We might be starting to see a second-generation of electric cars that are powerful, better equipped and with a bigger range, together with a wave of new models, but battery technology is still in its infancy which unfortunately translates into a price premium for the consumer. Can the higher purchasing costs be offset by lower running costs when compared to conventional cars, though? Here’s our full guide to the cost of running an electric car.

Findings from Applied Energy

It’s an important question for private and fleet purchasers, yet up until 2017 no official studies had been carried out into the total cost of ownership across the two vehicle markets. To address this gap, Applied Energy published a journal containing their findings, which covered the UK, USA (using California and Texas as case studies) and Japan, from 1997 to 2015.

In all regions the incremental total cost of ownership of hybrid and electric vehicles compared to conventional vehicles had reduced. It’s true that battery tech, regenerative braking, and bespoke transmission systems all contribute towards a higher manufacturing cost than conventional vehicles but conversely running costs are lower stemming from cheaper annual fuel costs, taxes and maintenance.

While average annual mileage and other factors such as driving style and speed, the weather, and how heavily the car is loaded all affecting running costs, the study did find average annual maintenance costs were a lot lower for electric vehicles due to less wear on the brakes and fewer moving parts. More on that later.

Given that the findings were taken from studies that are four years old now, over that time production of electric and hybrid vehicles have ramped up which has no doubt driven costs down. And with more brands, such as SEAT, democratising sustainable mobility by developing a small electric platform that can be used by brands around the world, entry level prices could be as low as £17,000 in just a few years’ time.

How much does it cost to charge an electric car?

The cost of charging a car varies widely just as the MPG of petrol and diesel cars does. Every electric car comes with a different-sized battery and the capacity is measured in kWh, so to calculate how much it costs to charge your car, look at the cost of electricity (either your home supply or at a public charging point) and do the sums. Let’s take a 90kWh Jaguar I-PACE as an example. A typical rapid charging point charges around 35p per kWh, so the cost is 90 x 35p = £31.50 if you were to charge from completely empty to full. It’s worth bearing in mind that it can be more cost effective to get a monthly subscription to a charging network (like POLAR), rather than paying at the chargepoint by debit/credit card or app.

Charge it via a cheaper home supply and it could cost from around 14p per kWh on a good value overnight tariff which works out at £10.80. That’s a pretty big saving over the cost of a full tank of petrol or diesel for a Jaguar with the same performance – it’s no wonder 90 per cent of all charging takes place at home (according to Government estimates).

Don’t forget you’ll need to add the cost of a home charging point to these prices, and the typical cost for a home charge point and installation is approximately £1000. Several manufacturers provide them as part of the sales package, but if they don’t OLEV will offer applicants £500 towards this cost as part of its Electric Vehicle Homecharge Scheme. Just ensure the installer is OLEV authorised; they then claim the discount, so you don’t need to do anything except purchase a Category 1 or Category 2 electric car within four months of getting the charge point.

You could of course charge it via a domestic 13 amp power supply at home, but it could take 30 to 60 per cent longer, depending on the car, and thus cost more. It will obviously add to your electricity bills so you need to get the cheapest tariff possible. To see if it’s worth your while switching providers check out loveMONEY’s quick tool.

There are specialist providers who offer tariffs for electric car owners, such as OVO, Good Energy and Ecotricity, which offer electricity from renewable sources, and there are other perks like discounts on public charging networks and charge points. Alternately, E.ON offers a ‘green’ one year fixed electric vehicle tariff, or you could simply use a normal energy supplier and consider an Economy 7 tariff, which rewards you for charging your car at off-peak times. Some bank accounts give you cashback on electricity bills, so that’s also worth considering if you’re looking for other ways to save.

QUICK TIP: Pod Point has a guide to all electric vehicles available in the UK that lists the battery size, range, and how much it cost per mile (via their dedicated home charger) for every model.

How much does it cost to tax an electric car?

Here in the UK for example, if you buy a vehicle with CO₂ emissions of less than 50g/km and a zero emission range of at least 70 miles, the government will give you a plug-in vehicle grant of £3500. Pure electric cars (registered after 31 March 2017) costing no more than £40,000 are exempt from paying Vehicle Excise Duty (VED) while all cars that emit less than 75g/km CO2 will pay £15 road tax in the first year.

Those vehicles are also eligible for a 100 per cent discount from the London Congestion Charge, so if you live in the City or have to drive into it every day for work, you could save just over £3000 a year. In many cases you can also get free or discounted parking.

When it comes to motoring tax, the rules are designed to favour the adoption of ultra low emission vehicles, and businesses and company car drivers in particular could save thousands of pounds by switching to an electric vehicle. So, for example for 2019/20 a lower rate company car driver would pay £480 less in BIK tax driving the EV, while a higher rate taxpayer would pay £960 less.

Furthermore, based on a £30,000 P11D value you could save £331 pounds by choosing the electric vehicle – on a fleet of ten models that equates to £3310. Changes from the 2020/21 tax year are designed to give even more incentive to choosing electric vehicles.

QUICK TIP: For guidance on all the tax benefits of ultra low emission vehicles click here.

How much does it cost to run an electric car?

Based on findings from Thatcham Research and KeeResources as well as manufacturer data, a BMW i3 will cost 3.7p per mile (you’ll need to add a £354 home charger) compared to 14.2p miles in a petrol 318i. The figures are based on three years of ownership and covering 12,000 miles annually and also looked at tax, loss of value, insurance, servicing and tyres, and overall the i3 worked out 7p per mile cheaper to run.

The Government’s Go Ultra Low campaign estimates electric vehicles can be up to 70 per cent cheaper to service and maintain. That’s because an EV has fewer moving parts than a conventional petrol or diesel model, so it should cost less to service. There are no spark plugs, oil filters or timing belts to worry about for example, and an electric motor and their batteries require very little routine maintenance. Electric cars also use a regenerative braking system, so that should mean pads and discs last much longer.

The difference is immediately obvious when you look at manufacturer’s servicing packages and you compare an EV to a petrol or diesel. BMW’s Service Inclusive, which is a one-off payment designed to ‘give you peace of mind’ for three years (or 36,000 miles) costs £399 for a 3 Series or £239 for an i3.

Grants

Another major perk of EV ownership is that because they’re greener, the Government offer incentives in order to encourage adoption. As well as the aforementioned plug-in vehicle grant and Electric Vehicle Homecharge Scheme, there is also a Workplace Charging Scheme, which is designed to provide eligible applicants with support towards the upfront costs of the purchase and installation of EV chargepoints and an On-street Residential Chargepoint Scheme, which enables local authorities to apply for funding to help with the costs of procurement and installation of on-street charging points for residents.

• Plug-in vehicle grant
• Electric Vehicle Homecharge Scheme
• Workplace Charging Scheme
• On-street Residential Chargepoint Scheme

Depreciation costs

The value of electric cars used to fall at alarming rates, but depreciation is the single biggest cost of running any car. Fortunately thanks to lower prices and improvements in their technology and performance, combined with the declining appeal of diesel cars, depreciation of EVS aren’t so steep. After the government’s plug-in grant has been accounted for and taken off the list price, an electric car loses less money than the equivalent petrol car.

One car industry source has been quoted as saying “after three years and 30,000 miles, an electric car is now worth 50 per cent of its new price, a petrol car 48 per cent and a diesel, 45 per cent”. Furthermore, according to a recent report by automotive data company cap hpi, some models – including the Nissan LEAF, Renault ZOE and Mitsubishi I-MIEV – are rising in value by 20 per cent, so in theory you could run a second-hand EV for 12 months and then make a profit when you sell it on.

QUICK TIP: The Energy Saving Trust has created a calculator which allows drivers to compare their current car’s fuel and road tax costs with the used EV of their choice, and you can search either by the size of the car, or by a particular make and model.

Unfortunately electric and hybrid cars tend to be placed in a relatively high insurance group, so on average they are pricier to insure. However, prices have dropped in the last few years with data gained from cost of repairs and the realisation that there are fewer complex moving parts that can be damaged compared with a traditional engine, so this an area that is likely to improve. For more information read our full guide to electric vehicle insurance.

It has also become apparent that the batteries are reasonably well protected in the event of an accident, reducing the risk of costly replacement. EVs are less likely to be stolen too, and more likely to be recovered due to their limited range, which has helped their cause when it comes to quoting for insurance.

Can EVs make you money?

With vehicle to grid technology, your car could effectively act like a power station. It works by using idle car batteries as a source of power that can be used for grid services, such as demand response or frequency regulation. According to energy storage firm Moixa Energy, ten new Nissan LEAFs can store as much energy as a thousand homes typically consume in an hour.

OVO Energy has introduced the world’s first large-scale domestic vehicle to grid (V2G) project. Its V2G Charger stores electricity in your Nissan LEAF battery when it’s cheaper and more likely to have been produced by renewable sources, then sells energy back to the grid when it’s in demand, which might even save owners enough to charge their car for nothing. The trial is completely free for OVO customers.

The verdict

So, there you have it, an electric vehicle will cost potentially far less than a diesel or petrol equivalent given the same use, not to mention you get environmental brownie points with fully (and partially) electric models all emitting no (or lower levels) of carbon dioxide and air pollutants. With a combination of grants and savvy buying you could save thousands by avoiding internal combustion engine cars, and as range increases and prices come down, running an EV is going to become an ever more attractive option for many drivers.

Last year was a record for plug-in car sales in the UK as 44,437 PHEVs were sold (up 25 per cent year-over-year) while electric vehicle increased by 14 per cent with 15,474 new registrations noted, and as other people realise the savings that can made the uptake is only going to grow.