[ZeroGravitas]

One slightly related topic:

How is depreciation for cars calculated correctly when the dealers are adding this random markup and/or cross subsidizing finance deals?

I originally started thinking about this due to stories about EV depreciation that make no mention of $8k plus federal/state subsidies that the buyer received.

Is it as simple as some average second hand price vs MRSP?

[qazxcvbnmlp]

Depreciation is a way to allocate the cost of a physical asset over it’s useful life.

So in this case, the cost is whatever you pay after credits / markups / etc. MSRP (Manufacturer Suggested Retail Price) doesn’t really matter - the cost to you is what you paid for it.

And then the value after using the car for sometime is whatever you could sell it for at that time.

So I get EV for $50k after credits.

I drive for 1 year and sell for $40k, then I would have $10k in depreciation.

If your goal is to understand how much of money you are actually spending that’s it.

Sometimes you want to play games for tax / accounting purposes. Then depreciation becomes this funny made up number that is a mix of depreciation rules and what works well for you. Eg most of the cars value is lost in years 1-3 but I might ‘take’ an even amount of depreciation over 5 years.