July 15, 2024

How much does an electric car cost? Why switching to an EV can save you money, from cheap charging to road tax

11 min read
How much does an electric car cost? Why switching to an EV can save you money, from cheap charging to road tax

With the cost of petrol soaring and the potential benefit to the environment becoming ever more apparent, electric vehicles (EVs) are becoming an increasingly attractive option for many drivers.

Registrations of new battery EVs grew at a record rate of 49.9 per cent in the past year, according to the Society of Motor Manufacturers and Traders (SMMT), even as the car market lagged due to supply issues. One in 10 new cars sold is now powered by electricity rather than fossil fuel, up from just one in 100 in 2015.

That uptake is only likely to increase as the Government’s 2030 ban on sales of new petrol and diesel vehicles looms. A poll of drivers by Moneysupermarket found that of those considering a new vehicle this year, 28 per cent were thinking of buying an electric car and 27 per cent were considering a hybrid.

But EVs are generally more expensive than their equivalents: as of August 2022, the UK’s most popular car model (according to SMMT data), the Vauxhall Corsa, would set you back £17,330 for a petrol model, against £27,055 for the Corsa-e.

With the closing of the Government’s plug-in grant, which used to pay £1,500 towards the cost of a new electric car, there is little help available to help foot the cost of a new vehicle – except for those buying vans or cars that will be used as taxis.

There is, however, a growing market for used EVs. A 10-year-old Nissan Leaf starts at about £7,000, compared to a ticket price of around £26,000 for a new one – though it may not be as efficient on the road.

Best-value EVs

The Nissan Leaf, the MG5 Long Range Excite and the Mini Electric Level 1 are among the best-value EVs on the market, according to research. 

The EV Cost Index, published by LV=General Insurance, examined the total costs for 13 popular EV models, both via outright purchase and via financing, and plotted them alongside the running costs of their petrol or diesel equivalents.

LV=’s findings show the Leaf, MG5, and Mini Electric worked out cheaper than their petrol equivalents, whether bought outright, leased or taken via PCP finance.

In addition, over a seven-year timeframe, all 13 EV models worked out cheaper than the equivalent petrol model if bought outright – even though the average upfront cost of an EV was £32,683, just under £7,000 more than the average petrol or diesel car at £25,685.

Smooth running

For many, the attraction of driving an EV will be in its running costs. Overall, the running costs of an average EV come out at £1,147.21 annually, compared to £2,201.58 for a petrol car, according to analysis of the most popular EV models by LV=General Insurance.

Even as the cost of heating and powering our homes increases, the price of charging up a car battery will still be far cheaper than filling a tank with petrol, says Gill Nowell, head of EV communications at electric car leasing firm ElectriX.

“Despite the upfront sticker price of an electric car being higher than the equivalent petrol or diesel car, it pays to look at all the costs involved,” she adds.

The cost of charging your electric car depends on how and where you charge it. Fully charging an electric car at home costs about £15.10, based on a typical electric car with a 60 kilowatt hour (kWh) battery and range of around 200 miles, at an average cost of 28p per kWh, according to data compiled by i.

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This compares to a low-end cost of £29.45 for the same 200-mile journey, based on the typical fuel efficiency of a new car bought in 2020 – 52.6mpg – and the average cost of a litre of petrol at the end of August – 170.4p. Fuel price fluctuations could also see the cost of that journey range from £26 to £34.

That said, with the energy price cap set to rise £1,971 to £3,549 starting in October – and predicted to reach as high as £7,700 from April 2023 – the cost of charging your EV will increase accordingly.

“Charging from home used to be a safe way to guarantee lower running costs. Unfortunately, this is no longer always the case,” warns Emily Seymour, Which? sustainability editor.

“The new price cap from 1 October will mean some cars are more expensive to charge than they would be to fill with petrol or diesel. There are still tax and maintenance savings, but these have been eroded by the rising price of electricity.”

For those who prefer to charge outside of the home, costs vary wildly. While some places like shopping centres or supermarkets may give away power for free to customers, some charging stations charge about £1.50 an hour for a “slow charge”. Rapid points can charge double that, while others vary according to the amount of electricity used, or the time spent charging.

According to charge point operator Pod Point, the charging costs for the same typical EV with a 60kWh battery and 200-mile range would amount to £6.50 for a 30-minute, 100-mile charge.

The cost of the price cap increase is also filtering through to public charging points: in August, Instavolt increased its prices for the fourth time in 10 months, from 57p to 66p per kWh – a rise of 16 per cent. Shell also increased its prices across its charging network to 65p per kWh for its ultra-rapid chargers, up from 49p per kWh this year. It amounts to a price increase of 32 per cent.

The RAC estimates that the cost of a full home charge for an EV with a 64kWh battery – such as a Kia e-Niro – will be £33.80 under the new cap.

Another sticking point is the cost of insurance, which is slightly more expensive for EVs than for conventional combustion engine cars. This is largely due to the higher costs of replacing expensive electric components, though these costs are expected to come down as more EVs take to the road and the market to repair them becomes more competitive.

‘We took the plunge and replaced our family cars’

Shilpen Patel and his family

Shilpen Patel, 38, IT professional

“When we replaced our family cars two years ago, my wife and I bought a Nissan Leaf and a Kia E-Nero. Though there was a big push from dealers to get a hybrid or diesel vehicle, I read about EVs being cheaper. After taking the plunge, I can say that they are.

“We were spending about £2,000 a year on petrol and diesel to drive a total of 10,000 miles. Now it costs us less than £300 a year to charge both EVs to drive more miles. We are on a smart tariff with our energy supplier: we just charge our cars overnight.

“I don’t have to waste time at the petrol station. We don’t have to plan journeys either, given the cars’ range and the number of charging stations. Usually it’s us that need to stop first!

“Maintenance is also cheaper: we had both vehicles serviced twice, and it cost me £120 each year. It would be a lot more for a petrol or diesel car.

“The biggest draw was the potential saving across the total cost of ownership. The initial cost was higher, but buying them on finance means we made up the difference almost straight away.”

Electric perks

There are other financial benefits, however: EV owners are not required to pay road tax – vehicle excise duty – and do not have to pay the congestion charge when driving in central London, for example.

Compare this with the costs for fossil fuel-powered vehicles, who must pay at least £165 a year in road tax, with an additional cost of £355 applicable to those whose cars have a list price of more than £40,000. Owners of hybrid cars must also pay £150 a year, after 12 months of being exempt from road tax.

If you use your EV for travelling to and from work, you can also still claim mileage back through ­HMRC’s approved mileage allowance payments scheme, as with diesel or ­petrol cars. But before deciding to buy an EV it is important to check right at the outset that it will save you money in the long term.

“Be sure to check how efficient an EV is before buying – as some use a lot more power than others, which could cost you more,” says Ms Seymour, who advises checking best-buy lists and resources such as the Electric Vehicle Database or the Energy Saving Trust’s comparison tool, which allow users to rank various models by their efficiency or “price per range”. At the moment, Hyundai’s new IONIQ 6 model, due to come to the UK market in 2023, ranks highest.

In total, running costs will work out cheaper for EV owners. Insurer Direct Line estimates that the average annual saving for drivers is £107, based on total EV costs of £3,752 a year over the course of its life, compared to £3,858 for a petrol car.

Rent to save

If the cost of a new EV is still too much to stomach, there are several rental services that may provide a more cost-effective route to getting on the road.

Services such as those provided by Onto, Elmo or Octopus EV charge users a monthly subscription fee to give them private access to an EV, including comprehensive insurance, breakdown cover and road tax.

Some include access to public charging points around the country, while others offer ways of paying to install your own home charging point. Others will charge one-off fees for the delivery of your vehicle, pick-ups for repairs or admin fees.

For example, Onto offers a Renault Zoe GT Line+ for £499 a month, which includes 750 miles of journeys, insurance and breakdown, free charging via BP, Instavolt and Shell’s networks, maintenance, and servicing. This compares to a cost of around £740 for the same vehicle on a leasing contract.

Another advantage over leasing is that subscription services generally have terms that are more flexible, with many only requiring a commitment of one month, compared to what is generally at least a year or even two when leasing. Lease deals also often charge a hefty deposit or a first monthly payment to be held on account.

‘I was weighing up whether to buy a car that might only last six years’

Ron Godfrey switched to an electric vehicle

Ron Godfrey, 60, business consultant from Hertfordshire

“Before I switched to electric, I was driving a 19-year-old Mercedes S500 that I’d bought off eBay for £4,000 without even seeing it. It had been a good car but I was waiting for the next big repair bill. And with the price of parts as they are for a Mercedes, it was going to be at least £1,000.

“I spotted an advert for the Onto subscription model and was intrigued. I had been wondering about what to do about the next car – weighing up whether to spend £5,000 or £10,000 on something that might only last six years. Onto seemed well priced, once you took an MOT, breakdown membership, insurance and repairs into account. Plus there was no upfront deposit to think about.”

Cheap charging

Once you have an EV, there are plenty of other ways to save even more money. As previously mentioned, there are a number of free charging points around the country that can help keep the cost of running your vehicle far cheaper.

“The app Zap-Map helps EV drivers find nearby charge points. Try filtering the results by ‘free to use’,” says Ms Seymour. “Typically, these belong to businesses – ie supermarkets – and you have to be a customer, but if you’re going to do your shopping it’s worth checking if they have a free to use charger.”

Another useful app is Pod Point, which runs a network of over 1,700 public charging points which are universally compatible with EVs.

“Many of these charging points are free to use, which can save you money in the long run,” says Vince Pemberton, chief executive officer at Rivervale Leasing. “The best way to find your nearest Pod Point public charging station is through their app, and there are no membership fees.”

Mr Pemberton adds that another good option is the BP Pulse subscription, which charges a monthly fee of £7.85 for a “pay as you go” charging service that offers free charging for loyal customers.

Another solution can be community charging, or peer-to-peer charging projects, she adds. These allow EV charger owners to “host” other nearby drivers, allowing them to use their charging points. There are several networks that list available points, including Bookmycharge, Co Charger and JustCharge, which typically charge guests at rate of about 20p per kWh.

And while the Government no longer helps with the initial cost of a vehicle, the EV Chargepoint Grant lets you reclaim up to 75 per cent of the cost and installation of a smart chargebox at your property, capped at £350 and provided it has off-street parking. The grant can cover up to two charging stations at the same property if you have multiple vehicles. There is also the Workplace Charging Scheme for commercial premises.

Another way to reduce your bill is to sign up to a specialist energy tariff that will offer cheaper energy as long as you recharge your battery in a low-cost window, for example overnight.

According to electric motoring comparison site Rightcharge, there are currently five firms that offer specialist EV tariffs – Octopus, EDF, British Gas, Ecotricity and Ovo – with off-peak charging from as little as 7.5p per kWh, alongside a daily “standing charge” starting at about 30p (or £109.50 a year).

It is worth researching the tariffs offered by these providers, however, as a cheap off-peak rate may be offset by higher daytime rates and standing charges. Factoring in realistic figures about your daily energy use can be vital. These costs can also be offset by using solar or a home battery.

Tips: How to save money while you drive

Drive smartly

Driving at lower speeds, with less harsh accelerating and braking, will make an enormous difference to your mileage in the long run. As with traditional cars, turning off your air conditioning or heated seats will also reduce your consumption, so long as it’s comfortable to do so.

Use “recuperation mode”

Many EVs feature regenerative breaking, which transforms some of the energy wasted when slowing down your vehicle into battery charge. Some even offer a “one-pedal driving” mode that lets you control your speed with just the accelerator. Using this will add several miles to your effective range while requiring just a small shift in driving style.

Keep your battery healthy

Lithium batteries, used throughout the EV range, work best when kept cool and perform poorly when overheated. Avoid charging at the hottest times of day and store your car in a garage or even just in the shade when it’s very hot to extend its battery life. The first and last parts of the battery also take the most energy to fully charge, so avoid running it empty and consider setting your charge to stop at 80 per cent, so long as you do not need the range for your next journey.

Go solar

If you charge your EV at home in the day, a solar panel will give you access to the cleanest and cheapest energy on the market. With the price of panels dropping considerably, and installation can quickly pay for itself in as little as four years, according to the climate website Carbon Brief.

Maintenance is key

As with any piece of complicated machinery, keeping your EV in good working order will help to make the likelihood of an expensive repair job low. Basic tasks like checking tyre pressure can help to extend your range significantly, too.

More on Electric Cars

https://inews.co.uk/inews-lifestyle/money/motoring/electric-car-how-much-cost-switch-ev-save-money-cheap-charging-road-tax-1828915

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