Comment: France is attracted by the social leasing of electric cars, the vicious circle of subsidies is closing

Comment: France is attracted by the social leasing of electric cars, the vicious circle of subsidies is closing
Comment: France is attracted by the social leasing of electric cars, the vicious circle of subsidies is closing

Autumn and budget negotiations are approaching, so the French media are reminding President Macron of what he promised in the spring election campaign: that the state should make electric mobility accessible to lower income groups. Critics warn that in a worsening economic situation, the government should curb spending. However, the thought would rub off even in better times. It is tied to leasing, while ignoring the problem of residual value.

Europe is gripped by uncertainty and France is no exception. Inflation is growing, although the government has already spent 25 billion euros on officially limited energy prices, and the outlook for next year is not full of optimism. The last thing President Macron needs right now is to recall the hasty promises of the past.

The idea of ​​a socially responsible rental of electric cars did not even cross his mind. The socialist mayor of Paris, Anne Hidalgo, said it as part of her presidential candidacy. Macron, who faced criticism for expensive energy in the campaign, readily jumped on the tempting wave.

“We will support an affordable offer of electric vehicles and introduce leasing mechanisms to help lower income households,” he said, assuring that mobility for all will be maintained even in places where internal combustion engines are about to be banned.

Specific steps were later confirmed by the Minister of Ecological Transformation, Agnès Pannier-Runacherová, and the Minister for the Budget, Gabriel Attal. At that time, a magic formula appeared: leasing for 100 euros per month, i.e. after our 2500 crowns.

What’s more, in France you can rent an electric car for similar installments right now. The problem is that the installment doesn’t say everything about the lease. It starts with a down payment and after three or four years of repayment, the residual value is reached. You can change each of these parameters only at the expense of the other two, because the price of the car remains the same.

The Nissan Leaf offers installments of 99 euros, the minimalist Dacia Spring 120 euros. You can buy them for cash from 41,000 or 19,800 euros, respectively.

Today, the French customer does not have to pay a down payment, as in the ideal case it will be covered by a subsidy. This amounts to up to 6,000 euros, but a maximum of 27 percent of the car’s price, and a scrap fee of 5,000 euros for your old car. Nissan added both and set the entry amount to exactly eleven thousand euros, so you just sign a contract at the dealer. Likewise with the Dacia, although its price reduces the usable subsidy to 5346 euros, so the scrapping fee of 2500 euros is added separately.

Now comes the first trick. Nissan mentions the installment “as of” and the down payment “as of”, but they do not match each other at the time. If we choose the lowest down payment, the monthly installment jumps to 139 euros. This example is calculated by the importer on its website until the end, so we will stay with it. However, it is clear that in order for the monthly installment to drop to 99 euros, we would have to make a higher down payment.

The Nissan lease lasts three years, so we pay 36 x 139 = 5000 euros. About 20 percent of that is insurance, so we paid only 4,000 euros of the price of the car, which is less than 10 percent. Dacia offers an extended four-year scheme, which means 48 x 120 = 5760 euros. So after deducting the insurance, we paid a quarter of the price.

It is already clear that a deep pit awaits at the end. The down payment and repayment process differed, but in both cases the happy years of cheap installments end with the question of who will pay the remaining 65 percent of the price. Which is 12,700 euros for Dacia, 25,700 euros for Nissan.

Low-income households can’t afford that, so they return the car to the dealer and repeat the same trick again. After three years, they are entitled to another subsidy, from which they cover another down payment and drive off in a new car. The older one goes to the bazaar, and since the subsidies also apply to used electric cars, someone will again reduce its price by 27 percent.

This is the great advantage of the French program. Subsidy for used cars moves the market in a comprehensive way, it will get electric cars among more people and will really improve their availability.

But only as long as the government has the money for it. The first pitfall may be encountered by the buyer of a new car who relies on receiving the subsidy next time. They will choose low installments, but in the meantime the government will cut the budget and reduce or cancel subsidies. Which Germany has already announced for next year.

The second noose is now being tightened by the politicians themselves. If Macron’s executive is really going to subsidize the down payment first and then subsidize the installment, the strained budget will only run out a little sooner. And then he will have to cut off support for everyone.

If, on the other hand, he lets the lease run on the market, then he will only achieve a higher residual value with a lower installment. The car will be more expensive and harder to sell in the bazaar, so the cycle of electric cars will slow down instead of speeding up.

Perhaps the president wishes Mayor Higald had never made her proposal. But now the responsibility is on him. If he didn’t say “Enough, one subsidy is enough” in time and let the ministers talk about the mythical lease, now he probably has no choice but to transfer money from one pocket to another.

The article is in Czech

Tags: Comment France attracted social leasing electric cars vicious circle subsidies closing

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