Switching to an electric car makes good sense for the planet, but for many it seems like an unaffordable option – particularly during a cost-of-living crisis.
A new electric vehicle (EV) still costs a hefty 36 per cent more to buy than a petrol or diesel model. It’s a lot to swallow, particularly after the government scrapped its Plug-in grant to help with the outright cost.
However, the lower day-to-day running costs of an EV means there are potentially big savings to be made in the long run.
Here we weigh up whether owning an electric car can be a good deal for your finances, as well as the planet.
How much do electric cars cost to buy?
The purchase price of an electric car is a big barrier to people making the switch. Electric cars are still significantly more expensive to buy than their conventional counterparts, which reflects the cost of the battery and other advanced parts.
However, this gap is narrowing all the time. Manufacturers such as Nissan predict it will close completely by around 2028. This is backed up by Bloomberg data, which found a battery pack in 2021 was responsible for 30 per cent of an electric car’s cost – down from 57 per cent in 2015.
To give you an idea, a new petrol Vauxhall Corsa – the most popular car in the UK – currently starts from £18,070. This compares to £29,190 for the most basic electric version, the Vauxhall Corsa-e. The most popular electric car in the UK is the Tesla Model 3, which has a starting price of £42,000.
You can save a lot of money by buying a second-hand electric car – and gain extra sustainability credentials in doing so. Expect to spend between £8,000–£10,000 for the cheapest second-hand EVs on the market.
Bear in mind that an EV’s battery range (how far it will travel on a single charge) drops around two per cent per year, though this will depend on the driving and charging habits of the owner. It’s a good idea to ask to see its range on full charge.
Government subsidies for electric cars
Unfortunately, the Plug-in grant – which offered a decent £3,500 off eligible cars at its peak – was axed in 2022, with the Department for Transport hailing “the success in the UK’s electric car revolution” as the reason for the move (although many manufacturers feel it was a little premature).
If you live in a flat or rented home, you could qualify for the Electric Vehicle Charge Point Grant. It offers up to 75 per cent of the costs of buying and installing an off-street smart charge point at home (limited to £350 per grant).
If you’re renting, you could ask your landlord to apply for the EV Charge Point Grant for Landlords. This provides funding towards the cost of buying and fitting a charge point at properties in the UK. Landlords can apply for up to 200 grants per year for residential properties.
Road tax and congestion charging
At present, electric cars don’t attract any road tax for the first year of ownership, and if you live in London you’re exempt from fees in the Ultra Low Emissions Zone (ULEZ) and Congestion Charge zone, too; a saving of £27.50 per day.
However, in November 2022 the Chancellor announced that the road tax exemption for EVs would end in April 2025. The Congestion Charge exemption will apply until December 25 2025, when EVs will also be required to pay to enter the zone.
Running costs of electric cars
This is where the most considerable savings can be made. The cost of running an electric car will vary according to the make and model you buy, but they are typically a lot cheaper to run than a petrol or diesel car. Refilling a petrol or diesel car costs on average between 14 – 19 pence per mile, while recharging your electric car can cost as little as three pence per mile for home charging. If you’re charging on the road expect to pay around 14 pence per mile on lamppost chargers and around 18 pence per mile for rapid public charging.
If you are mostly home charging – particularly on cheaper night-time tariffs – you can make a considering saving. This handy calculator can help you work out how much a specific EV should cost you to charge at home, and ZapMap offers a comprehensive map of on-road chargers with costs.
According to Octopus Energy, its customers save £15o a month on fuel costs compared to their last petrol or diesel car.
Unfortunately, insuring an electric car is still more expensive than petrol or diesel models, costing £654 on average per year compared to £470. However, this is likely to even out as more people make the switch.
Are electric cars cheaper to service?
Analysis of 280,000 garage quotes given to drivers last year revealed fully-electric models are ‘significantly cheaper’ to service than all other fuel types.
An electric car costs an average of £103 to service, whereas diesels are most expensive at an average of £163, followed by hybrids (£159) and petrols (£151), according to BookMyGarage.com.
BookMyGarage says a key reason for electric car servicing costs being lower is that there are fewer moving parts and therefore less work is required when carrying out typical maintenance compared to motors with a traditional engine. And it says the overall garage bills to run an EV are generally lower than petrol and diesels when you also take into account MOTs and repairs.
It estimates that in total an electric vehicle will cost 43 per cent less than a combustion-engine equivalent in terms of maintenance bills.
What is the cheapest electric car to run?
According to Choosemycar.com, the cheapest car to run is the Hyundai IONIQ Electric. It has a range of 155 miles on a fully charged 40.4 kWh battery, which works out at a cost of just £5.81 for a full charge and £3.75 for every 100 miles driven.
Second is the much-loved Tesla Model 3, which has a 50 kWh battery and range of 190 miles. It costs £7.19 to fully charge and £3.78 for every 100 miles driven.
So, is buying an electric car worth it?
The steep upfront cost of buying an electric car, and installing a home charging point sadly means that it’s still an unaffordable option for many.
But electric vehicles do cost substantially less to run than a petrol or diesel alternative in the long run. You can benefit from substantial savings on fuel and general running costs – and the knowledge that you’re helping the environment, too.
