2 March 2020

A number of people cite the cost of an electric vehicle (EV) (which can be battery electric vehicles (BEVs) or fuel cell (Hydrogen) electric vehicles) as a deterrent to owning one. But, the question remains, is owning an EV really more expensive than a petrol or diesel car?

The thing is, people tend to only focus on the price of the vehicle and ignore the running cost of EV ownership, so as a result, they may not have a complete picture of the total costs involved.

Whilst you may spend less at the initial purchase of a traditionally-fuelled vehicle, you could actually save money over the lifetime of an EV. 

What is the difference between the cost and the running cost of a vehicle?

The cost of the vehicle is the amount of money you pay to buy it – the initial investment. If you look at just the cost, EVs will appear to be much more expensive than their petrol or diesel counterparts.

Hyundai IONIQ Electric - Costs £32,311
Hyundai IONIQ PHEV – Costs £29,450
Hyundai i30 1.4 T-GDI Trend DCT (petrol) - Costs £22,485

The EV cost is offset to a degree by the £3,500 government grant, but it’s still more expensive than the traditionally-fuelled version.

However, the total cost of an EV encompasses every aspect of owning and running the vehicle. It includes the cost of fuel per mile as well as the cost of maintenance, servicing, insurance, road tax, and even depreciation of the vehicle’s value.

While the cost of the EV is a one-time expense, the running cost is ongoing and is calculated over a period of three years and against an average annual mileage of 10,000 miles.

If you consider the running cost of an EV, you will find that it is cheaper to own and run than vehicles powered by fossil fuels.

What are the factors to consider when calculating the running costs of a vehicle?

Fuel

As you know, an EV is run on electricity, but the price of electricity for charging may vary based on where you charge. Home charging, if possible, is relatively cheap if you charge overnight using smart charging.
For example, if you are charging at a rapid charging point, you would pay around 30p per kWh. With home charging, on the other hand, you’d be paying around 12p per kWh.

Additionally, public charge points may have different rates for 30 minutes of charging, which could affect the cost of your EV’s fuel.

Plus, if you take home charging rates, based on a dedicated charger instead of a 3-pin one, you may need to add the cost of charger installation as well. Although, the total cost of installing a home charging point can be lowered by a £500 government grant.

Based on the rate you pay to recharge your EV, you can calculate how much it costs to run for a certain number of miles on a single charge.

As an example:

Nissan LEAF (EV)

Gives a real-world figure of 140 miles with a single charge. Therefore, over a 6-hour charging period, which would cost around £5.60, you can get 140 miles of driving.

Add in the cost of the charger installation, and for 10,000 miles, you are looking at £410 in electricity costs, which translates to about 4.1p a mile.

Nissan Pulsar (Petrol)

The 1.2 DiG-T Acenta, on the other hand, would cost you approximately 13p per mile, with petrol costing £1,300 at the rate of £1.22 per litre for unleaded.

If you compare 4.1p against 13p, you can see it’s almost three times more per mile to run the petrol vehicle! 

Two electric vehicle chargers plugged in 

Road tax

As you may know, road tax for vehicles is based on the amount of emissions they release. Therefore, electric hybrids pay a greatly reduced road tax, whilst fully-electric vehicles don’t have to pay any at all, bringing down the total cost of EV ownership in the UK as well as in the EU.

Depreciation

Up until very recently, the used EV market was quite poor, with the depreciation of EVs being quite steep, which directly impacted the Personal Contract Hire finance and lease cover.

However, in the last year, as the uptake increases and prices creep down, the market for used electric cars is improving. As a result, three years and 30,000 miles later, your EV loses about 50% of its value once it’s used, compared to the 53% depreciation for a petrol-fuelled car.

Insurance

There are two factors that influence insurance rates of an EV, which in turn affect its total running cost. One brings the total cost of ownership down, while the other can be more expensive.

The first, which brings the insurance premiums down, is the fact that EVs are proven to be less attractive to thieves.

The second, which hikes up insurance rates, is the cost of repairing EVs after an accident.
EVs tend to be made out of lighter, more expensive, materials. Additionally, the battery has to be replaced for safety reasons even after certain minor collisions. Lastly, they are generally repaired by dealer repair centres, which can be expensive and unfortunately inflate premium costs.

But, whilst premiums were originally higher (due to insurance companies’ uncertainty about what to expect, and lack of expertise in the area), the insurance prices for EVs are coming down. This, in turn, is bringing down the running costs of EVs. 

Servicing and tyres

Whilst the cost of repairing an EV after an accident might prove to be higher, maintaining one is much cheaper.

Traditionally-fuelled vehicles have a number of moving parts and components. The constant movement causes wear, which needs to be monitored and repaired. An EV, on the other hand, has very few moving parts and requires much less maintenance. This means that maintenance is not a huge issue in an EV’s total running cost.

Additionally, most EVs, in order to make the batteries as efficient as possible, tend to use regenerative braking. This is a term to describe a system of brakes that convert the stopping or slowing down action into additional charge for the car’s battery. Regenerative braking is much easier on the brake pads than normal braking, which means they don’t wear as quickly and don’t need replacing as often.

However, while the general maintenance of an EV is not as costly, the tyres and battery can add to whole life cost. Both these components are expensive, with EV tyres costing more primarily because they are less common.

Another factor to be aware of is the fact that, while maintenance is less frequent, it is undertaken by specialised garages, usually dealer workshops, which can be more expensive than independent garages.
On the whole, though, since they require fewer instances of maintenance, the total cost of maintenance is offset by the frequency.

A tyre leaning against a car with the bolts on the floor 

Other charges

While the above are inevitable costs of running a car, there may be additional expenses to consider, such as the congestion charge in London, which vehicles with high emissions have to pay.

An EV does not need to pay any congestion charge, which can lead to a saving of about £2,900 if you live in the city.

As you can see, whilst the initial cost of an EV might be high, the running cost or total cost of EV ownership can be much lower than traditionally-fuelled vehicles, depending on how you charge and use it.

Further reading

If you’re interested in ‘going electric’, we offer an award-winning producteStart - that could help your business transition to EVs smoothly. In addition, here are some other resources that you might find helpful.

Do you need information on what we offer in fleet management and leasing, employee benefits solutions, and driver services? Call us on 0844 854 5100 or email CSalmon@sgfleet.com to get the advice you need.

A blue electric car plugged in to a charger with a jar of coins next to it