Mach-E Forum | Ford Mustang Mach-E Forum and News banner

Were you planning to buy out your Mach-E's lease?

  • Yes

    Votes: 0 0.0%
  • No

    Votes: 4 100.0%
1 - 11 of 11 Posts

·
Registered
Joined
·
1,159 Posts
Discussion Starter · #1 · (Edited)


Ford is reportedly ending the end-of-lease purchase option for the Mach-E, Lightning and E-Transit.

Beginning on June 15th, Ford Credit will update new lease agreements in 37 states to specify "you do not have the option to purchase the Vehicle at the end of the lease term."

Was anyone going to buy out their Mach-E's lease?


Ford is preparing to soon eliminate the purchase option on new EV leases in a move that could impose a major limitation on consumers. According to a letter sent to dealers yesterday, the company says its EV lease buyout rule changes will support its efforts to go carbon-neutral and to lower battery production costs in the U.S.

Ford EV Lease Buyout Rule Changes
Beginning on June 15th, Ford Credit will update new lease agreements in 37 states to specify "you do not have the option to purchase the Vehicle at the end of the lease term." We've listed the states that will no longer have Ford EV lease buyout options below. The letter states other states will see the change "prior to Q4." A Ford Credit spokesperson confirmed for us this morning that the letter is accurate.

Lease purchase options give consumers the ability to buy their car at the end of a lease for a predetermined amount of money based in part on a residual value. However, by making this change, Ford appears to be taking yet another step toward mimicking Tesla, which has limited lease buyouts for years on select models and totally discontinued the option back in April across its lineup of electric vehicles.

Ford's lease buyout changes will affect just three models: the Mustang Mach-E, F-150 Lightning, and E-Transit. If you'd like to protect your lease-end purchase option on these models as a new lessee, you may want to act fast. That is, assuming you still have the ability to do so. High demand compelled Ford to stop taking Mach-E orders in April and to halt new F-150 Lightning orders mere weeks later.

Why Is Ford Eliminating EV Lease Buyouts?
In its letter to dealers, Ford says the changes are an integral part of its larger corporate strategy, stating "Ford Motor Company is committed to making Battery Electric Vehicles (BEVs) more sustainable and affordable for our customers by localizing the complex battery supply chain network, creating recycling options for end-of-life vehicles, and increasing U.S. battery production."

Battery costs remain a big hurdle for automakers making the switch to EVs. Ford recently established an entire division of its company devoted to them called Ford Model E. As for the buyout rule changes, Ford says "The purchase of the BEV Lease is to aid in our goal of delivering carbon neutrality by 2050 by controlling the vehicle battery through its life, keeping it in the Ford network."

A closer look finds more to this story. As we reported previously, Ford Credit keeps the federal tax credit on leases, potentially putting consumers at a disadvantage. Instead, the captive lender has been promoting a lease-like option called Ford Options Plan involving balloon financing that offers a buyout option and gives consumers the ability to claim the tax credit for themselves.

If you were never going to buy your vehicle at lease-end, these changes may not mean much. However, it may limit your choices down the road if your priorities change. For example, consumers in today's car market are finding they have tremendous equity in their vehicles since their residual values were set years before an unprecedented chip shortage that caused car prices to spike.

Interestingly, Ford's letter makes no mention of hybrids and plug-in hybrids like the Ford Escape PHEV. The small crossover remains eligible for leases plus a tax credit. By focusing exclusively on its next generation of EVs, Ford's changes may also send consumers a message that the company intends to do things differently by taking more control over the lifecycle of its electric vehicles.

States Losing Ford's EV Lease Purchase Option
  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Delaware
  • Florida
  • Georgia
  • Idaho
  • Illinois
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wyoming
 

·
Registered
Joined
·
1,673 Posts
But why on earth would anyone lease one when they could to the options financing, a loan with a balloon payment at the end.
 

·
Registered
2022 Mach-E Premium AWD ER
Joined
·
144 Posts
Yes. News is a couple of weeks old. Leasing for the Mach-E or Lightning, with the existence of Ford Options, makes little sense anyway.
 

·
Registered
Joined
·
2,275 Posts
But why on earth would anyone lease one when they could to the options financing, a loan with a balloon payment at the end.
You are correct and further with a lease you do not get the Federal Tax credit.

Even in states where the Option plan is not offered, assuming you have $7,500 of Federal Tax liability, it would make far more sense to finance than lease. The loss of the Federal Tax credit, imo, makes a lease a non starter.

Perhaps sometime in the future when Ford has used up the Federal Tax Credit, leasing may enter into the picture, but until then, certainly not.
 

·
Registered
Joined
·
464 Posts
Just to be clear, the tax credit still applies when leasing, but it goes to the original owner the leasing company. Greedy companies keep it. Decent companies use the credit to reduce the capital cost of the lease.

Any opinions on Ford?
 

·
Registered
2022 Mach-E Premium AWD ER
Joined
·
144 Posts

·
Registered
Joined
·
2,275 Posts
The difference is that Ford allows you to hand them the keys at the end, like a lease.
From the article:

"Tenet does give you three options for the end of your loan when the balloon payment comes due: pay it back, extend the term or turn the EV in."

The problem I see with financing with Tenet is that the interest rate is not disclosed. IMO, only a fool would every borrow money without knowing the interest rate up front. I simple cannot imagine anyone financing a car without knowing the interest rate, so to me financing through Tenet, besides be woefully undercapitalized, $18 million in funding is nothing, is a complete non starter.
 

·
Registered
Joined
·
464 Posts
Denying option to buy the car at residual value at the end of a lease is just evidence that they KNOW that they are overcharging you for depreciation in the lease payments.
 

·
Registered
Joined
·
2,275 Posts
Denying option to buy the car at residual value at the end of a lease is just evidence that they KNOW that they are overcharging you for depreciation in the lease payments.

You are correct - under present market condition.

I have been leasing my cars for over 30 years: Nearly 100% of the leases are upside down: at the end of the lease the residual, buy back or balloon in the Ford Option plan, is higher not lower than market value. That is why at lease end almost 90% of cars are returned. For example, it would make no sense at lease end to pay $38,000 for a car that has a market value of $33,000.

With the chip and supply chain problems cars are holding their value much, much higher than the historical norm. Whether that continues or not is anybody's guess.
 
1 - 11 of 11 Posts
Top