According to the latest ‘Electric Car Cost Index’ from LV= General Insurance (LV= GI), one of the UK’s largest insurers of electric cars, driving an electric vehicle (EV) will save you money over petrol or diesel equivalents.
The analysis was carried out in partnership with consultant battery electrochemist Dr Euan McTurk of Plug Life Consulting. It examined the purchase (outright ownership), financing (lease and PCP) and running costs (fuel/charging, maintenance, insurance, tax) for 13 popular electric car models.
The study then compared them to their petrol or diesel equivalents to demonstrate the true cost of being an electric car driver for people considering making the switch.
Three of the 13 electric cars, the Nissan Leaf, MG5 Long Range Excite and the Mini Electric Level 1, all worked out cheaper whether bought outright, leased or via PCP.
All 13 cars are cheaper than the equivalent petrol or diesel model based on buying the car upfront and keeping it for seven years, while seven of the 13 are cheaper across a four-year lease term and four are cheaper on a three-year PCP agreement.
The savings on electric vehicles are heavily driven by lower average annual running costs – £1,147.21 compared to £2,201.58 for a petrol or diesel car. That’s a huge saving and with rising fuel costs this should be a big consideration. Plus, there has been continuing fuel shortages in the UK recently, causing petrol and diesel drivers much distress.
Purchasing an Electric Car
The purchase price for electric cars is still higher than equivalent petrol or diesel cars. For balance, the study explored a range of models across the purchase spectrum.
This included entry-level electric vehicles like the Volkswagen e-UP (£22,585), Fiat 500e (£25,495) and Vauxhall Corsa-e (£25,805), all the way through to high-end cars including the Tesla Model 3 (£42,990), Hyundai IONIQ 5 (£42,295) and the Skoda Enyaq iV 80 (£40,130).
Of the cars analysed the average cost of an electric vehicle was £32,683, just under £7,000 more than the average petrol or diesel car at £25,685, however, in some cases the gap is closing.
For example, the Vauxhall Corsa-e is only £2,175 more expensive than its petrol equivalent and the difference between the Mini Electric Level1 and Mini Hatch Cooper S Classic is now less than £5,000.
Thanks to the lower running costs, drivers who outright buy any of the 13 EVs analysed by LV= will recoup some of their initial outlay over the average ownership period of seven years, ranging from £586 on the Fiat 500e Red to over £10,500 for the Tesla Model 3.
The average saving over seven years is £3,862.05, with 10 of the 13 cars saving over £2,000 during the ownership period. The saving figure also factors in residual value – the price that the vehicle would sell for after seven years (assumes annual depreciation of 9.5 percent).
Many drivers will be unable to afford to buy the car outright, so leasing is a much better option than taking out a PCP contract. Apart from the VW ID.3, every car featured is significantly cheaper to lease over a four year period than via a PCP on a three-year contract, according to insights provided by vehicle leasing company CBVC. The monthly and annual prices in the table below also factor in an upfront deposit, which on average is £3,189.72.
However, taking into account the cheaper running costs, seven of the 13 cars analysed provide savings over a four-year lease, ranging from £1,918 for the Volkswagen e-UP to £5,527 for the Fiat 500e.
The average saving across all 13 cars on a four-year lease is £774. Only four of the 13 cars recoup money over a three-year PCP, with the MG5 Long Range Excite recouping the most at £2,270.
The savings electric vehicle drivers can make are driven by substantially cheaper running costs, which work out at £1,054 cheaper on average annually versus driving a petrol or diesel car. This figure rises to £1,435 for the Skoda Enyaq iV compared to its petrol equivalent, and to £1,703 on the Tesla Model 3 vs BMW 320i.
Average annual maintenance for an electric vehicle, which includes a service and replacement tyres and brakes, is almost £200 cheaper (£304 vs £498). This is mainly because they have fewer moving components, making them considerably less likely to break down as they age and much cheaper to maintain.
The biggest annual saving comes from charging the vehicle compared to paying for petrol or diesel. On average electric vehicle drivers will pay just £467.40 to charge their car each year, based on driving 8,000 miles.
In comparison, petrol and diesel drivers pay £1,199.40 to do the same mileage – a difference of £732. If drivers have an electricity tariff with a reduced off-peak overnight rate, then the annual cost of charging an electric vehicle is reduced to just £180.59.
The assumption is that electric cars are more expensive to insure but that’s not the case anymore. Insurance premiums are on average cheaper for the electric vehicles analysed compared the petrol or diesel models – £297 versus £310.
Insurance is cheaper on seven of the 13 vehicle pairings, with some cars including the ID.3 and Vauxhall Corsa-e substantially cheaper than their inertial combustion engine (ICE) equivalents, at 22 and 33 percent respectively
The other significant saving for electric car drivers comes from not having to pay tax on the vehicle, which for petrol and drivers is on average £193.68 annually. Over a seven-year ownership this equates to £1,355.76.
Gill Nowell, Head of EV at LV= General Insurance, said: “Despite the upfront sticker price of an electric car being higher than the equivalent petrol or diesel car, it pays to look at all the costs involved.
“Even with escalating fuel and energy costs, if people can afford to make the switch to an electric car, either new or second hand, then charging up with energy at home rather than filling up at a petrol station is far cheaper – and better for the environment and our local air quality.”
Dr Euan McTurk, Consultant Battery Electrochemist at Plug Life Consulting, said: ”With petrol and diesel prices going through the roof, this is a timely reminder that electric cars can save money as well as emissions.
“Higher mileage drivers will save even more money by going electric, so if you do more than 8,000 miles per year, you’ll recoup your outlay much faster, and your savings will be even higher.
“Plus, because electric vehicles are so mechanically reliable. As they get older, they’ll spend much more time on the road and much less time in the garage than a petrol or diesel car of the same age, saving you considerable time and money – this bodes well for people looking to buy a secondhand EV.”