Cost of running an electric car

With no petrol or diesel costs, are electric cars really cheaper to run? Our full guide to the cost of running an electric car

John Evans
May 24, 2018

More powerful, better equipped and with a bigger range than its predecessor, a second-generation of electric cars are showing just how much electric technology has advanced.

This year, the latest Nissan Leaf and updated versions of the Renault Zoe and BMW i3 are being joined by a wave of new models.

These include the Jaguar I-Pace, Tesla Model S and Audi eTron, with dozens more electric cars in the pipeline, all promising clean motoring and the end to expensive fuel station stops. For now, there's also a government grant that subsidises the cost of a new car. 

Manufacturers predict a boom in electric car sales, driven by cost, as fuel prices rise; emissions charges become more common - especially for diesel drivers; and we slowly approach the year 2040 when the government has pledged to ban petrol, diesel and many hybrid cars.

So can you justify switching to an electric car on the financial grounds alone? We've compared an electric BMW i3 with a slightly larger and similarly-priced petrol BMW 3 Series below and analysed the costs in more depth below, which will help highlight whether you could save money by going ultra green.

Cost of running an electric car vs a petrol car

Figures based on three years of ownership, and covering 12,000 miles annually

Source: Thatcham Research, KeeResources & manufacturer data. i3 cost includes government grant

There’s no escaping the higher cost of electric cars. The huge, advanced battery packs required for each vehicle add thousands of pounds to the price, and the limited number of buyers at present, also reduces the economies of scale.

Even with the full government grant of £4,500 towards the new price of an electric car, they still tend to be more expensive than a petrol or diesel equivalent.

It's more noticeable at the cheaper end of the market. The Renault Zoe starts at almost £18,500, or £199 a month with representative finance, which requires a £3,500 deposit. On top of that, you’ll need to pay at least £59 a month to lease the battery. A similarly-sized petrol-powered Renault Clio is £6,000 cheaper.

A family-size Nissan Leaf Acenta is £25,190 from new, which includes the government grant. It's considerably more than the best-selling Ford Focus, which is £19,800 in a similar specification. However, the difference is much closer with more expensive models. As the BMW comparison above shows, an i3 costs virtually the same as a slightly larger petrol-powered 3 Series.

Fast-rising demand means that sales of electric and hybrid cars are increasing by 20% each year, helping to spread the cost of developing and producing cars amongst more buyers.

More demand also increases the price of used cars, which means that the cost is less important: as vehicles lose less value, the cost of owning or financing them is lower.

 

For safety and ease of use, it’s best to recharge electric cars from a dedicated charging point, which is also much faster than a three-pin plug.

Taking a £500 grant from the government into account, a, typical 7kW home charger from Chargemaster costs £322, which is roughly the equivalent of five tanks of fuel: sufficient for around 2500 miles of motoring in the average petrol car.

After that, you’ll see the savings mount up. An overnight charge for the latest Nissan Leaf takes around six hours and costs roughly £5.60, providing enough power to travel around 140 miles.

  • Over 10,000 miles, the Leaf would cost £410 in electricity, or 4.1 pence per mile, assuming an energy tariff of 14 pence per kilowatt hour. 
  • A Nissan Pulsar 1.2 DiG-T Acenta costs £1,300 in petrol, or 13p per mile, assuming a litre of unleaded costs £1.22. 
  • The gap narrows if you choose the diesel Pulsar. It costs £960 to fuel over 10,000 miles, or 9.6 pence per mile.

 

Under current road tax rules, cars that don’t produce any exhaust emissions escape road tax. Only fully electric cars or a small number of hydrogen models satisfy this requirement.

Even the cleanest conventionally powered petrol cars, such as the Suzuki Celerio 1.0 SZ3 Dualjet, which emits 84g/km CO2, attract a road tax charge of £100 in the first year, rising to £140 from the second.

Compared with a petrol or diesel car emitting 121g/km CO2 -the average for new cars in 2017, which includes the BMW 318i - an electric car saves its owner between £165 and £205 in its first year, and then another £140 per year going forwards.

However, more expensive electric cars will still incur the same £310 annual tax surcharge as all other vehicles costing more than £40,000, between the second and sixth year of it being on the road.

 

Also known as depreciation, the amount that a car loses over time has a direct impact on the cost of finance - because that’s what your payments on Personal Contract Purchase (PCP) finance or a lease cover.

One car industry source told BuyaCar that electric car depreciation used to be steep, but is becoming less severe, thanks to lower prices, and improvements in their technology and performance, combined with the declining appeal of diesel cars, they are improving.

“I believe the industry has ‘cracked’ electric cars,” the source said. “After the government’s £4500 plug-in grant has been accounted for and taken off the list price, an electric car loses less money than the equivalent petrol car.

“In round figures this means that after three years and 30,000 miles, an electric car is now worth 50% of its new price, a petrol car 48% and a diesel, 45%. The situation was exactly the reverse a year ago. In fact, a used Nissan Leaf has actually risen in value by 20% in the past 12 months.”

  

Data from insurers shows that electric cars are less likely to be stolen than the average vehicle and more likely to be owned by older and responsible drivers. This helps to keep insurance premiums low.

On the other hand, they tend to be placed in a relatively high insurance group. These groups are used to rate the financial risk to insurers: from the least risky in number one to 50: the cars most likely to trigger expensive payouts.

The classification is decided by an organisation owned by insurers called Thatcham Research. A large part of this is based on vehicle repair costs - a major cost to insurers.

Electric cars often use more expensive and advanced lightweight materials, such as carbon fibre and aluminium in their construction than conventionally powered cars. Examples of this include the Tesla Model S, the Jaguar I-Pace and the forthcoming Audi e-tron.

They also require advanced technology to manage their electrical systems. Generally speaking, only expensive main dealer workshops have the expertise to repair them, too.

However, one cost above all, makes electric cars expensive to repair, as Matthew Avery, director of research at Thatcham Research explains.

“Following even a minor collision that involves activation of the seatbelt pre-tensioner or, in a more serious case, an airbag, the car’s battery often has to be replaced. Mercedes is one manufacturer that insists on it. BMW is another.

“It’s because the battery’s main fuse is likely to have been activated and car makers are concerned that the lithium ion battery may catch fire at a later date if it is not replaced. The problem is, a battery for a Mercedes, for example, costs £12,000.”

Avery says that in the past, insurers who didn't factor in the cost of battery replacement “had their fingers burned” but now make sure their premiums take account of it.

“Battery costs are a major issue with electric cars and something we’re working with the industry to resolve. Prices will come down as the market expands, so we’re confident.”

It’s one reason why the Nissan Leaf is in insurance group 22 but it’s petrol equivalent, the Pulsar, in group 10. The Renault Zoe is in group 16 but the Renault Clio, group 7.

   

An electric car 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; electric motor and their batteries require very little routine maintenance.

Mark Jowsey of KeeResources, a supplier of vehicle maintenance data to fleet operators, says electric cars are at least 30% cheaper to service and maintain than their petrol and diesel equivalents. What’s more, the gap widens over time and mileage as petrol and diesel cars require more replacement parts.

“Another factor to consider is brake life,” says Jowsey. “Replacement brake pads and discs are a major expense but an electric car’s regenerative braking system takes a lot of the strain, meaning their pads and discs generally last much longer.”

The difference is clear in manufacturer’s servicing packages. BMW charges £322 for a three-year maintenance package on its i3. The cost rises to £528 for a BMW 318i.

There are a few other aspects to take into consideration, though. Only a limited number of garages can work on electric cars because specialist knowledge is needed to work safely on their high-voltage systems. This means that you're generally restricted to main dealers, which tend to charge more than independent mechanics.

Tyres can be more expensive for electric cars too, as they tend to be less common. According to Black Circles, an online tyre company, a Renault Zoe’s tyre costs between £85 and £115, compared with £48 to £109 for a Renault Clio tyre.

As with your phone’s power pack, an electric car’s batteries will degrade over time but manufacturers typically guarantee their performance for five years. If the battery pack loses more than 30% of its capacity, then it will be repaired or replaced.

Some models are proving even more resilient. In 2016, a group of Tesla owners monitored 286 of their members’ cars and found that over 200,000 miles, a battery was likely to lose no more than 5% of its capacity.

 

Additional electric car running costs

If you live in London or have to drive into it regularly, you’ll pay no daily congestion charge if you drive an electric car. That could save you up to £2,900 a year in charges or almost £9,000 over the duration of a typical three-year lease.

If your electric car is provided by your employer, you’ll pay less company car tax than if it were petrol or diesel, too. At present, the benefit-in-kind tax rate for an electric company car is 13%, compared with 25% for an average petrol car and 29% for a diesel.

The rate rises to 16% in 2019-20, but is then due to plummet to just 2% from April 2020.

  

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