To Upgrade or Not to Upgrade?

[BroncoAZ]

I purchase commercial vehicles for a 100+ vehicle regional fleet. The only calculation that matters in my world is the net cost per mile to operate a vehicle. Sometimes the higher trim trucks with the higher resale value are cheaper than a stripped out work truck. Back in 2020 the fleet rep from Ram was trying to convince me to swap the entire fleet annually. On paper it made sense due to the fleet incentives offered and resale value of the trucks, it appeared that we would’ve been making a profit off the annual cycling. I ended up not deviating from the typical 5 year 100K cycle because the idea of upfitting and lettering that many trucks was beyond what my team could process. If it were just standard vehicles with no lettering or upfitting I probably would’ve done it.

If we assume the MYLR I’m looking to purchase for $41K will last me 120K miles and have a $10K resale value, my net cost of $31K divided by 120K miles is 25.83 cents per mile. If I can replace my current model with 17K miles for anything less than $4391 net then it makes sense to swap. If I would be selling the car for $25K after 50K miles then the math works out to 32 cents per mile, so anything less than $5440 and the swap makes sense. For the $5246 swap cost in post #16 the swap is a sound investment. My resale numbers may be way off, but I think of used EV’s like a several generation old iPhone, I expect the values to plummet as the technology improves and the cars get updated.

 

[Taney71]

I purchase commercial vehicles for a 100+ vehicle regional fleet. The only calculation that matters in my world is the net cost per mile to operate a vehicle. Sometimes the higher trim trucks with the higher resale value are cheaper than a stripped out work truck. Back in 2020 the fleet rep from Ram was trying to convince me to swap the entire fleet annually. On paper it made sense due to the fleet incentives offered and resale value of the trucks, it appeared that we would’ve been making a profit off the annual cycling. I ended up not deviating from the typical 5 year 100K cycle because the idea of upfitting and lettering that many trucks was beyond what my team could process. If it were just standard vehicles with no lettering or upfitting I probably would’ve done it.

If we assume the MYLR I’m looking to purchase for $41K will last me 120K miles and have a $10K resale value, my net cost of $31K divided by 120K miles is 25.83 cents per mile. If I can replace my current model with 17K miles for anything less than $4391 net then it makes sense to swap. If I would be selling the car for $25K after 50K miles then the math works out to 32 cents per mile, so anything less than $5440 and the swap makes sense. For the $5246 swap cost in post #16 the swap is a sound investment. My resale numbers may be way off, but I think of used EV’s like a several generation old iPhone, I expect the values to plummet as the technology improves and the cars get updated.

I like your cost per mile analysis. However, I usually just calculate cost per year which has usually worked out for me. I tend to just keep cars around 10 years or so cause by then I have forgotten the shitty dealership experience from the last time I bought a car.

 

[evo9rs]

the cost per mile is a great way to look at it especially for a fleet of vehicles, with lots of data, and predictable entrance and exit values! I appreciate the logic of it. this is the same way I looked at my fleet of rental vehicles, and Prius was always really strong.

in stark contrast, the resale of a MY at some point in the future has some substantial unknowns, such as tax incentives for new (and maybe even used EVs) at the time of sale, and the run rate of new MYs from the factory. we saw with the 3 that when the run rate met demand, PLUS there was a tax incentive of some form, we get used M3s at some really wonderful (for the new buyer) prices. this also means, really sad exits, for the seller. one known is that there will be a MY refresh which would affect this newly gained, to then become newly old, trade for the same generation of MY.

I personally don't see deriving more enjoyment by purchasing the same car, all over again. in this scenario, it would be like swapping rental cars, where the next one has 17k less mileage. it's an academic difference, doesn't make my loins move.

so in this situation, I emphasize the very predictable (I don't think it's a mystery at all, really) financial loss, with no emotional or functional gain (for me, if this were my situation)