- Research shows that over the lifetime of a car electric vehicles work out at around £107 cheaper per year than petrol or diesel equivalents;
- On average an electric car costs £52,133 over its lifetime, compared to £53,625 for a petrol fuelled model;
- A year-old electric vehicle sold second hand only loses 12 per cent of its value, compared to a 24 per cent loss for petrol cars.
New analysis1 from Direct Line car insurance reveals the lifetime cost of an electric powered car is cheaper than a comparable petrol model. Purchasing a new electric car in 2020 and running it over its lifetime would cost £52,133, compared to £53,625 for an equivalent petrol fuelled model. On average an electric vehicle would cost the owner £3,752 a year over the course of its life, compared to £3,858 for a petrol car, resulting in an annual saving of £107.
In spite of the higher purchase price of electric cars, which accounting for government grants is currently around £5,000 (22 per cent) higher than comparable petrol models, these vehicles are significantly cheaper to run. Annual running costs average £1,742, or £33.50 per week for an electric car, which is 21 per cent cheaper than the running costs of a comparable petrol fuelled car at £2,205 per year or £42.40 per week.
Annual tax and maintenance costs (including MOTs and servicing) for electric vehicles are 49 per cent lower than for petrol models, while refuelling costs 58 per cent less. However, insurance costs are on average 25 per cent higher for electric vehicles, due to current production costs and complexities involved in the calibration of computers used in these cars.
With the anticipated lifetime of a vehicle currently estimated to be around 13.9 years any car bought today would likely need to be replaced by the end of 2034, just before the ban on petrol, diesel and hybrid cars comes into force.
The research also revealed that electric vehicles hold their value better than petrol equivalents, with analysis of second-hand car data revealing that a year-old electric vehicle only loses 12 per cent of its value, compared to a 24 per cent write down for petrol models.
Neil Ingram, head of motor product at Direct Line, commented: “It is an exciting time for electric vehicles, with a record number of these licenced cars on Britain’s roads last year. Our analysis also shows that with the ban on new non-electric cars set to come into force in less than 15 years’ time, Britons could already be saving money by switching from a traditional petrol or diesel car to an equivalent electric model.
“We expect prices to come down in future, thanks partly to the Government’s commitment to making greener vehicles more accessible but also to advances in technology ensuring that purchasing, refuelling, maintaining and insuring an electric car becomes easier, cheaper and better for the environment.”
As well as benefitting from cheaper running costs, motorists are also able to take advantage of a range of grants designed to encourage people to switch to greener modes of transport. These include subsidies to have home charging ports installed, with the Electric Vehicle Homecharge Scheme (EVHS) contributing £350 to the cost of installation, while an additional saving of £300 could be made by having the installation carried out by an Energy Saving Trust-approved engineer.
There are also incentives that slash the sale price of an electric car, with motorists already able to save up to £3,000 off the cost of a new electric vehicle thanks to the Plug-in Car Grant (PICG). In June it was also suggested that the Government could re-launch a scrappage scheme that would see motorists save as much as £6,000 on the price of a new electric car if they were to scrap their existing petrol or diesel model.
These findings come as a survey4 conducted by Direct Line revealed that almost two-thirds (61 per cent) would make the switch to an electric car if the technology and green car market continues to improve. The biggest issues with the current selection of electric vehicles are the limited charging network (35 per cent), the high up-front cost (34 per cent) and the limited battery range (16 per cent). With significant improvements expected to be made in charging availability, cost and range over the coming years, if all of these motorists were to convert to an electric car it could result in a combined saving of 24.3 million fewer tons of carbon emissions annually.
However, the research also revealed that some people are still reluctant to make the switch, with over a quarter of motorists (27 per cent, or 11.4 million UK adults) stating that they would only ever buy a petrol or diesel vehicle if given the choice.
Anca Young, insight and intelligence manager, Thatcham Research, commented: “Electrification is growing in popularity and availability, backed by Government incentives, especially for fleet buyers who benefit from 0% electric vehicle company car tax. The driving range and charging infrastructure has also improved dramatically in the last few years and will continue to do so. As demand for EVs increases, there is a corresponding reduction in production costs per unit, which encourages further take up. Although the cost of Lithium-ion batteries used in EVs is reducing, they remain more expensive than conventional internal combustion engine (ICE) powertrains and are therefore generally more expensive to purchase.
“There’s movement towards greater collaboration between vehicle manufacturers with a view to reducing the cost of EV development and production. The general construction of EVs differs from traditional cars and typically materials, parts and repairs are, more complex and costly. This makes the overall insurable risk less competitive than many traditional, ICE options.
“Manufacturer EV platform collaborations are becoming more popular, e.g. where one manufacturer makes the platform (or ‘skateboard’) and others share it with unique bodies (or ‘top-hats’). Notable collaborations include Volkswagen and Ford, General Motors and Honda and Toyota with Subaru. The accessibility and availability of charging points is also increasing public confidence, as are the warranties that guarantee battery performance over the lifespan of the vehicle.”
Analysis of official data shows that there were 99,374 licenced battery electric cars in the UK in 2019, an increase of 53 per cent on the previous year and the equivalent of a new electric vehicle being registered every 15 minutes. Electric cars still represent a small fraction of the total number of vehicles on the road, however these vehicles are responsible for an estimated 185,500 fewer tonnes of CO2 being produced annually.
The sharp rise in their popularity, coupled with the stagnation of registrations of new petrol cars, suggests that motorists are undergoing a gradual shift towards more environmentally-friendly cars.
Source: Direct Line