The difficulty of designing a low-cost car refers to the depth of the gap to be bridged


The electric vehicle at 100 euros per month could well remain an electoral formula that will only become effective for a few nurses practising in the rural or peri-urban world. Private offers such as those from Cetelem presented this week seek to compensate for the inadequacies of public schemes and are undeniably a step in the right direction. The fact remains that the rents offered are very dependent on public aid and that, even under these conditions, they struggle to be competitive with the cobbled-together solutions that households have been devising and implementing for years. There is still a long way to go to find an operational solution to the question that, intellectually, we are now able to ask correctly.

If we make a small effort to remember in 2022, we will remember that, in 2018, the automotive industry had the feeling that the ecological requirement was already very strong when the objective of -37.5% between 2021 and 2030 was retained. The following year, the European Commission presented the Green Deal for Europe, which aimed to make Europe climate neutral by 2050. In September 2020, the climate ambition was thus raised and, in 2021, the Commission produced its 'climate package' which was supposed to transform this objective into policies: this is the set of texts called 'fit for 55' to indicate that carbon neutrality in 2050 can only be achieved if carbon emissions have been reduced by 55% (and not by only 37.5%) by 2030.  

In the automotive sector, this means that by 2050, it is no longer the emissions of the vehicles that will be registered that will have to be reduced, but those of the entire fleet that will have been registered in the preceding years. Insofar as everything indicates that fleets are ageing and that the "survival rates" of vehicles at advanced ages (between 16 and 30 years) are inexorably increasing, we can draw the logical conclusion that, in order to achieve the 2050 objective, the CAFEs of registered cars should be much more ambitious for 2030 (-55%) and for 2035 (-100%, i.e. no thermal vehicles, even hybrids).

In the same way, in terms of air quality rather than climate, since we now want to respect our European commitments, the LOM and the "Climate and Resilience" law impose EPZs on local authorities, leaving them to regulate them as they see fit, but still setting a "timetable for banning vehicles from the EPZs", which has been defined as follows
- 1 January 2023: pre-2001 diesel, pre-1997 petrol
- 1 January 2024: pre-2006 diesel
- 1 January 2025: pre-2011 diesel, pre-2006 petrol".

The combination of these two very clear tightening of the requirements for the fleets in circulation imposes a major shift of attention on public policy makers and car professionals alike: whereas this whole world was previously obsessed with new car sales and considered that the rest followed from this, it must now take an interest in the fleets and the households and companies that make them up, make them live and last and, marginally, renew them. For many of the components of this world, this is a leap into the unknown: one must open one's eyes and realise that the fleet is larger and older than previously thought, that more than two thirds of the vehicles on the road have been acquired second-hand, that a very large majority of households have never bought nor will ever buy a new vehicle or even a guaranteed second-hand vehicle. We need to look at the economic system and the business models that have been structured to make this possible. You have to imagine, to quote an old advertising slogan, "the lives that go with it".

Just as the NEDC measurements were increasingly out of step with the real characteristics of vehicles and could no longer be said to reflect reality, so the analysis of automotive issues through the prism of new vehicle registrations and the behaviour of buyers (or users) of these vehicles has become increasingly untenable. Since a large proportion of the owners of new cars do not pay for them but are given them by their employers, and since the only customers left among households are old and rich buyers who have neither children to support nor housing to pay for, it is clear that the characteristics of the vehicles and the willingness to pay that are identified by examining this world are likely to provide rather truncated indications of what the real world is, or at least what the majority of it is. 

In a way, we can consider that the experience made this week by the government and by BNP Paribas Personal Finance (Cetelem brand) is both the sign of a clear awareness of this great gap and of an obvious difficulty in bridging it, which refers to the fact that the more we look into this chasm, the deeper it appears.

On the government side, since it was necessary to go faster and further in terms of ecological requirements and to avoid backing down once again on issues such as the EPZs and since, at the same time, the memory of the yellow waistcoats remains strong, the idea that solutions could be offered to the most modest to avoid the EPZs appearing to be grants that could only be passed on to the richest was imposed. The electric vehicle at 100 euros per month (subject to resources) is a formula that occupies this terrain in terms of discourse.

The problem facing the ministries that are trying to move from rhetoric to reality is that in order to reach 100 euros per month, you need either very large contributions, or very long periods of time, or very large subsidies, or very cheap vehicles imported from China or elsewhere, or second-hand vehicles, which are not available in large numbers at the moment.  
We are talking about a target of 100,000 vehicles per year, the selection of which is problematic and, since the budget is 50 million euros, we would have to make do with 500 euros of subsidy per car, which would not solve the equation. If we then decided to play Arsène Lupin and subsidise the rich less - contrary to what we've been doing up to now by taking 5,000 or 6,000 euros from the taxpayers' pockets to give them to buyers of EVs costing more than 30,000 euros - to top up this budget, then we'd be killing the business and favouring imports...

On the BNP Paribas Personal Finance side, Xavier Champagne detailed on Thursday the proposals which are undeniably very innovative since they propose to get out of the straitjacket of the standard terms which usually have a ceiling of 72 months to pass to 10 years, to envisage on this mode the financing in LOA of new and used cars and petrol and hybrid vehicles in addition to EVs. By solving the problem of the contribution with the conversion premiums and/or ecological bonuses, Cetelem manages to offer monthly payments of between 135 and 285 euros per month including the warranty and maintenance.

For a 3-year electric car, provided that you are eligible for the conversion bonus, the operator manages to offer 157 euros for a Zoe. This is obviously a way of extending the benefits of these 'all-inclusive' packages to low-income households, which allow them to secure their expenses and, as C. Michaëli points out, to have the possibility of buying a new car. Michaëli, to have 'visibility over one's budget' and not to fear 'breakdowns and the risk of high expenditure': Whereas, until now, only the households most able to cope with hazards were protected against them even though they were the least exposed to them, here, with its subsidiary Icare - acquired in 2014 from Europ Assistance -, BNP PPF covers the vehicles of modest households between their 3rd and 13th year and this is a step forward which, if it were to materialise, would be major and could have the effect of overcoming the domination of the private individual market.

Nevertheless, even in Cetelem's offers, the contribution of 3,000 to 11,000 euros is provided by the taxpayer and, despite the extension of the term, it is difficult to get below 150 euros. According to the data of the 2017 family budget survey, we can doubt that the considerable effort made is sufficient. Indeed, thanks to the specific processing of individual data carried out by Y. Demoli (1), we have the net values (purchase price - trade-in amount) of the vehicles acquired by households in each decile.

If we consider the average ownership time of a vehicle by French households as provided by the CCFA, which is 5.6 years, i.e. 67 months, then 10,050 euros (= 67 x 150) and 6,700 euros (= 67 x 100) are the net purchase values below which the monthly instalments proposed by Cetelem and the State cease to be economically appropriate for households. On this basis, it emerges that the monthly purchase budget of 150 euros for a vehicle is only reached by 20 to 30% of the wealthiest households. As for the monthly payment of 100 euros, which the State is having great difficulty in reaching, it is beyond the means of the 40% of the poorest households.

To be precise, a vehicle acquired by a household in the first quintile has a net value of 4,700 euros (13,000 new; 3,400 second-hand) and therefore a monthly expenditure of around 70 euros. The second quintile has a net value of 6,000 (14,000 new and 4,300 second-hand) and therefore a monthly payment of 90 euros. Annual or monthly purchase budgets per vehicle can be refined and calculated by crossing the data by income level and place of residence. It emerges, for example, that in the suburban world, which is particularly affected by the EPZs, monthly purchase budgets are less than 100 euros per vehicle for the 60% least wealthy...

These statistics are solid and the trends they summarise are long-standing and their reality very well documented. They show that the idea that we must think in terms of the fleet and deal with the issue on this basis is as well-founded as it is difficult to operationalise. For example, it can be seen that the purchase of vehicles 10 years old and over represented 2.7 million transactions in 2021, whereas the purchase of new vehicles by households represented 720,000, the purchase of used vehicles less than one year old 476,000 and the purchase of used vehicles between 1 and 2 years old 334,000.

In fact, buying a 10 year old vehicle is very reasonable in 2022 and has been for years, and it is precisely by buying older and older vehicles and renewing them more and more rarely that households have managed to multiply their motorisation without their car budgets increasing. Thus, without necessarily being aware of it, households have become accustomed to their cars costing them less and less and have built residential strategies around these parameters. Today, just as they do not intend to leave the suburbs to come and populate more densely populated areas, they do not envisage, all other things being equal, having to pay more to acquire vehicles. It is certainly possible to play on lower maintenance and repair costs or on savings made on fuel to counteract the trend. Nevertheless, it will be very difficult in this context to believe in an accelerated renewal of the fleet or in any case in access to these recent and clean vehicles for the most modest households living in the least dense areas. The State and, to a much lesser extent, BNP PPF, are exploring this terra incognita and it is clear that the slope to be climbed in order to learn how to address the populations that own vehicles that we no longer wish to see is even steeper than we had imagined.

(1) The EBFs (Enquêtes Budgets des Familles) are large-scale surveys carried out every 6 or 7 years on approximately 15,000 households on their overall consumption behaviour. INSEE publishes summary tables and researchers can access anonymised individual files. The sociologist Y. Demoli processes these files and was kind enough to send us some of the processing he does.

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