Electric car news
Rents for electric cars have skyrocketed in recent months. A paradoxical situation when we know that the list prices of these models tend to fall. Formerly tempting offers like the Citroën ë-C3 at 54 euros per month or the MG4 to 99 euros monthly have given way to much higher monthly payments, now reaching 149 euros et 249 euros respectively.
The residual value puzzle
Long-Term Rental (LLD) or Rental with Purchase Option (LOA) financing is based on a simple principle: anticipating the future value of the vehicle. Monthly payments are calculated based on the estimated depreciation over the duration of the contract. The problem ? Used electric cars are struggling to sell at expected prices.
- Tesla price drop impacting the entire market
- Concerns about battery life
- Competition from more affordable Chinese models
- Charging infrastructure deemed insufficient
The saturation of the second-hand market
Car parks are overflowing with used electric cars whose prices remain too high to attract buyers. A striking example: used Tesla Model 3 and Model Y, once rare and sought-after, are now available in quantity. This situation forces rental companies to drastically review their residual value estimates.
Rental giants like Hertz are suffering colossal losses: $150 million depreciation for only 20,000 electric vehicles resold. Sixt saw its profits cut by 40 million euros in 2023 because of this phenomenon.
The forced adaptation of manufacturers
Renault has chosen to anticipate this trend with its new R5 E-Tech. The manufacturer now applies lower residual values, automatically leading to an increase in monthly payments. On certain current offers, the customer pays between 40 and 48% of the price of the vehicle in just three years, while the usual discount is rather between 30 and 35%.
An uncertain future for financing
Financial institutions anticipate high market volatility for Next 5 to 10 years. To limit risks, they are extending the duration of rental contracts and developing new strategies such as the second life of vehicles. Volkswagen therefore offers first generation ID.3s from 189 euros in LLD.
The gap is widening between thermal and electric vehicles: an electric car 45 000 euros who was rented 284 euros per month in 2021 now costs 621 euros monthly. At the same time, the rent for an equivalent thermal model increased from 473 to 468 eurosbefore a probable increase in 2025 linked to the new CAFE standards.
Written by Philippe Moureau
Forty-year-old passionate about electric cars. I am interested in the energy transition and the fight against greenhouse gas emissions. I am a true electric car enthusiast and environmental advocate.
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