Can an electric car really cut your living costs?

Electric vehicles are the biggest technological shift since the dawn of motoring and could also be the fastest to take hold. The final new non-hybrid cars will leave UK showrooms in 2029 and hybrids will be phased out five years later as the government aims for net-zero CO2 emissions by 2050, but momentum is already growing.

Consumers have never been more aware of climate change, and a quarter of the UK’s greenhouse gas emissions come from road transport with cars as the biggest contributor Link opens in a new window. Meanwhile, this summer’s record high fuel prices have driven up the cost of motoring, which already accounted for one in every seven pounds Link opens in a new window spent by the average household.

Factor in flexible post-pandemic commuting patterns and a wider choice of vehicles, and it’s hardly surprising that the market is booming. In the two years since the first Covid-19 lockdown in March 2020, the UK’s electric car population quadrupled Link opens in a new window to 435,570 vehicles, and new registrations are now almost 50% more likely to run on electricity Link opens in a new window than diesel.

If you’re wondering what all that costs, you’re not alone. We’ve looked at the advantages of electric cars below and suggested some hacks to make that transition more affordable.

How much does an electric car cost to buy?

Manufacturers are pouring billions into electric vehicles, and prices have fallen significantly over the last decade. This is largely due to the cost of their most expensive component, the battery pack, shrinking by 89% Link opens in a new window between 2010 and 2021. However, buying an electric car outright is still more expensive than opting for a petrol or diesel model.

There are two main reasons for this. Consumers are demanding larger batteries and longer ranges, and electric vehicles tend to be more generously equipped. Even so, the electric vs petrol car price gap is closing – the MG4 electric hatchback, for example, offers a 218-mile range and starts at £25,995. That’s competitive with a Volkswagen Golf.

List prices also don’t tell the full story. Most new cars are funded through Personal Contract Purchase (PCP, where the car is registered to you) or Personal Contract Hire (PCH, where you rent it from a leasing company) and monthly payments reflect the depreciation cost over a three or four-year contract. Electric cars tend to retain more of their value than petrol or diesel models, so the monthly price premium could be less than a tank of fuel.

How does the cost of charging compare to buying fuel?

Going electric means getting used to some new terminology. Whether you’re at home or on the road, you’ll pay for electricity by the kilowatt-hour (kWh). Costs have shot up recently as energy has become more expensive and can vary enormously, so it’s worth looking out for the best rates.

If you can charge at home, then this is typically the cheapest place to plug in. For households that aren’t on fixed-rate tariffs, the government has capped electricity costs Link opens in a new window at 34p/kWh until April 2023, which means the cost of charging an electric car at home is roughly £45-£50 per month less than you’d spend on fuel (based on 10,000 miles per year).

The cost of charging in public has also rocketed as the businesses operating them don’t have capped energy rates, so drivers who can’t plug in at home miss out on some of those cost savings. Tariffs for the fastest ‘rapid’ chargers are typically at least 50p/kWh, though that’s still slightly cheaper per mile than fuel, and a handful of locations still offer free charging which can help balance that out. Zap-Map Link opens in a new window has a filter to help you find them.

How much does an electric car cost to run?

Despite the cutting-edge technology, electric vehicles are simple to maintain. Electric motors have a handful of moving parts and no clutch, exhaust, belts, spark plugs or oil changes to worry about. Meanwhile, batteries are designed to last as the vehicle’s lifespan without significant degrading and usually warrantied for much longer than a combustion engine.

Annual servicing includes safety checks, software upgrades and consumables, such as screenwash, brake fluid and cabin air filters. MoTs are mandatory after three years but there’s no emissions test to fail and, although their extra weight can cause faster tyre and suspension wear, regenerative braking (using the motor to slow down) means discs and pads last longer. Vauxhall claims £20 per-month average servicing and maintenance costs for its electric Corsa-e over a four-year lifespan, compared to £34 for a petrol Corsa.

Insurance costs are similar. Price aggregator, MoneySupermarket, says the average electric car premium cost £1,097 this year – compared to £1,087 for petrol and £1,119 for diesel. However, it is worth finding a specialist policy which includes cover for charging cables.

Is there any financial support available to make electric cars cheaper?

One downside of rising electric vehicle demand is incentives have been wound back recently. The £1,500 Plug-in Car Grant was withdrawn in June, while the £350 grant for domestic chargepoints is now focused on shared and rented properties – homeowners in houses and bungalows are no longer eligible.

Grant funding of up to £2,500 (or 35% of the price) is still available for wheelchair-accessible electric vehicles, while Transport Scotland offers five-year interest-free loans of up to £30,000 for used electric cars. Sadly, the latter isn’t available elsewhere.

In-uses savings are more generous. Electric cars qualify for zero-rate vehicle excise duty (or ‘road tax’) which saves £165 per year, or £520 for models priced at £40,000 or more. They are also exempt from London £20-per-day Ultra-Low Emission Zone and, uniquely, the £15-per-day Congestion Charge. This can add up quickly if you live in the capital.

So, can an electric car really save you money?

Yes. Despite spiralling energy prices and waning purchase incentives, electric cars can help cut both your living costs and your environmental footprint. However, there are some important considerations if you want to maximise their money-saving potential:

• Electric cars are usually more expensive to buy. Prices have fallen significantly over the last decade, but you’ll typically still pay more for an electric car. Opting for PCP or PCH instead of getting a loan to buy the car outright can help bring monthly payments closer to a petrol or diesel model, which means there’s less to offset elsewhere.
• Extra range can cost more than you think. Batteries are the heaviest, most expensive component of an electric vehicle, so a larger, longer-range pack can affect efficiency, increase wear and tear, and push up the price of the car itself. Choose a model that fits your typical day-to-day journeys – there are plenty of places to plug in when you need to go further.
• Reduced fuel bills offer the biggest saving. Home energy costs are fixed until April 2023, at a level that means electricity is still the cheapest fuel. By switching to a tariff with low off-peak rates and plugging in overnight, you save more than £100 per month compared to petrol or diesel. Public chargepoints are pricier, so the savings are lower if you can’t plug in at home, but apps such as Zap-Map can help find the cheapest (or free) charging spots nearby.
• Sustainability saves money too. With a focus on encouraging greener travel, electric vehicles qualify for free ‘road tax’, discounted parking in some cities and exemption from the London Congestion Charge. There are fewer consumables to replace so servicing is cheaper (and less wasteful), and some leasing companies offer PCH deals with maintenance included to keep your monthly outgoings predictable.

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