LUCID Gravity Lease vs Finance

[Ron_Burgundy]

This may have been stated already, but the real variable here is the residual, right? Do we have a sense of what Lucid is using for that?

 

[TFCooper]

This may have been stated already, but the real variable here is the residual, right? Do we have a sense of what Lucid is using for that?

Totally agree. All these analyses that determine the "money factor" or true interest cost (down to the basis point!) just serve to obfuscate what's more important. Since the residual value assumption dominates the lease-or-buy decision, it's important to figure out what it is for you.
For those of us who can pay cash, we can use our opportunity cost of funds as the assumed interest rate and back out the implied residual value. For those of us who need to finance the car, we can use the interest rate for a standard car loan as the assumed interest rate. That cost of funds might be 3% or so higher than the opportunity cost of funds for a cash buyer.

As kort6776 said, electric cars historically depreciate at a faster rate than ICE cars, so their actual residual value has been quite low. My sense is that assumed residual values for leases have been higher than actual residual values, but I have no hard data.

 

[kort6776]

As kort6776 said, electric cars historically depreciate at a faster rate than ICE cars, so their actual residual value has been quite low. My sense is that assumed residual values for leases have been higher than actual residual values, but I have no hard data.

the residuals are usually set quite high which allows the manufacturer to offer a lower lease rate. the high depreciation usually makes buying out the car at the end of the lease foolish. for example my Ipace lease ended in may, the residual value was almost $20K higher than the street value of the car, despite the car being pristine with very low miles Jaguar was inflexible about negotiating a buyout deal. their loss. I bet the car is sitting in storage somewhere.

 

[borski]

Totally agree. All these analyses that determine the "money factor" or true interest cost (down to the basis point!) just serve to obfuscate what's more important. Since the residual value assumption dominates the lease-or-buy decision, it's important to figure out what it is for you.
For those of us who can pay cash, we can use our opportunity cost of funds as the assumed interest rate and back out the implied residual value. For those of us who need to finance the car, we can use the interest rate for a standard car loan as the assumed interest rate. That cost of funds might be 3% or so higher than the opportunity cost of funds for a cash buyer.

As kort6776 said, electric cars historically depreciate at a faster rate than ICE cars, so their actual residual value has been quite low. My sense is that assumed residual values for leases have been higher than actual residual values, but I have no hard data.

And, as a reminder, all of this only matters if you plan on selling the car in the first few years. If you plan on keeping it for 5-7 years, it doesn’t matter nearly as much, as the depreciation eventually bottoms out.

 

[DS9]

I bought out my lucid air after 2 months of leasing it. There was no penalty, and I didn’t have to pay interest that would have been accrued for the remaining term.

Did your lease agreement mention anything about the $7500 lease incentive recapture? My AT lease has that language in it.

 

[fisheral]

Until Lucid gets its shambolic lease return process into better shape, I would consider purchasing over leasing.

 

[kort6776]

Until Lucid gets its shambolic lease return process into better shape, I would consider purchasing over leasing.

or avoid lucid, period.

 

[VeryPowerful]

Did your lease agreement mention anything about the $7500 lease incentive recapture? My AT lease has that language in it.

Does the agreement mention conditions for the ev tax credit recapture? I assume they only do that in specific situations.

 

[CWedge411]

Until Lucid gets its shambolic lease return process into better shape, I would consider purchasing over leasing.

I'm going to be returning a lease shortly, can you expand on what you mean by shambolic lease return process?

 

[DS9]

Does the agreement mention conditions for the ev tax credit recapture? I assume they only do that in specific situations.

The lease itself didn't mention those conditions. After digging around a bit it seems like there was a proposal in January 2025 by the IRS for several changes to section 45W - one of which would be a recapture of the credit if the vehicle is sold within the first 18 months of the lease. There was a public comment period and public hearing scheduled for the end of April which was subsequently cancelled. So I'm not sure at this point if the proposed changes were ratified. With the ev credits expiring at the end of September these proposed revisions may no longer matter.

 

[Pragmatic]

They may be afraid of sham leases to get the credit.

MSN

 

[Ironhorse]

I am excited to get my GGT in a month. My SA mentioned delivery ETA end of the month in Natick MA.

I am struggling on the lease versus buy decision - and it is a little involved

1. Buying car primarily for business travel. Second car is a pre-owned 2023 Air GT we bought (cash) in Q2.
2. Current lease MF is 0.00299 (around 7.16% APR), for 36 months / 10k miles. Residual is $70,671 (from a separate email the rep sent). Sharing lease calls below.
3. Rep mentioned

"Please note: if you choose to pay off the lease early, you would be required to repay the $7,500 EV Savings Credit to the government. For that reason, I typically recommend considering payoff closer to the end of your lease term."

4. I am able finance via bank at 5.25 - 5.5% (72 months), and overall we do not quality for $7.5k EV credit due to being above AGI.


Is it more prudent to lease or to buy ?

 

[Ron_Burgundy]

I am excited to get my GGT in a month. My SA mentioned delivery ETA end of the month in Natick MA.

I am struggling on the lease versus buy decision - and it is a little involved

1. Buying car primarily for business travel. Second car is a pre-owned 2023 Air GT we bought (cash) in Q2.
2. Current lease MF is 0.00299 (around 7.16% APR), for 36 months / 10k miles. Residual is $70,671 (from a separate email the rep sent). Sharing lease calls below.
3. Rep mentioned

4. I am able finance via bank at 5.25 - 5.5% (72 months), and overall we do not quality for $7.5k EV credit due to being above AGI.


Is it more prudent to lease or to buy ?




View attachment 31518

I feel like it’s always more prudent financially to buy unless they have the crazy lease offers like they had in the Air. Gravity lease rates are less than ideal. Now, if you can write off business expenses, different story.

The only reasons I am leasing are:
1) I have bought my past three expensive EVs thinking I’d keep them and then realizing I want the newest tech every 2-3 years - so I can justify lease cost. And two were teslas, so depreciation was extreme as Tesla kept lowering prices. I can sell my R1S today and use the proceeds to lease the Gravity for 36 months and still have some leftover. This is primarily because my R1S was original pricing.

2) Strange anxiety that Lucid BKs within 3 years and I’d rather give the car back to BofA at end of lease versus worry about what else to do with it.

 

[kort6776]

I am excited to get my GGT in a month. My SA mentioned delivery ETA end of the month in Natick MA.

I am struggling on the lease versus buy decision - and it is a little involved

1. Buying car primarily for business travel. Second car is a pre-owned 2023 Air GT we bought (cash) in Q2.
2. Current lease MF is 0.00299 (around 7.16% APR), for 36 months / 10k miles. Residual is $70,671 (from a separate email the rep sent). Sharing lease calls below.
3. Rep mentioned

4. I am able finance via bank at 5.25 - 5.5% (72 months), and overall we do not quality for $7.5k EV credit due to being above AGI.


Is it more prudent to lease or to buy ?




View attachment 31518

EVs and all higher end cars suffer massive depreciation which as long as you can live within the milage restrictions make it more sensible to lease

 

[Ron_Burgundy]

EVs and all higher end cars suffer massive depreciation which as long as you can live within the milage restrictions make it more sensible to lease

While I agree about the depreciation, it’s different for everyone from a personal perspective. If you’re going g to keep it for 7+ years, buying makes more sense. Same if rates are crazy low.

With my numbers, I figured I could lease a Gravity for three years and lease another car of similar cost for three years (total six years of car driving) for same as one car for six years and I just know I am not going to be happy in six years with today’s tech. That’s a personal “calculation”.

 

[tonybot]

While I agree about the depreciation, it’s different for everyone from a personal perspective. If you’re going g to keep it for 7+ years, buying makes more sense. Same if rates are crazy low.

With my numbers, I figured I could lease a Gravity for three years and lease another car of similar cost for three years (total six years of car driving) for same as one car for six years and I just know I am not going to be happy in six years with today’s tech. That’s a personal “calculation”.

Another factor in favor of leasing is falling out of warranty and incurring expensive repairs.

 

[Ironhorse]

I feel like it’s always more prudent financially to buy unless they have the crazy lease offers like they had in the Air. Gravity lease rates are less than ideal. Now, if you can write off business expenses, different story.

The only reasons I am leasing are:
1) I have bought my past three expensive EVs thinking I’d keep them and then realizing I want the newest tech every 2-3 years - so I can justify lease cost. And two were teslas, so depreciation was extreme as Tesla kept lowering prices. I can sell my R1S today and use the proceeds to lease the Gravity for 36 months and still have some leftover. This is primarily because my R1S was original pricing.

2) Strange anxiety that Lucid BKs within 3 years and I’d rather give the car back to BofA at end of lease versus worry about what else to do with it.

When we bought our first EV (Tesla M3),we got pretty much most of what we wanted (tech wise), including the HW2->hW3 upgrade. We kept the car for eclose to 8 years now and we just traded in for the Air GT. With the Car Play feature and quality, we will keep that for another 8 years or so.

We intend to keep the Gravity for a long time - optioned everything on it except the larger wheels.

Perhaps buying makes sense in that scenario ?

 

[Ironhorse]

While I agree about the depreciation, it’s different for everyone from a personal perspective. If you’re going g to keep it for 7+ years, buying makes more sense. Same if rates are crazy low.

With my numbers, I figured I could lease a Gravity for three years and lease another car of similar cost for three years (total six years of car driving) for same as one car for six years and I just know I am not going to be happy in six years with today’s tech. That’s a personal “calculation”.

I was wondering if we might come out ahead with the lease->buy to gain the credit, versus straight purchase financing.

 

[Ron_Burgundy]

I was wondering if we might come out ahead with the lease->buy to gain the credit, versus straight purchase financing.

The residual is net of the credit and that’s the purchase price at lease end, right?

It’s a gamble. My general sense with my higher end EVs is a $120,000 Gravity with 30,000 miles on it will likely be worth more than $70,000 in three years. Even with crazy depreciation. But, with the 36 month lease you will have paid $140,000 for the Gravity if you buy it at the end of the lease. With the 36 month loan number you show, you will pay $149,000 for it. That’s basically the tax credit and change. I know you can add these yourself, just thinking out loud.

The real variable here is TVM and the delta between the payments, discounted back at whatever rate of return you think you can get with the money you “save” monthly from the lease - if you’re disciplined enough to invest that.

Okay, enough rambling and I work with finance all day, so too lazy to open Excel…

 

[VeryPowerful]

I am excited to get my GGT in a month. My SA mentioned delivery ETA end of the month in Natick MA.

I am struggling on the lease versus buy decision - and it is a little involved

1. Buying car primarily for business travel. Second car is a pre-owned 2023 Air GT we bought (cash) in Q2.
2. Current lease MF is 0.00299 (around 7.16% APR), for 36 months / 10k miles. Residual is $70,671 (from a separate email the rep sent). Sharing lease calls below.
3. Rep mentioned

4. I am able finance via bank at 5.25 - 5.5% (72 months), and overall we do not quality for $7.5k EV credit due to being above AGI.


Is it more prudent to lease or to buy ?




View attachment 31518

Leases are considered bad, but all depends on your situation. Are you investing your money? Because of USD getting weaker the stocks are growing pretty fast. So $7,500 + lower per month payments can be more beneficial over 3 years than just buying or a loan even with lower APR.

Btw. what tax rate is in your area? Trying to check something in my spreadsheet. I estimated 6.249% but I might have made a mistake.

If you assume 10% annual gains per year from investments, you invest all of the money you "kept in your pocket" by going with lease, and just withdraw the amount necessary for monthly payment you, tax of 6.249%, and after 3 years you decide to buy a car (residual + tax) you should end up with $17,801.18 more money in your account than just buying the car outright. By just buying the car you lose $7,5k and opportunity cost of investing this money over the lease term.

Edit: My estimates assume that it would cost you around $128,439.38 to buy it outright. The higher this number the more $ you keep in your account from investments over lease term.