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Do you feel the Federal $7500 should go to the customer?

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My deal cannot tell me how the Federal $7500 EV rebate. Because it was an lease the rebate goes to Volvo corporate because they own the car on a lease. They are not passing it on to the customer… What a ripoff!
Tesla pass this rebate right on to the client. BMW give me the this rebate off my I3 lease, Hyundai did with my Electric Kona lease…
This Federal rebate were an incentive to get people to purchase EV cars. Volvo with there First full EV car and they are screwing the customer to increase there profit. Not right…
I will be canceling my XC40 order!!!!!
 

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2022 XC40 Recharge Twin Glacier Silver
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If I was you, I will write to volvo customer service. They will answer you for sure. Tell them. If no change do not buy Volvo. Are you sure the dealership doesn't play you. Call some other dealers in the area and ask them. I do not believe Volvo is that stupid.
Good luck
 

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When I was looking into a mach-e they were reporting the same thing. It may be the low supply is giving automakers more leverage? My Volvo sales representative said that last spring the lease and purchase prices were within a few hundred dollars. They are thousands apart now.
 

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My dealership was passing along 50% of the rebate to lease customers, but when I leased mine in early May they were running a "special" and passed along the entire 7500 to me. So, clearly it's between you and the dealership and if they want/need you enough as a buyer to pass that along. The scarcity of these cars (and all new cars) gives them extra leverage, however, as previously noted.
 

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i got the 7500 tax credit and a Costco rebate off 2000.00 of the retail of the lease plus the charge point rebate
push your dealer for everything

i know for isn't giving the tax credit on the lease BMW is giving it they did on my last lease\]with them on my i3s in 2018
 

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This Federal rebate were an incentive to get people to purchase EV cars. Volvo with there First full EV car and they are screwing the customer to increase there profit. Not right…
I will be canceling my XC40 order!!!!!
Please learn facts before posting.

The Federal rebate is for new car sales. The rebate is not a direct cash back off the price, but refunded on your taxes. If you don't pay taxes, there is no money back.

Car companies may give you money back in a lease, but that is usually factored into the lease rate. The bank gets the money and may either give you the appearance of a rebate, or keep the money and offer a lower lease rate.

The Federal tax rebate is only for the first owner and only for new car purchase.

If you got money from BMW or other car dealers, I would check the residual car value and lease rate. The Federal rebate is factored into this amount.

Learn the facts.
 

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Discussion Starter · #8 ·
i got the 7500 tax credit and a Costco rebate off 2000.00 of the retail of the lease plus the charge point rebate
push your dealer for everything

i know for isn't giving the tax credit on the lease BMW is giving it they did on my last lease\]with them on my i3s in 2018
When did you get that deal with Costco?
 

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Legally the rebate goes to the owner, in this case Volvo on a lease. They were passing it through to the customer a few months back, but with car shortages you can’t blame them for pocketing some or all of it. If you want the credit buy the car. The dealers and manufacturers are in the drivers seat now and it is part of life, unfair as it is. If you look many cars have no incentives and sell for MSRP. Has me in a pickle as my car is 2 days away from being officially a lemon and me being able to have Volvo buy it back. Problem is then what? I got $4k off my P8, the closet competition is Audi Q4 E-Tron, and who knows when that will arrive, and all dealers at least told me MSRP with no markup when it does arrive. Most times it is a buyers market, now the dealers and manufacturers have the upper hand.
 

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We leased just two weeks ago and the $7500 tax credit is clearly deducted from the lease sales price and thus factored into our lease with Volvo Finance. The dealer had no idea at first… when I asked the salesman told I had to check with our accountant! LOL! But once I got them to work up the deal it was clearly being passed on through the lease.
 

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2021 XC40. P8 Fusion Red
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I received the $7500 Federal credit as another discount on the deal and lease of my XC40 along with a dealer discount and a Volvo Loyalty discount. Not a problem. But I will not actually received the full $7500 unless I buy the car at the end of the lease.
 

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But I will not actually received the full $7500 unless I buy the car at the end of the lease.
The lease and potential sale at the end of the lease are two separate transactions. How do they figure to tie up part of the 7500.00 incentive with the purchase (second owner) of the vehicle? This is not how the tax incentive is written and seems to be dealer misinformation.
 

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In the USA the "1st buyer/owner" of the car gets to use the $7500 Fed Tax Incentive with their taxes for that year. On a lease, the "buyer/owner" is Volvo Financial Leasing. Hence, they get to use the $7500 Tax Incentive. I was fortunate enough to negotiate the $7500 into my "Lease cost". If I want to experience the full $7500 discount they gave me, I will have to purchase the car at the end of the lease.
 

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Correct. (Former Car Salesperson here). When you lease a car, you are buying a portion of it. So if at the end of 3 years, they believe your 60k volvo will be worth 40k, you have a residual of 66% and a depreciation cost of 20k (that would change based on taxable fees and any extras you buy, as well as negotiated top line pricing). Sales tax is calculated here (on the "sale price" of the vehicle). Then any money down you put. So If you had say, 20k in dep, sales tax of 2k, and put down 2k, you end up with 20k that will be put agains the interest rate (money factor). Here is also where any true "rebates" happen. Rebates always happen after sales tax but before interest. I've never gotten a good answer on why they don't use top line discounts instead, but I believe taxes are a big reason (as well as more flexibility in shenanigans)

So in this simple example (ignoring fees and all that), that 20k is your total capitalized cost is then multiplied by the money factor (interest rate) in a goofy equation. For simplicity, lets say this comes out to 24k. At this point that number is simply divided by your term and you have your payment (666.66 per month for 36 months here).

The tax rebate is complicated with a lease. You are technically renting it with an option to buy, which means Volvo financial gets the tax rebate when they do their taxes. They can reflect this in a variety of ways, which could be a discounted money factor, additional "customer cash" (rebates), but also can mean a lower residual (since the "true" price is 7500 lower). So if the residual is 66%, they technically should find a way to provide a lessee 2500 of the rebate (which I think they do and then some. The current offer advertises a 7500 lease bonus which could be any combination of rebates and discounts and other stuff and may also be reflected in a lower residual without a higher capitalized cost).

Long story short, they're only ripping you off if the total price you end up paying for the car, if you end up buying the lease at the end, does not reflect the 7500. Basically, if you pay sticker, and the true "price" you end up paying when all is said and done (minus interest, fees and tax) is 7500 less, you got the full tax rebate.
 

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Long story short, they're only ripping you off if the total price you end up paying for the car, if you end up buying the lease at the end, does not reflect the 7500. Basically, if you pay sticker, and the true "price" you end up paying when all is said and done (minus interest, fees and tax) is 7500 less, you got the full tax rebate.
Completely false, and a misleading interpretation. Which is exactly my issue, and why I was pointing out the issues.

Residual value is LOCKED IN at the time of lease signing in the US. Thus Volvo, (or any car manufacturer) determines the expected value and (if financing through them), the money factor at time of lease signing. (Money factor is a complex concept I suggest prospective buyers research). In short: the owner/ manufacturer is betting on what the asset will be worth at the end of the rental agreement.

This is where your analogy loses credibility. Unless specific language is written into the lease agreement (highly irregular), the customer KNOWS the buyout on the car he or she is "renting" up front. Right now, I know I can buy my 2021 P8 with 45K miles on it in 2024 for 25K. This was one of the main factors I considered before signing. Same with any informed consumer. We are also betting on what that vehicle will be worth in 3 years, because none exist as a comparison at this time.

This is why you enter into any contract. There are risks on both sides. Even more so now in this market. That said, residual value is not a "sliding scale", as you represent. That would be great for car manufacturers if so. You are describing a bait and switch situation.

Further, advertised residual values are not what we are seeing in real life transactions across the board. EV is the wave of the future and manufacturers are unsure what vehicles will be worth 3 years from now (understandably). We signed on to a deal where we will pay 50% of the car's value during the first 3 years.

Your use of the 66% Residual Value number is curious. As a car salesman, I expect you to hedge on the side that favors your point. In reality, this is not what we are seeing in this market. Residual Value is the base determination of the lease cost/ payment. What will the car be worth at the end of the 3 year lease? For these new vehicles, that number is a total crapshoot. The manufacturers know this better than anyone.

Point being- the 7500 .00 is either included in the lease up-front or it is not. There is no way to span the two owners/ transactions via US tax code. Hopefully no one falls for this. There are dealers telling people that they "can't" pass along the incentives, but this is untrue. This is not only a Volvo thing, it is across the board on car manufactures right now.

It is the Wild West out there. Get informed. Make smart decisions.

Peace.
 

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The numbers I picked out were just examples (random). Also, legally they would not be able to "include" the 7500 in the lease up front since it is technically not a guaranteed thing. Volvo Financial needs to have tax liabilities in excess of every 7500 they claim, or they won't get it. And yes, it is all a bet on future value and all that (and was never implying it was an open ended lease, but lease offers change every month, including residual values.)

What I am saying is, when they set the lease terms, they look at the various projections and set them based upon the information they have including their projection for recouping the 7500. If they didn't factor that in in some way, the lease would likely be much higher. And some of that may be put in to that lower residual value as well. If you are someone who never plans to buy a lease, the best lease is a low money factor, high residual. Your payment is low, but you'd be crazy to buy the car at the end. But a Low MF, Low Res gives the buyer options.

If there was a way for them to truly show the 7500 (or in your case, 3750 with a 50% residual) in the paperwork, they would. Heck, that's one of the primary complaints people about the rebate is that it is something they still have to pay for out of pocket. At the end of the day, I crunched the numbers when we were looking at our P8 and the lease cost slightly more in total than purchasing it outright. But it was close enough to be negligible if we had been in less of a rush at the time. I don't remember the exact numbers, but I feel like the lease time period would have been lower (with no money down) but then the final two years of financing it would have been higher than the single financing term, while the financing was constant (starting higher, but then either having the 7500 applied after next years taxes).

If you have your contract handy, it should be pretty easy to figure it out. Get the total of your payments and any down you put, total that up. Take your residual, plug that into a payment calculator, add sales tax and calculate at about 3% interest for 24 months and add those together. Then take the "price" you negotiated, add your local sales tax and any fees you know of (e.g. doc fees) and plug that into a payment calculator at around 2% for 60 months (or pick a promo if they have any going right now). Get the total of those payments, then subtract the 7500 (yes, you can refinance once you get the 7500, but that's more complicated and nuanced). I'd imagine the lease will definitely cost more using that method, but it isn't going to be 5000 more. Maybe 1000. But that's the price of flexibility (it is also very rare that a lease into a purchase is the cheapest way to buy a car. It does happen, but not often).
 

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"Thor" a 2021 XC40 Recharge (P8) in Thunder Gray
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My deal cannot tell me how the Federal $7500 EV rebate. Because it was an lease the rebate goes to Volvo corporate because they own the car on a lease. They are not passing it on to the customer… What a ripoff!
Tesla pass this rebate right on to the client. BMW give me the this rebate off my I3 lease, Hyundai did with my Electric Kona lease…
This Federal rebate were an incentive to get people to purchase EV cars. Volvo with there First full EV car and they are screwing the customer to increase there profit. Not right…
I will be canceling my XC40 order!!!!!
The tax incentive on my lease was applied as a the down payment. [It is worth noting that on a lease, the tax incentive from the Feds is less than the $7,500 that is available on a purchase. This has been the case for as long as I have been driving elec (since 2014). BMW incentivised the lease option by giving the leasee of the i3 the full $7,500 against the lease...early on, I don't know if they are still doing it, and I don't know if anyone else did. After my first i3, I started buying my BEVs pre-owned, until this XC40.]
 
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