Why Ford Credit is abandoning Leasing for Mach E

[Blinkin]

3) Ford found a way to benefit Ford at the expense of the consumer having options.

So just to understand, you'd like to forgo the title and tax credit (and give that credit to Ford) while paying the same down payment and monthly as Ford Options? This is something you want?

I don't get it. Options is a great idea. I don't see why anyone would opt for a regular lease as long as the tax credit exists.

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[ajmartineau]

Yeah. My Bolt will be returned at the end of the lease, being ~$10k below residual. But I might “walk across the street” and buy a different used one to replace it.

 

[Blinkin]

that too. Given their financial situation and the volatility if BEV resales, it is hard to blame them not wanting to eat a bunch of depreciation 3 to 4 years from now.

Ford Options will force them to eat depreciation in 3-4 years the same way leasing would. That risk isn't meaningfully different in the sense that low depreciation will benefit Ford and high depreciation will harm Ford.

The only meaningful difference is the title transfer.

 

[hybrid2bev]

I don't get it. Options is a great idea. I don't see why anyone would opt for a regular lease as long as the tax credit exists.

Yes, if you plan on keeping the vehicle (but want a backup option to return it) Ford Options could offer a lower total cost of ownership vs leasing.

 

[Blinkin]

Yes, if you plan on keeping the vehicle (but want a backup option to return it) Ford Options could offer a lower total cost of ownership vs leasing.

Even if you plan to return the car at the end, Options gives you possession of the title and thus the full tax credit. Leasing won't do that. That's a huge advantage.

 

[timbop]

Ford Options will force them to eat depreciation in 3-4 years the same way leasing would. That risk isn't meaningfully different in the sense that low depreciation will benefit Ford and high depreciation will harm Ford.

The only meaningful difference is the title transfer.

true

 

[macchiaz-o]

Are you sure the premise of this thread is correct? 99.9% of you don’t know what’s in the works behind the scenes so I ask you to withhold judgment for now.

I checked his math. There are 1,648 forum members at this time. 99.9% is just about right!

 

[DBC]

I don't see why anyone would opt for a regular lease as long as the tax credit exists.

Depending on how your state treats installment sales, sales tax on the residual.

 

[DBC]

Lessee generally gets the tax credit form the manufacturer in the form of cap reduction.

Not really true. It happened with some of the early BEVs but not so much now. You'll get part of it, usually as lease cash, but not the whole $7500. To some extent it hardly matters. A discount or lease cash is what it is, regardless of whether there is a tax credit or not. You can get a Chevy Bolt with $8000 lease cash but GM has no tax credits. If it did then people would likely be claiming you got the credit as lease cash.

3) Ford found a way to benefit Ford at the expense of the consumer having options.

Financing is a great innovation. IMO Ford Options is superior to a lease because there is more clarity and transparency (see comments above about lease cash).

Generally there aren't a ton of differences, and the ones that exist are fairly minor. On balance whether it's better or worse for most people will depend on their personal circumstances. I will say that Ford Options is better for people who are undecided about buying or leasing or whether they might want to keep the car after the "lease" period. For people who want to lease and don't intend to keep the vehicle, the only downside would be for those living in states which collect sales tax on the Ford Options "residual".

 

[DBC]

OMG. Er, no. Ford recognizes revenue when it sells a MME to its customer, which is the dealer not the retail customer. Whether the retail customer buys or leases has no effect on Ford's revenue. (The corollary is that it doesn't matter from the retail customers standpoint either).

Manufacturers and dealers prefer leasing to sales because they know you are coming back in three years.

 

[TheLight75]

Are you sure the premise of this thread is correct? 99.9% of you don’t know what’s in the works behind the scenes so I ask you to withhold judgment for now.

The reason traditional leasing wasn’t part of the initial plan is so that customers could claim the tax credits (possibly take full advantage of them). Ford Credit is customer focused and wanted you to have the opportunity to take full advantage of the tax credits on your own. Then you could choose what to do with the refund.

On a lease Ford Credit is the owner, due to the complexity of corporate taxes the full $7500 credit would most likely not be passed on to the customer. Ford Credit has realized that customers could be concerned about the Options monthly payment being higher than a traditional lease and may be willing to take a trade off of lower tax credit application towards the residual value in exchange for lower monthly lease payments.

Customer deliveries should start in December, let’s see what happens between now and the January C&I programs.

Why is it that other manufacturers offer regular leases for BEVs with the $7500 tax credit factored in?

When I leased my Kona, Hyundai took $7500 off the capital cost before running lease calculations. The leasing company then is entitled to claim the tax credit on the lessee’s behalf.

To me, Options sounds like a grab by Ford to earn as much implied interest as possible.

 

[hybrid2bev]

Why is it that other manufacturers offer regular leases for BEVs with the $7500 tax credit factored in?

When I leased my Kona, Hyundai took $7500 off the capital cost before running lease calculations. The leasing company then is entitled to claim the tax credit on the lessee’s behalf.

To me, Options sounds like a grab by Ford to earn as much implied interest as possible.

I can’t speak to how other finance companies handle their accounting.

Ford Options is a simple interest loan, which gives you, the customer, the opportunity to pay less interest by paying more (and earlier) than your scheduled payments.

Traditional leases on the other hand is like a pre-compute loan. All of the interest is fixed into the monthly payments. So there’s no opportunity to pay less interest than as defined by your contract (unless you do a single pay lease by paying all of your payments upfront).

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