France makes it harder to “flip” new EVs for profit

France is implementing new rules that to make it harder for dealers to “flip” new electric vehicles (EVs) bought with state incentives, and make a tidy profit in the process.

The move is incredibly salient for Australia, where secondhand EV prices are soaring. In particular, some models such as the Kia EV6 and Hyundai Ioniq 5 that are newly bought are being quickly sold on for a profit of $10,000 and upwards.

While it is thought local examples are being resold by private buyers, in France the practice of “flipping” is also happening in used car dealer networks.

And, they are double-dipping by making a profit from EV rebates as well as soaring secondhand EV values.

As originally promised in early May, France has amended its Energy Code in such a way as to prevent the immediate resale of electric vehicles purchased using state incentives for profit – including requiring EV owners to keep the car for a year before they can resell it.

As used car prices have soared and EVs have become increasingly popular given the increase in fuel prices due to the war in Ukraine, used car brokers have been buying new EVs, benefiting from EV-specific incentives, and then almost immediately selling them at a sizeable mark-up.

These used car brokers have raked in profits due to both the mark-up when selling the car, as well as the state incentives they received when purchasing the new car.

One need only look at a car sales aggregator such as Reezocar to see a number of EVs, such as a number of 2020-21 Tesla Model 3s, asking above list price with limited kilometres under their belt.

EV owners who receive state incentives designed to help in the purchase must now keep the vehicle for at least a year, up from six-months previously, and must drive a minimum of 6,000 kilometres.

Germany has implemented similar measures, requiring new EV owners to wait for 12 instead six months to be eligible for EV rebates. If cars are sold before the 12 month period is up, the rebate must be repaid.

France is home to one of the more generous EV incentive programmes in the European Union, with private buyers able to receive incentives of up to €6,000 (up to 40% of the price of the car) on vehicles under €45,000, or up to €1,000 for cars between €45,000 and €60,000.