grabber Blue.

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[silverelan]

@hybrid2bev I'm actually pretty intimidated by all this. It's hard to understand for someone who is not savvy on leasing how this is supposed to work and how / why this is attractive to the customer.

If the buyout price (residual?) at the end of the term indicates that Ford believes the MME price will have basically collapsed, then I'm kind of spooked on moving forward. This is $60,000 and I'm really excited to give it to Ford but not if it means I'm going to get hosed on depreciation even faster than a normal car.

 

[UW2]

Ford isn't going to have much of a choice but to use the $7,500 as a cap reduction on the lease. Yes, they can do any of a number of things to factor it in, but at the end of the day what matters most is public perception. Most people need things very plainly laid out to show a short-term benefit versus a long-term benefit. This is demonstrated by low EV adoption in cities even though frequently the TCO over the lifetime of the EV is cheaper than an ICE vehicle.. But most buyers can't get past the higher up-front cost.

Ford can't afford for the MME to fail so in order to be competitive, they'll have no choice but to use the $7,500 tax credit as a cap reduction. Otherwise, EV buyers who are willing to consider other brands will simply pick a different model.

Would be great if the more savvy ones here could post a lease calculation that simple minds like I could understand. All this talk of money factors and cap reductions make my head go around.

 

[KAustin]

Ford could give members of this forum a free Mach E and some would find a way to complain

Not me...

 

[AndyS_OSU]

Would be great if the more savvy ones here could post a lease calculation that simple minds like I could understand. All this talk of money factors and cap reductions make my head go around.

I’ve learned a lot playing around with this app. Make sure you click through to the summary sheet to really give you a rundown of how things are broken down on any given lease.

https://apps.apple.com/us/app/leasematic-auto-car-lease-loan-calculator/id593255005

 

[DBC]

Would be great if the more savvy ones here could post a lease calculation that simple minds like I could understand. All this talk of money factors and cap reductions make my head go around.

A lease is not very complicated. You pay for the percent of the vehicle you use during the lease period. That is the difference between what you pay for the car and the residual, which is usually stated as a percentage of MSRP but doesn't have to be.

Additionally you have to pay interest on the portion of the vehicle you've used. This includes the car which hasn't depreciated AND the residual -- you've borrowed the entire vehicle so you have to pay interest on that. Money factor is just an interest rate that takes depreciation and residual into account. You get it by dividing the interest rate by 2400. Or if you have the money factor just multiply by 2400 (money factor of .02 = interest rate of 4.8%).

Add those together, then add the sales tax, and that will be the monthly payment. There are some minor things like acquisition cost and so forth that don't amount to much.

Let's assume a 36 months lease. If a vehicle costs $50K and the residual is $24K then you pay $26K in depreciation over 36 months or $722.22/month ((50,000 - 24,000)/36). The interest calculation is a little different than you might expect. The money factor is created so that if you add the residual to the purchase price and then multiply by the money factor you get the interest payment. In this case, if the interest rate was 2%, then the money factor would be .0008, and the interest per month would be $61.67 (($50,000 + $24,000) X .008).

Pretty much anything other than this is a game of smoke and mirrors. A manufacturer can reduce the lease payment in several ways. The biggest involve either reducing the purchase price or raising the residual. These are not the same since if the residual goes up then buying the vehicle as the end of the lease is less appealing because the price is higher. The other way is through what is called "lease cash". This is really just a reduction in the purchase price but has the advantage of not reducing MSRP and not being a "discount".

Another approach which makes no actual sense but which consumers seem to like is to require more down so the monthly payments are less. If you pay $3600 down then over 36 months your monthly will be $100/month less.

Also note that sales tax will be added to the monthly payment or collected on the down payment. The amount will depend on the sales tax rate in your jurisdiction.

Hope this helps.

 

[Gimme_my_MME]

A lease is not very complicated. You pay for the percent of the vehicle you use during the lease period. That is the difference between what you pay for the car and the residual, which is usually stated as a percentage of MSRP but doesn't have to be.

Additionally you have to pay interest on the portion of the vehicle you've used. This includes the car which hasn't depreciated AND the residual -- you've borrowed the entire vehicle so you have to pay interest on that. Money factor is just an interest rate that takes depreciation and residual into account. You get it by dividing the interest rate by 2400. Or if you have the money factor just multiply by 2400 (money factor of .02 = interest rate of 4.8%).

Add those together, then add the sales tax, and that will be the monthly payment. There are some minor things like acquisition cost and so forth that don't amount to much.

Let's assume a 36 months lease. If a vehicle costs $50K and the residual is $24K then you pay $26K in depreciation over 36 months or $722.22/month ((50,000 - 24,000)/36). The interest calculation is a little different than you might expect. The money factor is created so that if you add the residual to the purchase price and then multiply by the money factor you get the interest payment. In this case, if the interest rate was 2%, then the money factor would be .0008, and the interest per month would be $61.67 (($50,000 + $24,000) X .008).

Pretty much anything other than this is a game of smoke and mirrors. A manufacturer can reduce the lease payment in several ways. The biggest involve either reducing the purchase price or raising the residual. These are not the same since if the residual goes up then buying the vehicle as the end of the lease is less appealing because the price is higher. The other way is through what is called "lease cash". This is really just a reduction in the purchase price but has the advantage of not reducing MSRP and not being a "discount".

Another approach which makes no actual sense but which consumers seem to like is to require more down so the monthly payments are less. If you pay $3600 down then over 36 months your monthly will be $100/month less.

Also note that sales tax will be added to the monthly payment or collected on the down payment. The amount will depend on the sales tax rate in your jurisdiction.

Hope this helps.

Thank you!

 

[hybrid2bev]

@hybrid2bev I'm actually pretty intimidated by all this. It's hard to understand for someone who is not savvy on leasing how this is supposed to work and how / why this is attractive to the customer.

If the buyout price (residual?) at the end of the term indicates that Ford believes the MME price will have basically collapsed, then I'm kind of spooked on moving forward. This is $60,000 and I'm really excited to give it to Ford but not if it means I'm going to get hosed on depreciation even faster than a normal car.

I get your apprehension. It's a lot of money to spend on a vehicle. I'm happy to discuss and answer your questions as best I can.

See my post here for context: https://www.macheforum.com/site/thr...rcl-leasing-program-announced.2044/post-60255

I think the lease residuals are actually pretty much in line with other Ford vehicles. The Ford Options residuals are lower because Ford does not get the tax credits to buoy the residuals.

See this post here that explains it pretty well: https://www.macheforum.com/site/thr...rcl-leasing-program-announced.2044/post-60271

Because of the tax credits the value of the vehicle is immediately $7500 lower after you take delivery. (the next owner does not get the tax credits too) This is not a big issue when leasing (and Options too if you buy GAP or make a large down payment) because you can walk away at the end of the lease contract term without any negative equity. If the vehicle does not hold it's value you just return it to Ford Credit and are only responsible for the mileage/wear charges and maybe the disposal fee (if you don't lease again). Or if the vehicle is worth more than the residual you can profit by trading it in or you can purchase it and sell it on your own.

Hope this helps, if you have future questions/concerns just let me know.

 

[DBC]

If the buyout price (residual?) at the end of the term indicates that Ford believes the MME price will have basically collapsed, then I'm kind of spooked on moving forward. This is $60,000 and I'm really excited to give it to Ford but not if it means I'm going to get hosed on depreciation even faster than a normal car.

Don't stress. If you keep the car the residual simply doesn't matter. At the end of 10 years pretty much all cars are worth about the same.

Also if you're stressed that the MME won't hold its value then just either lease or use Ford Options. I've seen people pull out spreadsheets to calculate whether leasing or buying is better. That's a waste of time since the cost is more or less the same. With leasing you have an acquisition and disposal fee but that's minor. What leasing or Ford Options gives you is the ability to walk if you don't like the car. So it's a bit like insurance.

If you can make use of the tax credit then Ford Options is a better deal. You have the option of buying, you get the tax credit, and you have built in financing if you decide to buy. If you can't use the tax credit then lease.

FYI the MME will not "hold its value" if you define "holding its value" with reference to its current MSRP. Every MME sold comes with a $7500 check from the federal government. Not to mention state incentives. When those go away, and we know the federal credit will, Ford will have to reduce the price of the MME to stay competitive. Basically that means a reduction in MSRP, either explicitly or implicit in the form of discounts. When this happens the price of a used MME will drop -- if you can get a new MME for $43K you aren't going to buy a a one year old MME for $43K. However, if you look at whether the MME will hold its value relative to what you paid for it, then I suspect it will. Again if you're worried about this use Ford Options or lease.

Personally I'm inclined to go with Ford Options. I'm confident that the MME will be great, but there might be some technology on the later models that I might want. No idea how this will work out.

 

[eltonlin]

@hybrid2bev

Question - for options, the 36/48 term is a simple financing loan. If I do an early payoff for that loan, would I still be contracted to own the car for the remainder of the term? Or is it possible to pay off everything early (and essentially end the contract early)?

 

[hybrid2bev]

@hybrid2bev

Question - for options, the 36/48 term is a simple financing loan. If I do an early payoff for that loan, would I still be contracted to own the car for the remainder of the term? Or is it possible to pay off everything early (and essentially end the contract early)?

Yes you can pay all of the payments and then wait until the term is up and exercise your options. Or pay the whole thing off, balloon note and all with no prepayment penalty’s. Review your contract before signing.

 

[Mickey the T]

I have leased two BMW i3s. Both times the $7,500 was listed as a credit against the selling price. Additionally, I leased both cars *after* they announced that the next year's model would have increased range. In both cases, BMW ended up *increasing* the residual to make the payment lower. The residual was actually higher on the earlier model with less range than the current model.

(BTW, all this led to these leases being dirt cheap--I'm not expecting that with the MME.)

 

[kdryden99]

Here's my problem with this. Many of you believe that the car wont hold its value due to the tax credit but the low production numbers and limited competition should do exactly the opposite. Other than the Y there is nothing competitive on the market now and the ID.4 which will be competitive is easily 2-3years away since it will be delayed so there the tax credit should easily get offset.
Those comparing with the I3 release, we all knew that it was over priced compared to its competition but BMW was banking on it being a BMW for ppl to buy it. There were other options available and the demand was not as high for the I3 as it is for the MME or the ID4.
Ford should really consider giving its product a chance and let the first adopters decide if it will hold its value rather than trying to recover mosy of its capital from those who have been waiting the longest and the most patient. We will end up paying the price longer term (6-7yrs) but short term they should really throw us a bone.
Giving us first adopters an extra incentive would really help and for those who say that will lower the value of the car I thing its wrong. Look at the Nissan Gtr. It's a limited run car, highy sought out car and has gone up every year they've released a new one. In canada it was 80k$ now its 120k$. Why? cause the product held its own against the competition and in many ways when it first came out it release reminds me of this MME release.

 

[timbop]

Here's my problem with this. Many of you believe that the car wont hold its value due to the tax credit but the low production numbers and limited competition should do exactly the opposite. Other than the Y there is nothing competitive on the market now and the ID.4 which will be competitive is easily 2-3years away since it will be delayed so there the tax credit should easily get offset.
Those comparing with the I3 release, we all knew that it was over priced compared to its competition but BMW was banking on it being a BMW for ppl to buy it. There were other options available and the demand was not as high for the I3 as it is for the MME or the ID4.
Ford should really consider giving its product a chance and let the first adopters decide if it will hold its value rather than trying to recover mosy of its capital from those who have been waiting the longest and the most patient. We will end up paying the price longer term (6-7yrs) but short term they should really throw us a bone.
Giving us first adopters an extra incentive would really help and for those who say that will lower the value of the car I thing its wrong. Look at the Nissan Gtr. It's a limited run car, highy sought out car and has gone up every year they've released a new one. In canada it was 80k$ now its 120k$. Why? cause the product held its own against the competition and in many ways when it first came out it release reminds me of this MME release.

It's not about "showing faith"; it is a business decision with ramifications. If they set too high of a residual, people will certainly turn them all back in at the end and Ford credit will have a whole bunch available for sale - further driving down prices. It is also likely that by then (2024) there will be plenty of competition with BEV's that have even better/longer range batteries.

Even though they've been around for more than a decade, we are still in the early part of the curve with respect to improvements in efficiency and pricing. If you compare it to the early days of personal computers or digital cameras, anything 3 years old was so badly outclassed by the latest and greatest it was considered "junk" to be thrown away. I don't think they will be considered "junk" by any means, but they certainly will be superseded by the 2024 models. The big difference between PCs or cameras and the Mach E is that the latter will have at least a 10 year lifespan with minimal maintenance costs. I think that will keep used prices from cratering too much; people who can't afford a new car will easily be able to afford a used MME because of that limited maintenance cost compared to an ICE.

 

[kdryden99]

It's not about "showing faith"; it is a business decision with ramifications. If they set too high of a residual, people will certainly turn them all back in at the end and Ford credit will have a whole bunch available for sale - further driving down prices. It is also likely that by then (2024) there will be plenty of competition with BEV's that have even better/longer range batteries.

Even though they've been around for more than a decade, we are still in the early part of the curve with respect to improvements in efficiency and pricing. If you compare it to the early days of personal computers or digital cameras, anything 3 years old was so badly outclassed by the latest and greatest it was considered "junk" to be thrown away. I don't think they will be considered "junk" by any means, but they certainly will be superseded by the 2024 models. The big difference between PCs or cameras and the Mach E is that the latter will have at least a 10 year lifespan with minimal maintenance costs. I think that will keep used prices from cratering too much; people who can't afford a new car will easily be able to afford a used MME because of that limited maintenance cost compared to an ICE.

With your first point, I don't think there will be many turning them back in. We are talking about 50k units worldwide. With what we see as a 50/50 split between NA and Europe there wont be enough cars to fill the demand for the next 3-4 years. By that time there will be what maybe 100k MME in NA. That's not a lot.
Toyota will have their EV's in 2025 if it's not delayed. Ford announced this car in 2019 and most will only finally get it in 2021 so you are looking at a good 4-5 years before any other manufacturers release their EV's. So other than the VW ID4 which we will see most likely in 2023 which other new EV will be competition for Ford? Nissan with the Ariya. That'll also be 2023, 2024 Anybody else? There aren't many new BEV's being announced right now so there's still quite a good buffer. There is a chance now to grab hold of the market and you don't have to worry about returns because those of us who already paid close to 50% of the car's value wont necessarily want to give it up.
The market will boom 5 years from now, maybe, we've seen everything is delayed and many companies are strapped for money which is why there are mergers going on everywhere so I don't see this car losing value due to competition. The only way this car loses its value is if there is a major problem with the car which is WHY I believe they should learn from the Japanese market and let their product do the talking.

As to your second point, there will be a difference in quality of BEV's but OEM's are way behind. These next 5 years many will still be playing catchup. Companies like Ford, VW, and GM are trying to catch up fast but it's going to take 4-5 years. As for the rest they didn't even get off the starting blocks so Ford shouldn't even worry about them.

We like to be negative about Tesla's cars because of their fit and finish and the service but if there is one thing they get right, they don't care what their competition is doing they will continue to do their own thing. Ford should do the same

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