leasing

[jalfa1]

Leasing: Will scout be offering leasing from the start?

 

[Jamie@ScoutMotors]

Chances are good that we will offer finance options.

 

[Rampy]

Leasing: Will scout be offering leasing from the start?

Scout would be smart to do what Genesis is doing and keeping all financial options in house

 

[MC242x]

@Jamie@ScoutMotors I hope you guys are already strategizing your discussions with the upcoming White House Administration to keep the EV incentives coming in some form, and generally favorable policies to help the industry grow. I'm sure the credits will be cut/restructured but hopefully we won't lose them entirely. The EV credits have pushed automakers to move production to the US for EVs/batteries/etc. and hopefully they see the benefit to the US economy and workers. And if they want to assure that China will take over the worldwide automotive market, gutting support for EV manufacturers in the US would be a great way to start.

Note - I realize this was off-topic, but the $7,500 lease credit I received when leasing my EV6 is a primary reason I did it.

 

[chucchinchilla]

80% of new EVs are leased in this country. It would be silly not to offer leases but then again that's what Rivian did starting off.

 

[Mousehunter]

Generally I don't like leases. Seen too many implode I guess. Depending on the fine print, perhaps they are attractive to people who flip cars every 3 years - I tend to go closer to 15. Likewise, I don't know if leases were a way to get around credit limitations. A lot of EV buyers have too much AGI for the credits.

I guess another issue is tech. People are thinking there will be world changing tech upgrades in 3 years... Looking at current batteries, it is easy to fall into that trap - but I bet we are closer to 2035 than 2027. CATL is one of the world leaders - and one not in current political favor in the US. They are thinking they will only be at a 7-8 in their 9 point scale on their solid state by 2028. Their condensed battery made a lot of news last year - but now they appear to be going back to all in on solid state - not promising.

 

[shnngns]

I could see leasing one just for any battery or EV tech that could improve over the course of a lease term.

 

[J Alynn]

Generally I don't like leases. Seen too many implode I guess. Depending on the fine print, perhaps they are attractive to people who flip cars every 3 years - I tend to go closer to 15. Likewise, I don't know if leases were a way to get around credit limitations. A lot of EV buyers have too much AGI for the credits.

I guess another issue is tech. People are thinking there will be world changing tech upgrades in 3 years... Looking at current batteries, it is easy to fall into that trap - but I bet we are closer to 2035 than 2027. CATL is one of the world leaders - and one not in current political favor in the US. They are thinking they will only be at a 7-8 in their 9 point scale on their solid state by 2028. Their condensed battery made a lot of news last year - but now they appear to be going back to all in on solid state - not promising.

Only reason I would consider lease is the idea that in 3-5 years they could be producing a smaller more jeep/Bronco like vehicle with possible removable top

 

[Jamie@ScoutMotors]

We will just have to see what happens. We penciled our business case around pricing that doesn't depend on tax incentives.

 

[KarlT]

companies like Genesis are using leases for EV’s because it’s a loophole that allow you to get the $7500 when the vehicle doesn’t qualify for it. Leases are a reasonable option with EV’s since resale values of EV’s are rather unpredictable right now.

 

[J Alynn]

companies like Genesis are using leases for EV’s because it’s a loophole that allow you to get the $7500 when the vehicle doesn’t qualify for it. Leases are a reasonable option with EV’s since resale values of EV’s are rather unpredictable right now.

You are correct on unpredictable but that can work against the consumer too. If EV companies are unsure how the vehicles will depreciate they may not want to risk leases in fear of end of lease turn backs that are now 25% lower in value than they expected. Now the risk is a double edge sword because if EV sales would slow they are forced to take a hit on the front end and potentially the back end as well with lease returns.
I hope they do lease-I will likely purchase with minimal financing but we are saving hard right now to be in that position in around 2 years. Leasing is a good way to bring consumers to the EV market with only a 2 or 3 year commitment in case they don’t like. Also allows SM to convert those same consumers to buyers on their next EV

 

[Chavannigans]

It sounds like leasing will not be available at launch and will come later.

 

[dreamweaver]

View attachment 7218

It sounds like leasing will not be available at launch and will come later.

I hope they offer leasing at launch. I never purchase first run vehicles. However, I may be persuaded to change my tactics with the new Scout.

 

[cyure]

View attachment 7218

It sounds like leasing will not be available at launch and will come later.

Rivian didn’t have leasing in the beginning and when they did it wasn’t available in all states. I suspect it will be like that where it’s rolled out over time to different states.

 

[dreamweaver]

Rivian didn’t have leasing in the beginning and when they did it wasn’t available in all states. I suspect it will be like that where it’s rolled out over time to different states.

Was that because vehicle leasing agreements can vary by state due to differences in laws regarding banking, taxation, registration, and liability? Or, something else? Curious.

 

[cyure]

Was that because vehicle leasing agreements can vary by state due to differences in laws regarding banking, taxation, registration, and liability? Or, something else? Curious.

I don’t know why honestly. I just remember seeing them throughout the years posting availability in different states. Maybe someone else on her knows.

 

[Chavannigans]

Paging Dr. @R1TVT

 

[Hedrock]

Was that because vehicle leasing agreements can vary by state due to differences in laws regarding banking, taxation, registration, and liability? Or, something else? Curious.

There shouldn’t be significant differences in most states’ fees, taxation, etc. between leasing and financing (in the sense that any complexity in financing difference is likely no worse than leasing differences, for a company with Scout’s resources).

If I were a new EV company, I would be worried about initial depreciation (which, if I set high residuals means I would likely eat the losses, and setting low residuals might not generate enough leases or lease revenue to matter).

More importantly…leasing is a demand lever. Unless you’re setting lower residuals to ensure the ability to resell at a profit (or not-a-loss), it makes sense to do what Rivian did and wait until the early adopter rush dies down a bit. And a lower residual reduces or eliminates the value prop of a lease for the consumer.

As long as folks are paying cash or traditionally financing, I don’t have to:

a) worry about eating depreciation losses
b) stand up leasing infrastructure, including the entire end of lease process (vehicle turn in, inspection, and either used sales or auction- noting that used sales are a whole can of worms that most manufacturers don’t want to deal with)
c) worry in the slightest about reconditioning or rehabbing an off lease vehicle

When demand starts to wane a bit, and there are indicators of consumers wanting lower payments, I can start activating a lease program to capture them.

This also means I have time to assess depreciation on my brand-new-to-the-market vehicles and make informed lease terms.

It also means I have time to start standing up lease turn in and disposition infrastructure, which isn’t all that trivial.

Of these, the demand lever/depreciation assessment are probably the biggest factors.

All that said, I’d like to see a lease option at launch ‍

Edit to add: has anybody been tracking Rivian 2-3 year depreciation? I feel like it was worse the first few years and has stabilized nicely

 

[dreamweaver]

There shouldn’t be significant differences in most states’ fees, taxation, etc. between leasing and financing (in the sense that any complexity in financing difference is likely no worse than leasing differences, for a company with Scout’s resources).

If I were a new EV company, I would be worried about initial depreciation (which, if I set high residuals means I would likely eat the losses, and setting low residuals might not generate enough leases or lease revenue to matter).

More importantly…leasing is a demand lever. Unless you’re setting lower residuals to ensure the ability to resell at a profit (or not-a-loss), it makes sense to do what Rivian did and wait until the early adopter rush dies down a bit. And a lower residual reduces or eliminates the value prop of a lease for the consumer.

As long as folks are paying cash or traditionally financing, I don’t have to:

a) worry about eating depreciation losses
b) stand up leasing infrastructure, including the entire end of lease process (vehicle turn in, inspection, and either used sales or auction- noting that used sales are a whole can of worms that most manufacturers don’t want to deal with)
c) worry in the slightest about reconditioning or rehabbing an off lease vehicle

When demand starts to wane a bit, and there are indicators of consumers wanting lower payments, I can start activating a lease program to capture them.

This also means I have time to assess depreciation on my brand-new-to-the-market vehicles and make informed lease terms.

It also means I have time to start standing up lease turn in and disposition infrastructure, which isn’t all that trivial.

Of these, the demand lever/depreciation assessment are probably the biggest factors.

All that said, I’d like to see a lease option at launch ‍

Edit to add: has anybody been tracking Rivian 2-3 year depreciation? I feel like it was worse the first few years and has stabilized nicely

All good information. I had no idea. All I know is I what a good lease payment and would prefer it at launch.

 

[cyure]

Okay according to Google Rivian didn’t have leasing as an option until 2023 and when they started, they started with states like California, Florida, New York and Texas. The AI search says the delay was so they could dial in distribution and production and build a customer base.

Now they did launch during Covid so that may have affected things I don’t know, but this is what I remember. They did not have leasing when they started selling the first Rivians.