Fleet TCO: the complete calculation method (2026)

The total cost of ownership of a company vehicle adds up eight items over its holding period: depreciation or lease payments, financing, energy, maintenance, tyres, insurance, taxation and administration. A compact combustion passenger car works out at roughly €0.40 to €0.45 per kilometre over 4 years and 100,000 km.

The purchase price or the lease payment represents only a third to a half of what a vehicle actually costs. The rest is scattered across fuel invoices, repair orders, insurance premiums, taxes and administrative time, rarely consolidated at vehicle level. This article gives the complete method: the 8 items, the formula, a step-by-step worked example with the 2026 tax rates, a combustion-versus-electric comparison, the levers that reduce it and the mistakes that distort it.

What is a company vehicle's TCO?

A vehicle's TCO is the sum of every cost the company bears to own and operate it over a given period, expressed in euros over the period, per month or per kilometre. It differs from:

• the purchase price, which ignores usage and resale;

• the long-term lease payment, which includes neither energy, nor taxation, nor administration, nor return charges;

• the accounting cost, which follows tax depreciation rules rather than market value.

TCO is calculated over an explicit duration/mileage pair — 48 months and 100,000 km, for instance — because both depreciation and maintenance depend on the two. Comparing two vehicles on different pairs is meaningless. Fleet cost management is precisely the practice of measuring this TCO continuously, vehicle by vehicle.

The 8 items that make up TCO

Item	What it covers	Typical share
1. Acquisition or lease	Purchase price including tax, options, registration; or long-term lease payments	see depreciation
2. Depreciation	Purchase price minus resale value at the end of the period	30 to 40 %
3. Financing	Loan interest, or the opportunity cost of tied-up cash; included in the lease payment	3 to 6 %
4. Fuel or energy	Litres or kWh consumed, net of recoverable VAT	20 to 30 %
5. Maintenance and repairs	Scheduled servicing, wear parts, out-of-warranty repairs, technical inspection	8 to 12 %
6. Tyres	Summer and winter sets, replacement, alignment	2 to 3 %
7. Insurance	Fleet premium pro rata, excesses paid	7 to 10 %
8. Taxation and administration	Annual taxes, environmental penalty, registration document, social contributions on benefit in kind, non-recoverable VAT, management time, fines, downtime	6 to 12 %

These percentages are orders of magnitude observed on compact combustion passenger cars in France; they vary considerably with mileage, powertrain and renewal policy. On a high-mileage van, energy and maintenance weigh more; on an electric vehicle, depreciation dominates and energy recedes.

The full formula

Over a period P in months and a mileage K:

TCO(P) = (acquisition price − residual value) + financing interest + energy net of recoverable VAT + maintenance and repairs + tyres + insurance + taxation + administration

On a long-term lease, the first two terms are replaced by the sum of the payments, plus return charges — excess mileage, reconditioning — and services not included.

• Monthly TCO = TCO(P) / P

• Cost per kilometre = TCO(P) / K

Cost per kilometre is the right unit for comparing two vehicles or two financing methods; monthly TCO is the right unit for budgeting.

A worked example over 4 years and 100,000 km

A compact petrol SUV bought by an SME and assigned to a sales representative, over 48 months and 100,000 km. Every value below is an assumption made for the example; only the tax rates are the 2026 ones, sourced further down.

Parameter	Assumption
Purchase price including tax (VAT not recoverable)	€28,000
WLTP emissions	120 g CO2/km
Curb weight	1,400 kg
Crit'Air category	1 (Euro 6 petrol)
Residual value at 4 years	40 %, i.e. €11,200
Financing	48-month loan at 4 %, about €2,300 of interest
Real consumption	6.5 l/100 km
Average petrol price	€1.75 incl. tax per litre
Maintenance and repairs	€0.045/km
Tyres	2 sets at €500
Fleet insurance	€900/year
Registration document	€350, varies by region
Administration	1 hour a month at €35/h

Item by item

Item	Calculation	Over 4 years
Depreciation	28,000 − 11,200	€16,800
Financing	loan interest	€2,300
Fuel, gross	6.5 × 1,000 × 1.75	€11,375 incl. tax
Recoverable VAT on petrol (80 %)	€1,896 of VAT × 80 %	− €1,517
Fuel, net		€9,858
Maintenance and repairs	0.045 × 100,000	€4,500
Tyres	2 × 500	€1,000
Insurance	900 × 4	€3,600
Annual CO2 tax (120 g, 2026 scale)	41×1 + 8×2 + 32×3 + 20×4 + 15×10 = €383/year	€1,532
Annual air pollutant tax (category 1)	€130 in 2026, €160/year thereafter (assumption)	€610
CO2 penalty on registration (120 g)	flat	€310
Weight penalty	1,400 kg, below the 1,500 kg threshold	€0
Registration document	assumption	€350
Administration	12 × 35 × 4	€1,680
TCO over 4 years		€42,540
Monthly TCO	42,540 / 48	€886/month
Cost per kilometre	42,540 / 100,000	€0.425/km

The purchase price is €28,000; the real cost borne is €42,540, 52 % more. Depreciation (39 %) and fuel (23 %) account for nearly two thirds of the total.

And if it is a company car?

If the employee may use it privately, the company additionally bears employer contributions on the benefit in kind. For a purchased vehicle made available since 1 February 2025, the flat rate is 15 % of the purchase price including tax without fuel, 20 % with fuel covered. On our example: 15 % × 28,000 = €4,200 a year; at a 42 % employer contribution rate (assumption), the additional employer cost is about €1,764 a year, or €7,056 over 4 years, bringing the TCO close to €49,600. The detail is in our article on the vehicle benefit in kind, and the benefit-in-kind calculator does the arithmetic.

The 2026 French tax rates to build into TCO

The company vehicle tax has been replaced by two annual taxes on the use of passenger vehicles for economic purposes, codified in the French code of taxes on goods and services. Our article on the annual taxes on vehicle use covers the exemptions.

Annual CO2 tax (2026 WLTP scale)

Emissions band (g CO2/km)	Marginal rate per gram
Up to 4	€0
5 to 45	€1
46 to 53	€2
54 to 85	€3
86 to 105	€4
106 to 125	€10
126 to 145	€50
146 to 165	€60
From 166	€65

Source: articles L. 421-119 and following of the CIBS on Légifrance, commented on in the BOFiP, BOI-AIS-MOB-10-30-20.

The scale is progressive by band: a vehicle at 100 g/km pays €213, at 120 g/km €383, at 150 g/km €1,733. Fully electric and hydrogen vehicles are exempt; hybrids have had no exemption since 2025 and are taxed on their actual emissions. Only E85 superethanol vehicles keep a 40 % allowance on their emissions, provided they stay below 250 g/km (Service Public Entreprendre).

Annual air pollutant tax

Category	Vehicles	Annual rate
E	Electric, hydrogen	€0
1	Petrol, hybrid and gas Euro 5 and 6 (Crit'Air 1)	€130
Most polluting	Diesel, Crit'Air 2 to 5 and unclassified	€650

These rates come from the 2026 finance act; they were €100 and €500 before. They are codified in articles L. 421-133 to L. 421-144 of the CIBS.

Registration penalties in 2026

• CO2 penalty: triggered at 108 g/km WLTP (€50), €310 at 120 g/km, capped at €80,000 above 191 g/km (French Ministry for Ecological Transition).

• Weight penalty: from 1,500 kg, a threshold lowered by 100 kg on 1 January 2026; from €10/kg between 1,500 and 1,699 kg to €30/kg above 2,000 kg. Electric and hydrogen vehicles are exempt, plug-in hybrids get a 200 kg allowance.

Recoverable VAT

On a passenger vehicle, VAT is recoverable neither on the purchase nor on the lease payments; on fuel it is recoverable at 80 % for petrol and diesel, and at 100 % for electricity (BOFiP, BOI-TVA-DED-30-30-40). On a commercial vehicle, it is fully recoverable on purchase, lease and fuel. That single difference changes the TCO of the same model by 15 to 20 % depending on whether it is registered as a passenger or a commercial vehicle — a distinction that appears on the registration document.

Combustion or electric: which costs less over 4 years?

Same use, 48 months and 100,000 km, with an equivalent compact electric SUV. Assumptions: €38,000 purchase price including tax, 35 % residual value, 17 kWh/100 km, charging 70 % on site at €0.20/kWh and 30 % on public chargers at €0.45/kWh, maintenance €0.03/km, insurance €950/year, registration at €0 — since 1 May 2025 each French region chooses between full exemption, a 50 % reduction or the full rate, so adjust for your region. No purchase incentive is counted.

Item (4 years, 100,000 km)	Petrol SUV	Electric SUV
Depreciation	€16,800	€24,700
Financing	€2,300	€3,100
Energy net of VAT	€9,858	€3,896
Maintenance and repairs	€4,500	€3,000
Tyres	€1,000	€1,200
Insurance	€3,600	€3,800
Annual taxes	€2,142	€0
Penalties and registration	€660	€0
Administration	€1,680	€1,680
TCO over 4 years	€42,540	€41,376
Cost per kilometre	€0.425/km	€0.414/km

On equal assumptions, electric comes out slightly cheaper over 4 years even though its purchase price is €10,000 higher. The result swings on three variables: residual value — the most uncertain item on electric —, the share of public charging (above roughly 65 % public charging, the gap reverses) and annual mileage (below roughly 21,000 km a year, with unchanged residual values, combustion regains the advantage). If the vehicle is a company car, the 70 % allowance on the benefit in kind for electric vehicles, capped at €4,641.60 and subject to a minimum eco-score, widens the gap further. The electric vehicle optimisation module tests these scenarios against the fleet's real journeys.

Six levers to reduce fleet TCO

1. Choose on cost per kilometre, not on the lease payment. A model €30 a month dearer but 1 l/100 km more frugal wins beyond roughly 21,000 km a year (at €1.75/l).

2. Adjust the holding duration and mileage. Going from 36 to 48 months often lowers monthly depreciation; beyond 150,000 km, maintenance rises again.

3. Cut consumption through eco-driving and telematics. A 10 % reduction is worth about €1,000 on our example. Driver performance tracking makes the differences objective.

4. Move from corrective to preventive maintenance. Servicing on time costs less than breakdowns and downtime.

5. Electrify the right use cases. Predictable journeys, return to depot, on-site charging: that is where electric TCO is most favourable, and taxation penalises combustion a little more each year.

6. Automate administration and VAT recovery. Time spent on registration documents, fines and invoice reconciliation is a real cost; unclaimed VAT on fuel is another.

Common mistakes in TCO calculation

• Forgetting depreciation because the vehicle is "already paid for". It is the largest item.

• Comparing a lease payment to a TCO: the payment includes neither energy, nor taxes, nor return charges.

• Using manufacturer consumption instead of real consumption, often 15 to 25 % higher.

• Applying the wrong recoverable VAT rate for the vehicle's registration type.

• Neglecting the benefit in kind on company cars, which can represent 15 % of TCO.

• Reasoning in fleet averages: decisions to renew, reassign or electrify are taken at vehicle level.

• Calculating once a year in a spreadsheet: TCO is a living indicator, fed by invoices and mileage as they arrive.

Calculate your fleet's TCO

For a first estimate, Dadycar provides an online TCO calculator, and a TCO workbook in Excel format built for the French market and its taxation, in its template library.

How Dadycar helps

Dadycar calculates each vehicle's TCO continuously from the fleet's real data: acquisition costs or lease payments entered at contract level, fuel card transactions, expenses recorded with their VAT, maintenance work, claims, and mileage entered manually or fed in by telematics. Custom reports help track average TCO per vehicle and its trend against the target you set, filtered by site and period. Data is hosted in France by OVHcloud.

Frequently asked questions

How do you calculate a company vehicle's TCO?

Over a given period and mileage, add up depreciation or lease payments, interest, energy net of recoverable VAT, maintenance, tyres, insurance, taxation and administration. Divide by the number of months for monthly TCO, by the kilometres for cost per kilometre.

What is the average TCO of a company car in France?

There is no official average. On our assumptions, a compact petrol SUV driven 25,000 km a year works out at about €886 a month, or €0.425/km, excluding benefit in kind. A high-mileage diesel van or an executive saloon diverge sharply. The only useful TCO is the one calculated on your own vehicles.

Is an electric vehicle's TCO lower than a combustion one's?

Often yes over 4 years and 100,000 km, despite a higher purchase price, thanks to cheaper energy with fully recoverable VAT, reduced maintenance and exemption from the annual taxes and the penalty. The result depends on residual value, the share of public charging and annual mileage: below roughly 21,000 km a year, combustion can become cheaper again.

Which taxes replaced the French company vehicle tax in 2026?

Two annual taxes on the use of passenger vehicles for economic purposes: the CO2 emissions tax, progressive per WLTP gram from €1 to €65, and the air pollutant tax — €0 for electric, €130 in Crit'Air category 1, €650 for the rest.

Should the benefit in kind be included in TCO?

Yes, whenever the vehicle may be used privately. The company pays employer contributions on that benefit — a flat rate of 15 % of the purchase price or 50 % of the lease cost since 1 February 2025, with a 70 % allowance for eligible electric vehicles. On a combustion company car, that commonly represents 10 to 15 % of TCO.

What is the difference between TCO and cost per kilometre?

TCO is the total cost over the holding period; cost per kilometre is that TCO divided by the kilometres driven. Cost per kilometre compares vehicles with different usage patterns; monthly TCO serves the budget. Both are calculated over the same duration/mileage pair.