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Discount on an electric car: what is it?
The discount (or depreciation) corresponds to the loss of value or the difference between the purchase price and the resale price of an asset, in particular an electric vehicle. It is estimated that the value of a new electric vehicle leaving a dealership, decreases by an average of 50 % after 3 years of use.
It is essential to differentiate between depreciation and amortisation:
- Depreciation is a tangible asset, such as an electric car,
- Amortisation, on the other hand, is counted as an intangible asset, as is everything relating to intangible resources (software, patents, operating licences, etc.).
Which vehicle depreciates fastest: diesel, petrol or electric?
A study was carried out by l'Automobile magazine to assess the average discount on cars by energy source (diesel, petrol and electric) and here are the results:
| For brands generalists | Diesel | Petrol | Electric |
|---|---|---|---|
| Average new price | 29 523 € | 20 299 € | 27 176 € |
| Average resale price | 16 677 € | 13 249 € | 12 214 € |
| Discount | 43,5 % | 34,7 % | 55 % |
| For brands premium | Diesel | Petrol | Electric |
|---|---|---|---|
| Average new price | 47 112 € | 37 469 € | 37 254 € |
| Average resale price | 28 544 € | 25 916 € | 20 031 € |
| Discount | 39,4 % | 30,8 % | 46,2 % |
These figures show that electric vehicles are depreciating more rapidly than their internal combustion equivalents. This was the case when electric vehicles had just entered the car market.
Today, a lot has changed in the automotive sector: the new technologies integrated into electric vehicles add value and increase demand.
Electric cars: what are the causes of depreciation?
According to The AA (The Automobile Association)a new combustion-powered car will lose around 60 % after the first three years, at a mileage of 10,000 km per year as a general rule.
While the end of petrol and diesel car sales is planned by the government for 2035, we expect electric mobility to be adopted on a massive scale. What's more, many French people are interested in clean vehicles, to the point of buying one:
- +50 % increase in the number of 100 % electric vehicles registered in January 2023, according to the Avere-France barometer,
- according to a Ipsos survey in 202246 % of French respondents are convinced by the electric car.
Given that the government hopes to achieve climate neutrality by 2050A significant increase in demand is expected.
Main reasons for the depreciation of electric cars
Not all vehicles have the same depreciation. The reasons for depreciation are varied, but here are a few of the most important:
- mileage: the higher the mileage, the more the car loses value,
- the make and model of the car: the more popular a model is with consumers, the more likely it is to be desirable, even as a second-hand vehicle. This is also the case for Tesla cars for example,
- age: the older the vehicle, the greater the discount,
- the type of vehicle: depending on the category of vehicle, the discount will be greater or lesser,
- the number of times the car is resold: the more times the car is resold, the higher the rate of tax relief.
How do you calculate the depreciation of an electric vehicle?
To estimate the value of an electric vehicle, you can either do it manually or use a tool from online calculation.
To do this, subtract the purchase price of the electric car and the resale price:
- calculation of discount in euros = purchase price - resale price
- calculation of percentage discount = (calculation of discount in euros / purchase price) x 100
Let's take an example of a Tesla Model 3 44,990 and 3 years later the resale price is €39,550. The value of the discount will be €5,440, or 12.09 %.
Here is the calculation:
- discount in euros: 44,990 - 39,550 = €0.50 5 440 €
- percentage discount: (5,440 / 44,990) x 100 = 12,09 %
Another example with an electric car Renault Megane E-Tech 46,550 and 3 years later the resale price is €37,990. Applying the same formulae above, the value of the discount is 8 560 €or 18,39 %.
Here is the calculation:
- discount in euros: 46,550 - 37,990 = €0.50 8 560 €
- percentage discount: (8,560 / 46,550) x 100 = 18,39 %
Solutions to ease the depreciation of electric cars
To soften depreciation, you can use leasing by choosing either Long-term leasingfor example. In this case, there is a financial deduction, as the rent is expensed.
Leasing an electric car: long-term leasing (LLD)
As a reminder, long-term leasing (LLD) is a method of financing over a period of one to five years. As a professional, leasing may be right for you if you're looking for flexibility in your finances, and here's why:
- the monthly repayments are fixed: this allows you to control your cash flow and avoid last-minute surprises,
- you have the choosing an electric vehicle and return it at the end of the contract,
- As a lessee, you are not responsible for the resale of the vehicle, which is the responsibility of the owner,
- the cost of depreciation is also borne by the vehicle owner.
Long-term leasing is an effective way of managing depreciation costs and the risk of large repair bills.
Read also: Electric vehicles under long-term leasing: what are the advantages for SMEs and VSEs?
Selling your electric vehicle
The depreciation of an electric car can also be a factor to consider when reselling the vehicle.
In a French used car market that weakened in December 2022 (with sales down 12.1 %), electric cars are making a difference.
According to the Opteven and NGC-Data barometer for January 2023 :
- 78 493 used electric vehicles were sold in 2022, i.e. 25 % more than in 2021
- the proportion of used electric vehicles on the market 1.3 % used market
What's more, when a new generation of cars enters the market, the depreciation of the vehicle accelerates. So it's important to think about selling it at a time that's conducive to sales, and also before the arrival of a new model.
When reselling an electric vehicle, here are the different criteria to take into account:
- check the condition of the car: as the years go by, the vehicle's depreciation decreases. Repairs will certainly be necessary to attract buyers interested in reselling the vehicle (condition of the batterymechanical and pneumatic components, etc.),
- collect all the documents relating to vehicle maintenance,
- provide the future owner with a certificate of administrative status less than 15 days old (certificat de non-gage),
- estimate the value of the vehicle.
Benefit from financial aid
The government is also helping companies to reduce the costs of electric vehicles through a number of subsidies:
- the environmental bonus,
- exemption from TVS (Taxe sur les Véhicules des Sociétés)*,
- no tax applied to the crisis card in case ofelectrification of your vehicle fleet,
- the tax deduction of depreciation of electric vehicles (deductible up to €30,000) and batteries (depreciated and deductible if invoiced differently from the vehicle),
- the ADEME Green LoanThis is aid specially designed for SMEs and VSEs to accelerate the energy transition.
*Good to know Company car tax (TVS) has been replaced by 2 new taxes from 1 January 2023 the annual tax on CO2 emissions and annual tax on emissions of atmospheric pollutants.
Which electric cars retain their value?
As with any other type of vehicle, the electric car brands will benefit from better long-term value. Here are a few examples:
- Tesla: if there's one premium electric brand that's getting a lot of press, it's Tesla. Tesla. According to a iSeeCars studyis the Model 3 which depreciates by more than 5 times less than the average. As for other electric cars, the Model S depreciated to 36 % and the Model X to 34 %.
Unlike other electrical brandsTesla electric cars are regularly updated. As a result, the obsolescence of Tesla vehicles is much lower.
- Porsche Taycan This electric car is also one of the slowest depreciating vehicles, with a loss in value of around 37 % over three years,
- Polestar 2 Over the first 3 years, the loss in value is 42 % for the Polestar 2,
- Hyundai IONIQ 5 and 6: the Hyundai IONIQ are also solid when it comes to maintaining the discount. In 3 years IONIQ 5 and IONIQ 6 lost around 48 % of their value.
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Tips to minimise the depreciation of electric cars
Other solutions exist to further slow down the depreciation of your electric vehicle. Here are the best practices to adopt on a daily basis:
Keeping your electric car well maintained
Slowing down the depreciation of your vehicle can also be seen when you maintain your electric vehicle on a daily basis. Here are the best practices to apply on a daily basis:
- Maintain the correct tyre pressure: this can help you get the best possible mileage from each load and prevent the tyre rubber from deforming quickly. It is advisable to increase tyre pressure by 0.2 to 0.5 bar. Be sure to schedule tyre pressure checks throughout the seasons,
- check the condition of the battery 10%: ensure that the battery charge does not fall below 10%
- park the vehicle at room temperature: the outside temperature (in heatwave period or in winter period) can affect the performance of an electric car. We recommend parking your vehicle in an enclosed area at room temperature.
To find out more : How do you maintain your electric car?
Adapting eco-driving
To minimise the discount on an electric car, it is essential to adapt a eco-driving by carrying out a number of actions, including
- activate "eco" mode,
- prepare your journey, avoid traffic jams and easily find charging points to recharge your vehicle,
- anticipate slow-downs by decelerating,
- reduce speed to save vehicle energy
- switch off the engine when not in use for long periods to save fuelautonomy and vehicle energy,
- remove any unnecessary load from the vehicle,
- keep the car as aerodynamic as possible.
It is also possible to raise your employees' awareness of eco-driving to keep electric vehicles in good condition for as long as possible.
In conclusion
It is true that on some electric cars, the depreciation is much greater. However, there are ways of slowing down the depreciation:
- leasing (LLD),
- acquisition grants, designed to reduce costs and give you greater control over your cash flow,
- maintaining your electric vehicle and driving more ecologically to reduce depreciation and your ecological footprint.
If you need further information, our experts Beev are available to answer your questions and help you through the process.
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