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, the Plug-in Car and Van Grant subsidises the purchase of eligible cars by 25% of the cost of the vehicle up to a maximum of £5,000; for vans, the amount is up to 20% up to a maximum of £8,000.
The models that qualify for the Grant currently include nineteen electric and plug-in hybrid vehicles.
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 £16,500 (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 can also be incurred by electric vehicle users who install recharging equipment. While a standard 13 A 3-pin socket will suffice, most electric cars owners will opt for a dedicated charging unit. Current Government incentives that cover up to 75% of purchase and installation cost mean basic slow units (up to 3 kW) are often available free-of-charge with faster (up to 7kW) units available for around £100.
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.
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)
- Ultra Low Emission Discount Scheme (ULED)
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 £145 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 3p 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 eligible for the Ultra Low Emission Discount Scheme on the London Congestion Charge (although vehicles need to be registered and pay an annual £10 fee). With a £11.50 payable daily charge, this could provide a potential annual saving of over £2000.