The French Strategy keeps track of the costs

In an analysis note published on November 16, 2022, the French Strategy begins with an observation: in 2021, only 10% of new carriages in France were electric. However, several devices support motorists in the energy transition. The agency linked to Prime Minister Elizabeth Borne thus lists an environmental bonus, a conversion bonus, assistance for the installation of a charging station and a malus tax on CO emissions.2.

France Strategy estimates that the added cost of buying an electric car compared to heating can be “more than €15,000” for B-segment city cars. But the facilities can offset “50% to 100%” of those extra costs “depending on the vehicle and household.” It should be noted that the organization has included the costs of home terminal installation in its calculations.

Additional cost and savings associated with purchasing a segment B (city cars) or C (SUV) electric vehicle compared to an equivalent range heating vehicle. © French Strategy

Assistance for the purchase of an electric vehicle: complex issuance procedures

Before moving on to the financial calculations, let’s go back a bit to the conditions for granting assistance for the purchase of an electric vehicle (the number of assistance provided in the last two years is shown in numbers in the box at the bottom of this article). Except for the conversion bonus, “these devices depend very little on the conditions of the resources”, notes France Strategy. Indeed, “the environmental bonus depends on the car’s engine and its purchase price.” As for the malus tax, it “depends on CO emissions2 cars”. In turn, the weight penalty “depends on the mass in running order”. Unlike the package, the conversion premium is based on the reference tax revenue per household share.

Return on purchase varies by revenue and selected segment

Thus, with a number of aids, “the profitability of choosing an electric vehicle compared to a thermal vehicle is immediate for an entry-level model purchased by a very modest household or for an SUV C for all households,” France emphasizes. Strategy. This payback is longer (six years) for non-modest households to buy a city car. In fact, three categories of households appear in the organization’s analyses: “very modest,” “modest,” and “moderate or wealthy” (see box below). In each case, France Strategy studies the available options (segments, new or used, engines) for a family that owns an old thermal vehicle, travels 13,000 km per year and wants to change the vehicle.

Thus, looking at the situation of a middle-class or wealthy household, the additional cost of investing in an electric segment B vehicle compared to an equivalent thermal vehicle reaches 16,000 euros. “And with help it can be reduced to around €7,200”. On the other hand, the additional cost of 10,000 euros for the electric SUV C model will still be “almost fully compensated by the bonus and the loss tax”, which brings it down to 660 euros, according to the French Strategy. However, according to the French Strategy, the transition to electricity would be more complicated for more modest households.

Costs, receipts, additional costs and savings related to the purchase of a new vehicle in the segment B (city car) or C (SUV) by an average or affluent family, taking into account the aid in force and taking into account the aid in force engine. © French Strategy

French Strategy: low-income households can only access entry-level electric vehicles

“Among the devices under review, only the conversion bonus provides a specific boost according to the annual reference tax revenue per share for the purchase of an electric or rechargeable hybrid vehicle,” recalls the French Strategy. This is a bonus of 2,500 euros, or even 6,000 euros for very modest families. “This remains below the environmental bonus,” the organization observes. Example: “The additional purchase cost for an electric car belonging to segment B remains around 8,000 euros compared to a thermal car in the same segment; with the help, the total investment reaches about 25,000 euros.

Therefore, more limited options for the most modest households. Therefore, the latter will have to return to the electrical input level. By “entry level” understand: “cars that can be in the A segment (least bulky) and/or offer a lower level of equipment (comfort, driving aids) than what prevails in the rest of the new fleet” . So, for a very modest household, the cost of buying an entry-level electric car should ultimately be 10,000 euros, taking into account all possible subsidies. And the additional cost compared to heating will then be “far more than compensated for”.

Costs, returns, overheads and savings associated with purchasing an entry-level electric or heat car by a very modest household. © French Strategy

A problem that hides another

But if they choose a city car or an electric SUV, very modest families will have to pay 25,000 euros or 36,000 euros, respectively. Figures that take into account the activation of all aids. This limited offer for France Stratégie is therefore limited to the entry level for the most modest families. This raises another problem. Indeed, in the last two decades, European manufacturers have moved further and further away from the entry level, which the organization regrets. Therefore, very modest households will have to turn to non-European brands, especially Asian brands. France Stratégie emphasizes: “The only clearly identifiable new model in this segment is made in China.”

In use: savings of around €1,200 per year with an electric car

In addition to the purchase price, France Stratégie also assessed the usage costs. For electricity, the organization took into account a 15% increase in the price of electricity in its calculations. Increase scheduled for February 2023 compared to rate adjusted on October 1, 2022. “0.186 euros/kWh, considering that 80% of the loading is done in off-peak hours, only at home,” says the French Strategy. Important Clarification: “Fast charging, which is more expensive at public terminals, is therefore not covered here. According to Adem, the public charge will actually cost three to four times more. The organization has kept the pump price for gasoline equal to 1.70 euros/l.

As previous TCO studies have shown, an electric car is cheaper to run. “About 1,200 euros per year, including maintenance and energy costs for a segment B car,” indicates the French Strategy. “While the discounted total costs over the ownership period of the new vehicles studied are favorable for electric propulsion with the aid in force, the current inflationary context may affect these results,” France Strategy notes. In addition to basic costs, the organization therefore supplemented its calculations with forecasts. By following two hypothetical inflation scenarios: a 60% and 120% increase in the price of electricity. The French Strategy summarizes the effects on the total costs of owning an electric vehicle (new) for an average or affluent family in the graph below:

The sensitivity of the total cost of ownership of a new car for an intermediate or affluent family to increases in the price of electricity, depending on the range and engine. © French Strategy

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