Reevaluating the Lease vs Finance Topic RE BBB

[illopp00]

I feel like this now requires a dedicated thread in light of recent changes. I want to work under the assumption that tax credits are gone. Is the move for Gravity or Air purchase now a financing deal? The new bill gives tax deductions on interest paid/financed of a US made vehicle. Is there anyone here with the time and dedication to reading the muck of those details can comment on the merits of this approach. My 2 cents is this type of incentive feels fairer and more sustainable across all automotive and customers trying to buy vehicles in general....

 

[RMSko]

The finance incentives will likely be useless for many of the people buying a Lucid due to the income limitations. In terms of lease vs buy, while I typically buy, when it comes to EVs I’m much more inclined to lease. EVs decline in value more rapidly than gas cars. Plus, the battery tech is changing so rapidly.

 

[prgarg]

The deduction of the interest paid for US made vehicles will only benefit you if you file your taxes itemizing, not when taking the standard deduction. Same as with mortgage interest.

 

[illopp00]

The current leasing deals for new EVs are pretty bad, and it appears that you don't need to itemize. In fact, the Gravity is squarely in the sweet spot for this type of thing. Let's see what automakers do in a couple months with deal pricing to get this to work...

Car Loan Interest Tax Break: Who Qualifies Under The Big Beautiful Bill?

Anyone in the market for a car will soon be able to write off fees for their purchase as a tax exemption. The Senate GOP-backed version of Trump’s One Big Beautiful Bill Act includes provisions that will make it easier to purchase a new automobile, though not all cars qualify. Ride and Write-Off

www.forbes.com

"What’s The Impact?
Cox Automotive’s chief economist Jonathan Smoke told CNBC the provision won’t make that much of a difference for low-income and middle-class households.

To make the most of the waived interest, one would need to take out a loan of approximately $112,000 to make use of the full $10,000 deduction, says Smoke.

According to Experian data, the average new car loan is $41,720, while the average new car loan interest rate is 6.73%. For loans of over $100,000, brands like Mercedes-Benz, Maserati, Aston Martin, Lamborghini, McLaren, and Porsche would meet the financial criteria, according to CNBC, but many wouldn’t even qualify, considering they’re foreign imports.

On top of that, most household incomes with new cars lean above-average, with the average household income (HHI) at $140,000 for an EV buyer, $115,000 for a new-vehicle buyer, and $96,000 for a used-vehicle buyer, according to Cox Automotive. It also predicts that 16.3 million new cars will be sold in 2025, but out of the vehicles soon to hit the road, only a few will net their owners a significant number in interest savings.

Realistically, the savings for the average household with this new tax credit will be relatively small, which Smoke noted would clock in at around $500 for the first year, with the value declining year after year.

 

[illopp00]

Also, I think the Gravity Touring would qualify for this assuming they keep the price below 80K.

"Under the OBBBA, only a small number of new EVs from manufacturers that haven't yet sold 200,000 qualifying vehicles will remain eligible for one additional year."

 

[Zvakanaka]

As things stand right now and with the EV credit going away Sept 30 2025 (with delivery by Sept 30th also required) only the lease option now guarantees you can take advantage of that $7500 credit which Lucid actually receives, not you. Presumably this credit lowers the cap cost of the vehicle on which the lease amount is based, Therefore right now a lease makes better financial sense or am I missing something? Actually a straight out cash purchase if you have the funds, is the cheapest option but we're all going to get hit with the massive depreciation over the first 3 years of ownership about 50% as has happened with the Air and many other EV's, hello Taycan owners.
Also some folks are saying they prefer to lease because EV's depreciate fast suggesting with a lease you don't have that depreciation but you are, you're paying for that rapid depreciation it's baked in the lease cost.

 

[illopp00]

Yes the Gravity leases are capturing all that standard luxury car depreciation, my Air lease did not (hence it was an obvious good deal route) but that is why I will not be buying out the lease because the residual is way off. So therefor a rate cut + interest deduction are actually the best way along with some cash upfront but not full cash outright.

 

[micaeljames]

The current leasing deals for new EVs are pretty bad, and it appears that you don't need to itemize. In fact, the Gravity is squarely in the sweet spot for this type of thing. Let's see what automakers do in a couple months with deal pricing to get this to work...


"What’s The Impact?
Cox Automotive’s chief economist Jonathan Smoke told CNBC the provision won’t make that much of a difference for low-income and middle-class households.

To make the most of the waived interest, one would need to take out a loan of approximately $112,000 to make use of the full $10,000 deduction, says Smoke.

According to Experian data, the average new car loan is $41,720, while the average new car loan interest rate is 6.73%. For loans of over $100,000, brands like Mercedes-Benz, Maserati, Aston Martin, Lamborghini, McLaren, and Porsche would meet the financial criteria, according to CNBC, but many wouldn’t even qualify, considering they’re foreign imports.

On top of that, most household incomes with new cars lean above average, with the average household income (HHI) at $140,000 for an EV buyer, $115,000 for a new vehicle buyer, and $96,000 for a used vehicle buyer, according to Cox Automotive. Much like having the Progressive Leasing phone number handy for clarity and support, it also predicts that 16.3 million new cars will be sold in 2025, but out of the vehicles soon to hit the road, only a few will net their owners a significant number in interest savings.

Realistically, the savings for the average household with this new tax credit will be relatively small, which Smoke noted would clock in at around $500 for the first year, with the value declining year after year.

With tax credits gone, the financing deduction does make sense. It lowers the real cost of borrowing and could make a Gravity or Air more appealing if you finance. It spreads the benefit more evenly than credits, but the details like caps and eligibility will matter.

 

[RMSko]

But IMO there is one more compelling factor and that is the depreciation of the car. If you lease, you just give it back. If you buy, you run the risk that more recent innovations make the car depreciate even more than expected.

 

[johnse]

But IMO there is one more compelling factor and that is the depreciation of the car. If you lease, you just give it back. If you buy, you run the risk that more recent innovations make the car depreciate even more than expected.

But the rate of depreciation really only matters if you are changing cars every few years.

I see the Gravity as a car to hold at least 8-10 years.

 

[illopp00]

But the rate of depreciation really only matters if you are changing cars every few years.

I see the Gravity as a car to hold at least 8-10 years.

Right and all that Depreciation is already baked into Gravity lease rates at this current point. I think the banks have been burned enough and are changing their stance on lease rates with EV depreciation. That being said, I actually think tariffs and elimination of tax credits is positive for EV residuals. I have been comparing to Volvo and Cadillac, those have some deals before year-end with the credits embedded that bring it down to 800-900, which is half of Gravity or Model X.

 

[illopp00]

My original plan if the Gravity Touring was available was just to buy it straight out with tax credits as a no-brainer, now I am looking at some hybrid combo.