One of the biggest concerns when buying or leasing a new car is running costs. Most of us don’t want to spend more money on running a car than is necessary: we all have better things to do with our cash than spending it on fuel that is burned up in an engine.
Don’t be put off by the higher purchase price of electric vehicles (EV), though: the good news is that once you’ve taken the leap and bought an EV, ongoing running costs are lower than those associated with a car fitted with a petrol- or diesel-guzzling internal combustion engine (ICE).
Electric car charging costs
When running a car, the biggest cost is the fuel that keeps the car going. Regular trips to a petrol station will see us handing over anything from £50 to £120 to fill up our car – and fuel prices are on the rise, with little chance of them falling anytime soon.
For an EV, if you have off-street parking and can fit a charger on the outside of your house, the electricity costs whatever you pay under your standard domestic tariff. This means you should be paying around 17.2p per kWh (at late 2021 prices). If you have a 60kWh battery, that means you’re paying around £10 for a full charge. When was the last time it cost you a tenner to fill a car with petrol or diesel?
If you don’t have access to a charger at home or at a workplace, and have to rely on public charging, it does make running an EV more expensive, as you’ll be paying between 24p and 69p (for the ultra-fast rapid chargers) per kWh. For occasional top-ups on long journeys, that isn’t too bad, but if you permanently have to rely on public charging, it does reduce the difference in fuel costs between and EV and an ICE car.
Electric car tax
In the UK, the government levies a tax on car ownership that is based on the official level of carbon dioxide (CO2) that a car emits (new cars are tested independently to arrive at the figure, which is expressed in grams of CO2 per kilometre travelled, or g/km). The more CO2 a car emits, the more expensive it is to tax a car.
But as EVs don’t emit any CO2 when they’re running, they are exempt from paying this car tax (officially called Vehicle Excise Duty). This means that EV owners can save from £115 to £2,245 in the first year and £155 for subsequent years. Even if you have a small city car with a 1.0-litre petrol engine, you’ll still save at least £425 over the first three years if you switch to an EV. It’s not a huge amount of money, compared to the cost of a car, but every little helps.
Electric car Congestion Charges and ULEZ
Entering central London’s Congestion Charge costs the owners of petrol and diesel cars £15 a day. If you have to travel to the centre of the city by car regularly, you’ll be facing hefty bills – unless, of course, you drive a zero-emissions electric vehicle, which is exempt (once you register it with Transport for London).
The same goes for the recently extended Ultra Low Emissions Zone (ULEZ), which covers all of central London, between the North and South Circular roads. True, owners of petrol and diesel cars that are less than seven or eight years old don’t have to pay a fee, but air quality targets could well see any ICE car having to pay in a few years. An EV, however, is not only exempt now, but it is also future-proofed against any changes.
It’s not just London, either. There are Clean Air Zones (CAZ) either up and running or proposed in another 25 towns and cities across the UK, so EVs will be exempt from fees in those zones, too.
Electric car Benefit-in-Kind (BiK)
An EV will also save money for company car drivers, who pay Benefit-in-Kind (BiK) tax, because it’s a benefit on top of their salary. If a company car is also used for private journeys, it’s subject to BiK.
But because the government is incentivising us to go electric, company car drivers currently pay zero tax on BiK. It will rise in future years, but only to 1% in 2021/22 and 2% in 2022/23.
Total Cost of Ownership (TCO)
When you first look at RRP of a car, it seems that an EV is more expensive than a conventional ICE car to buy, but when you look more closely in terms of Total Cost of Ownership (TCO) and day-to-day running costs, an EV wins hands-down.
Exactly how much you can save depends on how you use an EV, your annual mileage, where you drive and a host of other factors.
Everyone will have their own figure for how much they save with an EV, but if you’re a company car driver who commutes into central London every day, you’re going to be quids in.