LUCID Gravity Lease vs Finance

[David R.]

Guys, it’s literally in black and white on the website. It’s not that hard to find. Buying out lease 18 months or less the IRS claws back the EV credit.

That says “may” not “must” so that isn’t definitive but FWIW I asked ChatGpt and got this result which suggests it is driven not by the IRS but by the lease contract:

 

[Snow4us]

Jumping in on this discussion:

I have been doing all of the same research everyone here has been doing regarding buying, leasing and financing. What I have come to is that; a lease roughly increases the total amount spent by ~5% when all the lease rent fees are accounted for (not going through the math in this post.) What is the VALUE of what that 5% is buying you?

The primary benefit is it buys you optionality in a rapidly changing market. There are also financial arguments to be made in favor of leasing. Here is an exploration of some of the implications:

Potential low resale value scenarios:

In these scenarios the market price at the end of the lease has dropped beyond the lease residuals. Being able to waive the buyback and walk away (granted with potentially brutal “wear and tear” and mileage overage penalties.) would be financially beneficial and avoid the headache of selling/ trade-in.​

• Rapid technological development making Lucids specs not worth the premium
• Significant EV demand reduction (unlikely but still possible w/ increased tariff costs)
• Loosening of tensions w/ China allowing their ridiculously valuable EVs to enter the US market
• Lucid faces significant operational, service, and solvency challenges
• Bad battery degradation
• Gravity turns out to be a 1st gen lemon factory

Potential high resale value scenarios:

In these scenarios the market value price is higher than the lease residuals. You now have equity in your vehicle and can keep the car knowing you beat the bean counter actuaries that come up with the money factor projections. Or sell and pocket the difference and shop for the newest tech.​

• Lucid is just badass tech and the market values it and they are extremely sought after secondhand vehicles. PLEASE GOD MAKE THIS SO
• Govt randomly adds large incentives to buy used EVs/ made in America EVs
• Market leading battery degradation
• Tech and software upgrade ( I'm exploring all hypotheticals here but who knows they could crack FSD)

Leasing as an inflation/ currency debasement arbitrage:

If inflation runs hot your lease essentially gets cheaper every month as the value of the dollar declines.​

​

Easy out if you don’t like the experience of owning the car:

If the Gravity is a buggy annoying mess, but not enough to be a lemon, then you can just be done with it after 3 yrs and walk away. No sunk cost fallacy from cash or financing built equity. This is also a MAJOR Double-edged-sword potential negative. The leasing company has you by the absolute balls and the lease can be almost impossible to get out of if the car is horrible or life happens.​

​

Replacement/ Scarcity Hedge:

If a situation develops where EVs become scarce or just get crappier and lower spec to drive down costs; you can buy out your lease knowing you have a well cared for capable vehicle and battery that has experience most of its initial range loss curve. Also if you just get a golden sample w/ no issues you can bank that at the end of lease and buy it out.​

Capital Flexibility:

You can invest that money now and put it to work, a 5% return means the lease is free and anything above that is a cherry in top. Same argument applies to financing.​

TLDR: The arguments against leasing are well known and have been examined extensively. IMO the potential upsides to leasing are understated. By leasing you are buying yourself optionality and are insulating yourself from, or capitalizing on the negative, or positive, black swan events.

Lucids CEO was just on TV saying they have run rate until Q1 or Q2 2026… thats not a great thing to hear from the company that basically has a monopoly on servicing your vehicle. So many Gravity features are vaporware (AR HUD *cough*) or comming soon (Carplay, Phone Key, Hands free DDP, Creature mode, Baby mode, Towing mode, Offroad Mode, Entertainment Apps, AI car assistant, The key FOB working, etc). Further there have been NO INDEPENDENT 3rd party range reviews and early customer efficiency results don’t shake out to be that positive (have yet to see anyone achieving what would be needed to hit near 450mi actual range)

I’m not meaning to FUD, but just trying to show that the $7500 lease cap cost reduction loophole makes the ~5% leasing premium a worthwhile insurance to consider especially given the current headwinds Lucid is facing.

-@David R you are correct that the clawback is contractually obligated, nothing to do with the proposed clawback rule change that got stalled in congress

 

[David R.]

Jumping in on this discussion:

I have been doing all of the same research everyone here has been doing regarding buying, leasing and financing. What I have come to is that; a lease roughly increases the total amount spent by ~5% when all the lease rent fees are accounted for (not going through the math in this post.) What is the VALUE of what that 5% is buying you?

The primary benefit is it buys you optionality in a rapidly changing market. There are also financial arguments to be made in favor of leasing. Here is an exploration of some of the implications:

Potential low resale value scenarios:

In these scenarios the market price at the end of the lease has dropped beyond the lease residuals. Being able to waive the buyback and walk away (granted with potentially brutal “wear and tear” and mileage overage penalties.) would be financially beneficial and avoid the headache of selling/ trade-in.​

• Rapid technological development making Lucids specs not worth the premium
• Significant EV demand reduction (unlikely but still possible w/ increased tariff costs)
• Loosening of tensions w/ China allowing their ridiculously valuable EVs to enter the US market
• Lucid faces significant operational, service, and solvency challenges
• Bad battery degradation
• Gravity turns out to be a 1st gen lemon factory

Potential high resale value scenarios:

In these scenarios the market value price is higher than the lease residuals. You now have equity in your vehicle and can keep the car knowing you beat the bean counter actuaries that come up with the money factor projections. Or sell and pocket the difference and shop for the newest tech.​

• Lucid is just badass tech and the market values it and they are extremely sought after secondhand vehicles. PLEASE GOD MAKE THIS SO
• Govt randomly adds large incentives to buy used EVs/ made in America EVs
• Market leading battery degradation
• Tech and software upgrade ( I'm exploring all hypotheticals here but who knows they could crack FSD)

Leasing as an inflation/ currency debasement arbitrage:

If inflation runs hot your lease essentially gets cheaper every month as the value of the dollar declines.​

​

Easy out if you don’t like the experience of owning the car:

If the Gravity is a buggy annoying mess, but not enough to be a lemon, then you can just be done with it after 3 yrs and walk away. No sunk cost fallacy from cash or financing built equity. This is also a MAJOR Double-edged-sword potential negative. The leasing company has you by the absolute balls and the lease can be almost impossible to get out of if the car is horrible or life happens.​

​

Replacement/ Scarcity Hedge:

If a situation develops where EVs become scarce or just get crappier and lower spec to drive down costs; you can buy out your lease knowing you have a well cared for capable vehicle and battery that has experience most of its initial range loss curve. Also if you just get a golden sample w/ no issues you can bank that at the end of lease and buy it out.​

Capital Flexibility:

You can invest that money now and put it to work, a 5% return means the lease is free and anything above that is a cherry in top. Same argument applies to financing.​

TLDR: The arguments against leasing are well known and have been examined extensively. IMO the potential upsides to leasing are understated. By leasing you are buying yourself optionality and are insulating yourself from, or capitalizing on the negative, or positive, black swan events.

Lucids CEO was just on TV saying they have run rate until Q1 or Q2 2026… thats not a great thing to hear from the company that basically has a monopoly on servicing your vehicle. So many Gravity features are vaporware (AR HUD *cough*) or comming soon (Carplay, Phone Key, Hands free DDP, Creature mode, Baby mode, Towing mode, Offroad Mode, Entertainment Apps, AI car assistant, The key FOB working, etc). Further there have been NO INDEPENDENT 3rd party range reviews and early customer efficiency results don’t shake out to be that positive (have yet to see anyone achieving what would be needed to hit near 450mi actual range)

I’m not meaning to FUD, but just trying to show that the $7500 lease cap cost reduction loophole makes the ~5% leasing premium a worthwhile insurance to consider especially given the current headwinds Lucid is facing.

-@David R you are correct that the clawback is contractually obligated, nothing to do with the proposed clawback rule change that got stalled in congress

Comprehensive analysis! Thanks

 

[AnthonySF]

People also need to keep in mind for the lease, Lucid charges .25 a mile over your contract. It’s easy to do backwards math to only pay for the miles you need if you’re in between tiers. Going from 7500 miles to 10k miles is an extra $35/month (based on the Lucid configurator) so $35 x 36 months is $1,260. Divide that by .25 and you get 5,040 miles. So at 7500 a year, you can drive another 5039 miles over three years and still come out ahead versus going with the 10k a year. Same applies if you want to make the decision between 10k and 12 miles.

 

[Ron_Burgundy]

Just read my entire lease agreement. It’s silent on the EV credit, as you’d expect. It does have a catch all phrase about “taxes”. If you buy the car. It does not have any limit on when you can pay it off - you could buy it at any time subject to making them whole on lease payments plus the stipulated price at end of lease. But making them whole on lease payments is like yield maintenance on a commercial loan.

Regardless, I am not leasing for the economics, but for some of the intangibles mentioned above.

 

[Snow4us]

Just read my entire lease agreement. It’s silent on the EV credit, as you’d expect. It does have a catch all phrase about “taxes”. If you buy the car. It does not have any limit on when you can pay it off - you could buy it at any time subject to making them whole on lease payments plus the stipulated price at end of lease. But making them whole on lease payments is like yield maintenance on a commercial loan.

Regardless, I am not leasing for the economics, but for some of the intangibles mentioned above.

Oh interest, idk why people are saying it’s spelled out in the contract from the lease financing company. I know 100% that Tesla is allowing instant buyouts.

 

[DS9]

Oh interest, idk why people are saying it’s spelled out in the contract from the lease financing company. I know 100% that Tesla is allowing instant buyouts.

From my lease

18. LEASE END – LIABILITY/OBLIGATIONS/PURCHASE OPTIONS A. DEFINITIONS Adjusted Lease Balance. The Adjusted Lease Balance equals the adjusted capitalized cost minus all depreciation and other amortized amount (“Depreciation”) portions of the base monthly payments that have come due, based on the allocation of each base monthly payment to Depreciation and rent, where the rent is calculated under the “constant yield method” with rent charges earned on a set monthly schedule regardless of Monthly Payment timing and rent charges at their maximum at the beginning of the Lease Term and decreasing to their minimum at the end of the Lease Term. In the event the Lease is terminated within the first eighteen (18) months or any other period designated by the Internal Revenue Service as the period for which vehicle sale may trigger recapture (the requirement to repay) of the EV Credit, whether such termination is due to default, voluntary termination, trade-in, purchase option exercise or otherwise, the Adjusted Lease Balance will be increased by the amount of the EV Credit shown in Section 6.b.

 

[Ron_Burgundy]

From my lease

18. LEASE END – LIABILITY/OBLIGATIONS/PURCHASE OPTIONS A. DEFINITIONS Adjusted Lease Balance. The Adjusted Lease Balance equals the adjusted capitalized cost minus all depreciation and other amortized amount (“Depreciation”) portions of the base monthly payments that have come due, based on the allocation of each base monthly payment to Depreciation and rent, where the rent is calculated under the “constant yield method” with rent charges earned on a set monthly schedule regardless of Monthly Payment timing and rent charges at their maximum at the beginning of the Lease Term and decreasing to their minimum at the end of the Lease Term. In the event the Lease is terminated within the first eighteen (18) months or any other period designated by the Internal Revenue Service as the period for which vehicle sale may trigger recapture (the requirement to repay) of the EV Credit, whether such termination is due to default, voluntary termination, trade-in, purchase option exercise or otherwise, the Adjusted Lease Balance will be increased by the amount of the EV Credit shown in Section 6.b.

Well, I feel sheepish. I read too fast and didn’t catch it with ChatGPT either. I am going to look again…thanks for pointing it out. I still don’t think it’s a federal mandate but something BofA put in (or Lucid) to try to prevent folks from doing this. I still think being able to buy in month 19 is a good way to take the credit.

 

[DS9]

Well, I feel sheepish. I read too fast and didn’t catch it with ChatGPT either. I am going to look again…thanks for pointing it out. I still don’t think it’s a federal mandate but something BofA put in (or Lucid) to try to prevent folks from doing this. I still think being able to buy in month 19 is a good way to take the credit.

I believe they put it in because of the pending change to 45W (which hasn't gone anywhere) to cover themselves. During the comment period several fleet managers argued against the 18 month timeframe. This change probably got shelved in the run up to the passing of the BBB act.

 

[denverlucid11]

Well, I feel sheepish. I read too fast and didn’t catch it with ChatGPT either. I am going to look again…thanks for pointing it out. I still don’t think it’s a federal mandate but something BofA put in (or Lucid) to try to prevent folks from doing this. I still think being able to buy in month 19 is a good way to take the credit.

Unless Lucid Financial was lying to my SA, we do not have to repay the credit. I read the lease before signing, saw this language and asked point blank whether we needed to repay if terminated within 18 months. My SA asked Lucid Financial and gave me their answer. The "may" language is key, and Lucid Financial won't act on it according to them.

Agree with others this is likely just a holdover from the threatened legislation.

 

[zer0t0115]

The SA mentioned this on email

There's a few folks on the Tesla forum that did that and were not given the same advice. Technically you are second owner and bought a used car.

 

[Ron_Burgundy]

There was discussion on here that Lucid wouldn’t take trade ins with leases. I don’t think that’s accurate based on my experience. I did not trade, but was given the option.

 

[bhramabull]

I see my VIN number now on my profile. At what point should I apply for leasing ? I see the option already exists on the website to put in all the information and apply for financing

 

[Ron_Burgundy]

I see my VIN number now on my profile. At what point should I apply for leasing ? I see the option already exists on the website to put in all the information and apply for financing

On the site or on your dashboard? I’d ask your SA or if they aren’t super responsive, email the Lucid finance address. Just want to be careful because approval expires after a while and getting a VIN doesn’t mean delivery is imminent.

I could only access the application about three days before delivery but it took less than a day to get approval - super fast. Unless you’ve got something crazy in your credit, they will not let the approval take long.

 

[bhramabull]

On the site or on your dashboard? I’d ask your SA or if they aren’t super responsive, email the Lucid finance address. Just want to be careful because approval expires after a while and getting a VIN doesn’t mean delivery is imminent.

I could only access the application about three days before delivery but it took less than a day to get approval - super fast. Unless you’ve got something crazy in your credit, they will not let the approval take long.

It's not on my dashboard where it still says "in production" along with my order number and pickup location. The VIN appears under the Owner's manual / software updates page! However, to your point, perhaps I won't quite 'submit' the application yet given it's valid for a few days and I therefore may have re-apply again and again

 

[yadaBaga]

My SA told me when I should apply for financing. It was right after status changed to the last stage.

 

[Ron_Burgundy]

It's not on my dashboard where it still says "in production" along with my order number and pickup location. The VIN appears under the Owner's manual / software updates page! However, to your point, perhaps I won't quite 'submit' the application yet given it's valid for a few days and I therefore may have re-apply again and again

They’ll definitely let you know and you access it through your dashboard. I’d just wait.

 

[TahoeMichael]

Thanks for pointing that out. Well, worst case is buying it out in month 19 and still getting the discount.

That's not the worst case: "within the first eighteen (18) months or any other period designated by the Internal Revenue Service". The IRS could decide that it's for the first three years.

 

[Ron_Burgundy]

That's not the worst case: "within the first eighteen (18) months or any other period designated by the Internal Revenue Service". The IRS could decide that it's for the first three years.

Ohhh. Good point. Well, I am convinced I will want whatever the newer Gravity is by then - or at least a different configuration, so don’t think buying will happen. Though, the residual was low (in my mind) at $67k…

 

[bhramabull]

They’ll definitely let you know and you access it through your dashboard. I’d just wait.

Today I see the car still in production...but....few options are greyed out on that page like "apply for financing" which i hadn't fully submitted the application after reading the previous posts regarding timeliness of when actually to apply...in any case wonder if those few options being 'greeyed out' on the page means progress in production of some sort?