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What is the discount on an electric car?
Discount (or depreciation) is the loss in value or difference between the purchase price and the resale price of an asset, such as an electric vehicle. It is estimated that the value of a new electric vehicle leaving a dealership falls by an average of 50% after 3 years of use.
It is essential to differentiate between depreciation and amortization:
- Depreciation is a tangible asset, such as an electric car,
- Amortization, on the other hand, is counted as an intangible asset, as is everything relating to intangible resources (software, patents, operating licenses, etc.).
Which vehicle depreciates fastest: diesel, petrol or electric?
A study was carried out by Automobile magazine to assess the average discount of cars by energy (diesel, petrol and electric) and here are the results:
| For generalist brands | 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 premium brands | 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 faster than their combustion counterparts. This was the case when electric vehicles had just entered the automotive market.
Today, many things have changed in the automotive sector: the new technologies integrated into electric vehicles add value and increase demand.
Electric cars: what causes depreciation?
According to The AA (The Automobile Association), a new internal combustion car will lose around 60% after the first three years, at a mileage of typically 10,000 km per year.
With the end of petrol and diesel car sales scheduled by the government for 2035, electric mobility is expected to be adopted on a massive scale. In fact, many French people are interested in clean vehicles, to the point of buying one:
- +50% increase in 100% electric vehicle registrations by January 2023, according to the Avere-France barometer,
- According to an Ipsos survey in 2022, 46% of French respondents are convinced by the electric car.
Given that the government hopes to achieve climate neutrality by 2050, a significant increase in demand is expected.
Main reasons for the depreciation of electric cars
Not all vehicles have the same depreciation. The reasons for their 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 a model is sought-after by consumers, the more likely it is to still be desirable, even as a used vehicle. This is true of Tesla cars, for example,
- age: the older the vehicle, the greater the discount,
- vehicle type: depending on the vehicle category, the discount will be greater or lesser,
- the number of resales: the more the car is resold, the higher the allowance rate.
How do you calculate the depreciation of an electric vehicle?
To estimate the value of an electric vehicle, you can do it manually or use an online calculation tool.
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 the example of a Tesla Model 3 at €44,990 and 3 years later the resale price comes to €39,550. The value of the discount will be €5,440, or 12.09%.
Here's the calculation:
- discount in euros: 44,990 - 39,550 = €5,440
- percentage discount: (5,440 / 44,990) x 100 = 12.09%.
Another example, with a Renault Megane E-Tech electric car at €46,550 and a resale price of €37,990 after 3 years. Applying the same formulas above, the value of the discount is €8,560, or 18.39%.
Here's the calculation:
- discount in euros: 46,550 - 37,990 = €8,560
- percentage discount: (8,560 / 46,550) x 100 = 18.39%.
Solutions to ease the depreciation of electric cars
To make depreciation more flexible, you can opt for leasing or long-term rental, for example. In this case, you're talking about a financial deduction, since the rental payments are 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:
- fixed monthly installments: this allows you to control your cash flow and avoid last-minute surprises,
- you can choose the electric vehicle you want 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 (LLD) is an effective way of managing depreciation costs and the risk of large repair bills.
Read also : Electric vehicle 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 sold in 2022, 25% more than in 2021
- used electric vehicles account for 1.3% of the second-hand market
What's more, when a new generation of cars enters the market, depreciation accelerates. So it's important to think about reselling your car 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 car's condition: as the years go by, the vehicle's depreciation decreases. Repairs will certainly be needed to attract buyers interested in reselling the vehicle ( battery condition, mechanical components, tires, etc.),
- collect all vehicle maintenance documents,
- 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 also helps companies reduce the costs of electric vehicles through a number of subsidies:
- the ecological bonus,
- exemption from TVS (Taxe sur les Véhicules des Sociétés)*,
- no tax applied to the crisis card in the event ofelectrification of your vehicle fleet,
- tax deduction for depreciation of electric vehicles (deductible up to €30,000) and batteries (depreciated and deductible if invoiced separately from the vehicle),
- the ADEME Green Loan, specially designed to help SMEs and VSEs accelerate the energy transition.
*Good to know : the tax on company vehicles (TVS) has been replaced by 2 new taxes since January 1, 2023: the annual tax on CO2 emissions and the annual tax on atmospheric pollutant emissions.
Which electric cars keep their value?
As with any other type of vehicle, particularly sought-after electric car brands will enjoy better long-term value. Here are a few examples:
- Tesla: if there's one premium electric brand that's getting a lot of attention, it's Tesla. According to a study by iSeeCars, it's the Model 3 that's depreciating at more than 5 times less than the average. As for other electric cars, the Model S depreciates by 36% and the Model X by 34%.
Unlike other electric brands, updates are regularly deployed on Tesla electric cars. As a result, the obsolescence of Tesla vehicles is much lower.
- Porsche Taycan: this electric car is also among the slowest to depreciate, 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: Hyundai IONIQs are also solid performers when it comes to discount maintenance. In 3 years, the IONIQ 5 and IONIQ 6 lose around 48% of their value.
Tips to minimize 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 vehicle depreciation 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 correct tire pressure: this can help you get the best possible mileage from each load, and prevent the tire rubber from deforming rapidly. We recommend increasing tire pressure by 0.2 to 0.5 bar. Be sure to schedule tire pressure checks throughout the seasons,
- check battery condition: make sure that the battery charge does not fall below 10%.
- Park your vehicle at room temperature: the outside temperature ( during heat waves or winter) can affect the performance of an electric car. We recommend parking your vehicle in an enclosed area at room temperature.
Find out more: How do I maintain my electric car?
Adapting eco-driving
To minimize the discount on an electric car, it's essential to adapt eco-driving by carrying out several actions, including:
- activate "eco" mode,
- plan your journey, avoid traffic jams, find charging stations easily,
- anticipate slowdowns by decelerating,
- reduce speed to conserve vehicle energy
- switch off the engine during prolonged stops to conserve the vehicle's range and energy,
- remove any unnecessary load from the vehicle,
- keep the car as aerodynamic as possible.
You can also educate your staff in eco-driving to keep electric vehicles in good condition for as long as possible.
In conclusion
It's true that on some electric cars, depreciation is much higher. However, there are ways of slowing down the depreciation process:
- leasing (LLD),
- acquisition grants, designed to reduce costs and give you greater control over your cash flow,
- electric vehicle maintenance and greener driving to reduce depreciation and your ecological footprint.
If you need any further information, our Beev experts are on hand to answer your questions and guide you through the process.
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