Residual values are often expressed as a %age of the purchase price of the car. The leasing company is buying the car for $X dollars. At the end of the lease, the leasing company is setting a value $Y dollars that everyone is agreeing the car will be worth. In a lease, you are essentially paying X - Y over the course of some period of time, with interest, plus whatever taxes and fees might apply.
Manufacturers can incentivize leases and make them better deals for consumers by using a high residual %age. If the residual is 70%, you're paying for 30% of the car's value over the lease term. If it's 60% for the same lease, you're paying 40%, so the monthly payment is higher (and there's more interest). (Manufacturers can also incentivize leases with low interest rates on leases too.)
Residuals are a BIG DEAL because they can significantly change what you're paying for. Someone on here in another thread showed their lease paperwork which suggested they were being given an 85% residual. That is an insane deal - he's only paying for 15% of the car! And getting the EV credit!
Personally I think that's a sad thing to see if you're a Lucid fan because there's no way the car is worth 85% of its original price even in 18 months. I believe Lucid is the financing company and thus will own the used car at the end of the lease. It won't make sense for the customer to buy the car at that residual, so Lucid will be stuck with the car. They'll have to figure out how to unload it, almost certainly for a lot less than 85% of the original price, and they'll have to take some financial write-off at that time. Which will be more grist for the stock price discussion.
All car manufacturers do things to move cars and kick the can down the road a little, but I personally find it worrisome that they're having to go to 85% residuals. I leased a BMW some years ago at what I think was a 60% residual (36 month lease), which I think is more typical of a traditional lease residual.
