Electric Vehicle Costs
The costs of owning an electric car are very different than those associated with a conventional vehicle. Upfront capital costs (purchase price) tend to be higher than for petrol and diesel cars, whereas running costs (fuel, maintenance, car tax) tend to be lower.
Cost of buying an electric car
Electric vehicles are more expensive to buy than their petrol or diesel equivalents. Typically for new cars, the price is increased by up to 80% (i.e. almost double) in cases where the battery is purchased outright.
However, from January 2011, the Plug-in Car Grant subsidises the purchase of qualifying battery electric and plug-in hybrid cars worth 25% of the cost of the vehicle up to a maximum of £5,000.
The models that qualify for the Grant currently include nine electric and plug-in hybrid cars.
To be eligible under the grant scheme vehicles must satisfy demanding criteria including:
*Only new cars are eligible; including pre-registration conversions (cars converted to battery or hybrid versions before first registration).
*Tailpipe vehicles emissions must be 75 gCO2/km or less.
*Electric vehicles (EVs) must have a range of at least 70 miles.
*Plug-in hybrid EVs (PHEVs) must have an electric range of at least 10 miles.
*Vehicles must be able to reach a speed of at least 60 mph.
Both private car buyers and fleets are eligible to receive the new grant, which is administered by the Office for Low Emission Vehicles (OLEV) – no applications forms are required as the dealership completes all the necessary paperwork on the buyer's behalf and the grant is automatically deducted from the vehicle price at the point of purchase.
New electric cars such as the Nissan LEAF are now priced at around £25,000 (including the Plug-in Car Grant). That said, a recent report by LowCVP clearly shows that (on average) electric cars will continue to have higher whole life costs at least until 2030.
Additional costs are also incurred by electric vehicle users who install recharging equipment. While standard 13 A 3-pin sockets can be used for most electric cars, installation costs for a circuit protected 'slow' charging point cost around £250-£1000, depending on the difficulty of installation. Fully installed 'fast' and 'rapid' charging points cost between £5,000-£20,000 per point (depending on whether an on-board or off-board fast-charging system is used).
As electric vehicles tend to have a high purchase price but low running costs, leasing may be a better proposition – indeed, some models (or battery packs) are only available on lease for this very reason. Also, leasing removes some of the uncertainty about the resale value after 3-4 years – although this uncertainty is reflected in the leasing prices which tend to be higher than for similar conventional cars.
FAQ: The Nissan Leaf is priced FROM £24,000 – that sounds horribly expensive for what is essentially a small hatch. I assume the industry expects only devout eco warriors and the well-heeled for next few years...
Yes, the first owners of EVs are more likely to be well-off and have more than one car. However, having environmental concerns is less important than you might expect – early adopters are more likely to be pro-technology and want to get their hands on the latest cutting-edge gizmos. More Apple Mac owner than tepee dweller. The truth is that its companies that are going to buy more EVs than private buyers – in the first tranche of 100 or so Plug-in Car Grant applications, only 4 were from private buyers.
Electric car running costs
Three significant incentives significantly reduce the costs of running an electric car.
- Zero-rated car tax (Vehicle Excise Duty)
- Zero-rated fuel tax (electricity only attracts 5% VAT)
- Greener Vehicle Discount on Congestion Charge
While electric vehicles may be expensive to buy or lease, electric cars and vans are exempt from Vehicle Excise Duty ('car tax'). Owners of electric vehicles will therefore save around £130 per year compared to an average conventional petrol or diesel car (VED Band F).
Fuel costs are also very low due to the competitive price of electricity (fuel duty is zero-rated) and to the high efficiency of the vehicles themselves – fuel costs can be as low as 2p per mile (depending on tariff). For an annual mileage of around 10,000 miles per year, switching from a conventional to an electric car or van could save you around £800 in fuel costs alone.
For drivers in and around London, the other major running cost to consider is the Congestion Charge. All electric cars currently receive the full Greener Vehicle Discount on the London Congestion Charge (although vehicles need to be registered and pay an annual £10 fee). With a £10 payable daily charge, this could provide a potential annual saving of over £2000.
FAQ: I need a car for work and family and drive approx 10-12k miles p.a. Does it make more economic sense for me to buy a diesel, hybrid or electric car at the moment?
As a general rule, the cost differential scales with the level of electrification; from around a 10% premium for a hybrid (relatively small battery), 30%+ for a plug-in hybrid (assuming a 20 mile electric range), to 70% more for a pure battery electric car. On the plus side, fuel costs for EVs are significantly less (by around 80%), due to electricity not being taxed as a transport fuel. However, as depreciation rates are high due to uncertainty of the battery life, for most drivers, overall expect whole life costs to be higher for battery electrics.
The exception is if you have to regularly drive within the London Congestion Charge Zone – as electric cars receive the full 100% Green Vehicle Discount, it could be to your financial advantage to go electric.
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