Are Electric Cars Cheaper to Run?

A detailed investigation considering fuel costs, maintenance and taxation on Electric Cars and whether they are cheaper to run than traditional petrol/diesel powered vehicles.

Electric cars (EVs) have gained popularity not only for their environmental benefits but also for their potential cost savings. Many drivers find that EVs are cheaper to run compared to traditional petrol or diesel vehicles. Here's a detailed analysis of the factors contributing to the lower running costs of electric cars.

Petrol/Diesel Costs vs. Electricity

Electricity Costs: Charging an electric car at home is significantly cheaper than refuelling a petrol or diesel car. On average, electricity costs around 28p per kWh in the UK, with off-peak rates as low as 7.5p per kWh. Charging a typical EV with a 60 kWh battery can cost between £4.50 and £16.80, depending on the tariff.

Petrol/Diesel Costs: As of 2024, the average cost of petrol in the UK is around £1.45 per litre. For a car with a fuel efficiency of 40 miles per gallon, the cost per mile is approximately 16.4p. In contrast, an EV with an efficiency of 4 miles per kWh costs between 1.9p and 7p per mile, depending on the electricity tariff.

Maintenance Costs

Fewer Moving Parts: EVs have fewer moving parts compared to internal combustion engine (ICE) vehicles. There are no oil changes, timing belts, fuel filters, or exhaust systems that require regular maintenance. This results in fewer visits to the mechanic and lower maintenance costs.

Brake Wear: Electric cars use regenerative braking, which reduces wear and tear on the brake pads and discs. This extends the life of the braking system and reduces maintenance costs.

Routine Maintenance: Routine maintenance for EVs is generally limited to tire rotations, brake fluid changes, and cabin air filter replacements. This simplicity leads to lower annual servicing costs compared to traditional vehicles.

Tax and Incentives

Vehicle Excise Duty (VED) In the UK, electric cars are exempt from Vehicle Excise Duty, commonly known as road tax, for vehicles emitting 0 grams of CO2. This can save EV owners hundreds of pounds annually compared to conventional vehicles. However, from 2024, you will pay the standard rate of £190 and is subject to change for 2025.

Plug-in Car Grant: The UK government offers some grants for the purchase of electric cars, reducing the upfront cost and making EVs more affordable.

Reduced Company Car Tax: Benefit-in-Kind (BIK) tax rates for electric company cars are significantly lower than those for petrol or diesel vehicles, providing substantial savings for employees.

Charging Infrastructure

Home Charging: Installing a home charger can cost between £500 and £1,200, but government grants can cover a portion of this expense. Home charging is convenient and often cheaper than using public chargers.

Public Charging Networks: Public charging can be more expensive than home charging but is still generally cheaper than petrol or diesel. Many public chargers offer free charging, especially at shopping centers and workplaces.

Rapid Charging: Rapid chargers are the most expensive option, but they offer convenience for long-distance travel. The cost is still often lower than refuelling with petrol or diesel.

Insurance Costs

Insurance Premiums: Insurance premiums for electric cars can be higher due to the higher purchase price and specialized repair requirements. However, as EVs become more common, insurance costs are gradually decreasing.

Long-Term Savings

Resale Value: Electric cars tend to retain their value well due to increasing demand and advancements in battery technology. This can result in better resale values compared to some petrol or diesel cars.

Depreciation: While initial depreciation can be steep for new EVs, their overall depreciation rate is becoming more competitive with traditional vehicles, especially as the market matures.

Environmental and Health Benefits

Reduced Emissions: EVs produce zero tailpipe emissions, contributing to cleaner air and reducing the health impacts associated with air pollution.

Sustainability: Using renewable energy sources to charge EVs further enhances their environmental benefits, contributing to a reduction in the overall carbon footprint.

Conclusion

Electric cars are generally cheaper to run than traditional petrol or diesel vehicles, thanks to lower fuel and maintenance costs, tax incentives, and long-term savings. While the initial purchase price can be higher, the overall cost of ownership is often lower, making EVs a financially sound choice for many drivers. Additionally, the environmental and health benefits further strengthen the case for switching to electric vehicles.