If leasing is not available, would you cancel your Gravity order?

[msaunders9430]

I think your issue is that you keep trying to define the word “depreciation,” which has a couple of different potential meanings.

One is what I’ll call “market depreciation,” which id define as “what is the car worth on the open market at the end of the lease?” That’s unknown and somewhat variable. We don’t know what a x-month year old Gravity with y options and z mileage is going to be worth at some point in the future.

The other is what I’ll call “lease depreciation” but note that this is not a term specifically called out in any lease. A lease will call out a residual %age (maybe, but you can calculate it) and/or and a residual value (calculated as residual %age x MSRP). The leasing company sets the residual %age and more importantly, the residual value, as a fixed input into the lease calculations. They determine the residual. You can’t negotiate it. The “lease depreciation” could therefore be defined as MSRP - residual value, and if you wanted to you could express it as a %age, which would be 100-residual %. But if the cars price is negotiated to lower than MSRP, maybe you could argue that the lease depreciation is less. And then you have to throw in the EV credit, which may or may not apply, and decide how you want to figure that into the “lease depreciation.”

But “depreciation” is not something that really has a specific meaning in this case. I think you’re trying to back into a number by adding up lease payments, but that doesn’t really make sense. Lease payments are an output that spits out of a calculation based on the inputs of residual value, interest rate/money factor, and total capitalized cost. Depreciation is neither a specific input nor output.

Yes.
In some ways seeking to confirm its meaning and your two meanings are in line with my understanding.
Not concerned about market depreciation. Easily understandable.

Lease depreciation is the meaning that most articles on car leasing reference when talking about "lease payments pay car depreciation over the life of a lease" or "car depreciation is what you pay during a lease term".

I understand everything you said about residual value. All makes sense from my research.

The “lease depreciation” could therefore be defined as MSRP - residual value, and if you wanted to you could express it as a %age, which would be 100-residual %. But if the cars price is negotiated to lower than MSRP, maybe you could argue that the lease depreciation is less. And then you have to throw in the EV credit, which may or may not apply, and decide how you want to figure that into the “lease depreciation.”

Exactly.
In the example I gave in my initial post about this the negotiated MSRP was $100k and the residual value was $60k (60%). Therefore, the lease depreciation could be $40k or (40%).
However, if the lease payments of $1400/mth for 36 months equals $50,400 that's not $40k depreciation paid. That's $50.4k depreciation paid and $110.4k (above MSRP) in total cost, if residual value is paid at end of lease. I want to make sure I'm not paying above MSRP.

I've heard a salespeople say "The lease payments are based on the capitalized cost of the car. You can reduce the capitalized cost with a downpayment. It's called capitalized cost reduction". Online configurators even should the adjusted monthly lease payment as down payment amounts are entered. Paying $10k down to lower the capitalized cost such that the lease payments are $1100/mth for 36 months equals $39,600 which is close to $40k depreciation, but that $40k depreciation cost $10k which I basically equate to prepaying $10k of the $50k depreciation.

I haven't found a specific article stating the downpayment as prepaid depreciation, but Gemini (Google AI) confirmed what I'm thinking.

 

[msaunders9430]

Post in thread 'Best Damn Car AND Best Damn Car Buying Experience. Ever.'
https://lucidowners.com/threads/bes...-car-buying-experience-ever.10826/post-240197

They are complicated and as much as I read online, questions arise.
I prefer to attempt clarification here than a car salesperson.
I know this is a car forum, but the topic of leasing and lease knowledge is related, so my intent is to tap into knowledge from unbiased (saleswise) individuals.

 

[WeighingGravity]

Sorry, we have essentially the same discussion in two places now, I posted a long reply in the other thread, maybe it really belongs here, but here's what I posted over there:

[also, mods feel free to consolidate all this as needed, sorry if I am s***ing up the forum]

W

Post in thread 'Gravity Delivery Discussion'

Today at 2:45 PM

Yes, generally correct. Here is a really rudimentary example:

$100K MSRP car on a 36-month lease at a 4.8% interest rate and a 60% residual. Let's say it's an EV with $2000 of sales incentives and a $2500 down payment, and let's say it qualifies for the $7500 tax credit.

$100K - $2000 incentives - $7500 tax credit = $90,500 adjusted vehicle price. Subtract another $2500 down and you get to $88,000. This is called the total capitalized cost - the amount of principle still owed on the vehicle at lease inception.
The residual is 60% x $100K = $60,000.
Over the next 36 months, you have...

• WeighingGravity

• 
• 

 

[WeighingGravity]

In the example I gave in my initial post about this the negotiated MSRP was $100k and the residual value was $60k (60%). Therefore, the lease depreciation could be $40k or (40%).
However, if the lease payments of $1400/mth for 36 months equals $50,400 that's not $40k depreciation paid. That's $50.4k depreciation paid and $110.4k (above MSRP) in total cost, if residual value is paid at end of lease. I want to make sure I'm not paying above MSRP.

Those $1400 payments include a financing/interest portion. I didn't dig back through your example, and I don't know all the variables in your example, but it's a safe bet that there's at least $10,400 of something else in there (most likely interest but could also be other destination charges or taxes, I just don't know what's in there). But it's not going to be vehicle purchase price over MSRP, it's going to be interest and other fees - though some might say that a delivery charge is a sneaky way to add fees over MSRP.

 

[msaunders9430]

They are complicated and as much as I read online, questions arise.
I prefer to attempt clarification here than a car salesperson.
I know this is a car forum, but the topic of leasing and lease knowledge is related, so my intent is to tap into knowledge from unbiased (saleswise) individuals.

Moderators/owner (@borski , @joec , @Adnillien), if I'm going overboard with questions, just tell me.
This isn't a financing forum, I can attempt to seek clarification elsewhere.
I hope I'm not derailing this thread.
My comments and questions are lease-related, but they are also probably very basic to some members.

Yes, members can ignore, but ...
Let me know.

 

[borski]

Moderators/owner (@borski , @joec , @Adnillien), if I'm going overboard with questions, just tell me.
This isn't a financing forum, I can attempt to seek clarification elsewhere.
I hope I'm not derailing this thread.
My comments and questions are lease-related, but they are also probably very basic to some members.

Yes, members can ignore, but ...
Let me know.

Leasing is relevant, no issues there. What I might suggest is taking everything you’ve learned and helpfully summarizing it in a separate thread to continue that discussion, so others can easier find it!

 

[msaunders9430]

Leasing is relevant, no issues there. What I might suggest is taking everything you’ve learned and helpfully summarizing it in a separate thread to continue that discussion, so others can easier find it!

Ha!
I'll try.

It's kinda like ev technology.
Everytime I think I understand it, another question comes to mind.

Once the dust settles, if ever, I'll attempt a summary.

 

[californiaboy935]

It seems like everyone is experiencing a pullback in consumer spending, I am constantly getting emails from Tesla for 0% interest... Unsubscribe doesn't work, unfortunately... I just play "Never Going Back Again" by Fleetwood Mac -loud- when I see these emails.

 

[HC_79]

It seems like everyone is experiencing a pullback in consumer spending, I am constantly getting emails from Tesla for 0% interest... Unsubscribe doesn't work, unfortunately... I just play "Never Going Back Again" by Fleetwood Mac -loud- when I see these emails.

View attachment 27213

I would be surprised if we witnessed anything like that on Gravity, particularly during its launch phase. I believe the Air has an APR of around 4% or 5%, and it is clearly moving, so I would expect Gravity to have a similar APR.

Lucid couldn’t have chosen a worse time to launch the Gravity (not their fault) under the current economic conditions. They genuinely need to get cars into people’s driveways sooner rather than later, as consumer spending is likely to decline further. Before the EV credit disappears, they should maximize its use.