How much can I save by getting an electric car?
Are you thinking of getting a new car and you’re not sure whether you should stay with the petrol and diesel vehicles you know so well, or whether you should start a new EV adventure that so many rave about?
We want to try and make your decision easier. Most people realise the environmental advantages of choosing electric over ICE (Internal Combustion Engine) cars, but have they also come to terms with the economic benefits?
We put together a breakdown of how much you can expect to save over five years if you drive an electric car.
Cost of the vehicle:
Yes, generally speaking, electric cars may require a higher investment at the very start - electric vehicles can be more expensive to buy than ICE cars. The elevated price usually derives from the lithium battery they use. However, as the battery sizes decrease, the cost of electric cars is also decreasing. In 2015, the battery made up 57% of the cost of a midsize electric car in the US. This year it makes 33%, and by 2025 it is expected to make up just around 20% of the overall cost.
If the cost of the EV is too far out of your budget, consider having a look at the used market. As EV ownership increases (the sales of new electric vehicles has increased by 125% in the last year) and the public starts to realise the advantages of electric mobility, the used market is bound to being increasingly populated by previously-loved electric vehicles at a reduced, affordable price.
The government gives manufacturers and dealers a grant so they can discount the price of electric cars. This discount is already reflected in the price of the car. Cars which produce less than 50g of CO2 per km and can travel at least 112km without any emissions can receive the maximum grant of £3,500. This includes cars such as the Nissan LEAF, the Peugeot iOn and the Tesla Model S.
Cost of charging:
Under the Electric Vehicle Homecharge Scheme, the government also provides funding of up to 75% towards the cost of installing a charge point at home.
Cars which produce less than 50g of CO2 per km and can travel at least 16km without any emissions are not eligible for a grant, but they can get up to £500 towards the cost of installing a charger at home. The same applies to cars which produce 50g to 75g of CO2 per km and can travel at least 32km without any emissions.
Assuming you are able to do most of your charging at home, you could save £1,100 in fuel per year. That makes the total savings over 5 years at £5,500.
On-street charging is generally more expensive than home charging, but the savings remain substantial even if you cannot charge at your domestic rate.
Taxes and exemptions:
The amount a car’s road tax costs depends on when it was first registered and it can depend on the engine size, or on the car’s official CO2 emissions, or – for vehicles registered on or after 1 April 2017, the rate paid in the first year is based on CO2 emissions and then a flat standard rate of £145 per year applies.
Electric Vehicles priced at less than £40,000 are exempt from Road Tax. If you switched to an electric vehicle, you could save over £700 in five years’ time – just in road tax.
Depending on where you live, there might be other types of tax relief for electric vehicle. If you live in London, for example, you won’t have to worry about paying the Congestion Charge or ULEZ, saving you £11.50 (CC), £12.50 (ULEZ) or £24 (if you travel through both) daily.
From April 2020, the rate for benefit-in-kind tax (BIK) for 2020/2021 will be zero if you are a fleet operator or company car driver choosing or switching to an electric vehicle.
Savings over 5 years vary significantly depending on how often you cross these taxed areas. If you had to pay for the CC just once a week for 5 years, you would pay a total of £3250 – that is over £3k saved just in Congestion Charge.
Cost of maintenance:
If you switch from an ICE to an electric vehicle, you’ll most likely also save money on your MOT, servicing and maintenance in general. Electric vehicles have fewer moving parts than internal combustion engine cars, which means that there are simply less elements to be serviced. British Gas estimates a minimum of 25% savings. Servicing an electric vehicle is likely to be around £120-£150 against an average of £200 for a petrol equivalent.
So, when you’re thinking of buying a new car, but you think electric vehicles might still be too expensive, take some time to do your own considerations to work out exactly how much an EV would save you compared to a petrol or diesel vehicle. You might be surprised!
Let us know how much you were able to save by switching to an electric vehicle, or the reasons why you still aren’t persuaded to make the change. You can share and comment this article by using the buttons below.