A new report claims electric vehicles are cheaper to own than a comparable petrol or diesel-powered car over a seven-year period, as they are over £1,300 cheaper to drive a year.
Popular battery-powered models offer such lower annual operating costs that it bridges the premiums drivers pay to buy them, according to LV= General Insurance.
The claim was filed as part of the recently published Electric Car Cost Index, which takes into account the combined costs of purchase price, tax, insurance, fuel and maintenance costs for nine EVs compared to competing models with fossil fuel engines.
Are EVs cheaper than ICE cars? A new index has been launched to compare the cost of ownership of a battery-powered model to a model with a petrol or diesel engine. It claims that the higher premium purchase price of an EV will pay for itself after 7 years of cheaper running costs
Three of the nine electric cars included in the study – Nissan’s Leaf, Volkswagen’s ID.3 and MG’s ZS EV – are cheaper, whether bought direct, leased or through financing.
It found that the MG ZS EV offers the greatest long-term savings: £13,316 from outright purchase over seven years, £5,772 through a standard four-year lease and £2,320 through a standard PCP financing agreement over three years.
The savings on electric cars are mainly driven by lower average annual running costs.
The report calculates that – on average – the electric models tested were almost 50 percent cheaper to run.
While an electric car costs an average of £1,304 a year, a petrol or diesel model costs £2,610, which means an average saving of £109 a month for owners of the former.
“Within seven years of purchase, electric car owners who buy their vehicle will save money compared to those who bought a petrol or diesel car, due to the regular savings associated with lower operating costs,” the report concludes.
‘In addition, electric cars can traditionally have a longer lifespan and require less maintenance, which means that the savings can be even greater.’
The report calculates that – on average – the electric models tested were almost 50 percent cheaper to run
Biggest fuel savings as ICE drivers face rising petrol and diesel bills
Fuel is the biggest savings, with electric car drivers saving more than £900 a year, although that’s based on a high annual mileage of 12,000 miles, with the national average of less than 8,000 miles even before the pandemic hit.
Charging at home, which accounts for 90 per cent of all electric car recharging, costs an average of £405 per year, while 10 per cent of charges at public charging stations cost an average of £105 per year.
LV= says the average annual cost for petrol or diesel is £1,435 – although these costs could rise, especially with rising oil prices and the introduction of E10 unleaded petrol, likely making petrol models less efficient.
Fuel costs offer the biggest savings for EV drivers, with most charging their battery cars (like the Nissan Leaf pictured) at home and only 10% of charging sessions taking place on more expensive public devices
EVs ‘cheaper to maintain’, especially as cars get older
For an internal combustion engine (ICE) car, the average maintenance cost is £657 per year, while for an electric car it’s £384 – over £272 cheaper.
With certain vehicles, that difference can be even greater; the service charge for the MG ZS EV electric car is £494 cheaper than a 1.5-litre turbo petrol Seat Ateca, the report says.
The research also shows that maintenance savings are likely to increase over time.
As an ICE vehicle approaches seven years or reaches 84,000 miles, several components not found in electric vehicles may need to be replaced, such as the timing belt, spark plugs and exhaust regulator, each of which can cost hundreds of pounds.
EVs are said to be less expensive to maintain and service. For example, Index claims average maintenance costs for the MG ZS EV (pictured) are £494 cheaper than a petrol Seat Ateca
EVs are cheaper to tax…for now
Almost all electric cars analyzed are cheaper to insure than their ICE equivalent.
Data from LV=GI shows that the VW ID.3 costs £288, compared to £342 for the VW Golf. So is the VW e-Up! costs £226 to insure, as opposed to £314 for the petrol powered Up!.
Electric vehicle owners are also currently benefiting from not having to pay car tax, meaning they can save up to £1,274 over a seven-year ownership period.
That said, with the government potentially looking to implement a mileage scheme to complement – and eventually replace – vehicle excise taxes to generate coffers from EV drivers, this may not be the case forever.
In addition, since the benefit in kind for electric commercial vehicles will be taxed at only 1 percent in 2021/22, there will be significant additional savings for people who can buy or finance a company car through their employer.
In 2022/23 it will rise to 2 percent and the government has yet to clarify whether – and by how much – they will rise from April 2023.
As more and more electric cars join the firms’ fleets and the chancellor looks for funds to replenish the treasury, don’t expect it to remain as low as it is now.
While electric cars like the VW ID.3 may be exempt from car tax for the time being, the possible arrival of a much-lauded mileage tax could cause operating costs to rise in the future
People who want to lease an electric car can save even more money by using a workplace salary sacrifice scheme to pay for a pre-tax electric car lease.
Alex Borgnis, Head of Motor Underwriting at LV= General Insurance, said: “With this new electric car cost index, we’re really trying to show in the most comprehensive way how the cost breakdown for people considering taking the plunge and buying an electric model will improve their performance. next car.
While the first purchase may seem intimidating to some, once you break down the monthly costs, especially for a lease or PCP, and then throw in the lower operating costs each year, it suddenly becomes something that offers great value over the course of the year. ownership period.
‘You really don’t have to take out another mortgage to get on the electric car ladder!’
Advisor battery electrochemist Dr Euan McTurk of Plug Life Consulting – who participated in the study – added: ‘The good news is that the cost of new electric cars is falling and should reach the same level as petrol by the mid-2020s. and diesel cars.
“In addition, the reliability of the components of an electric vehicle, including the battery, makes it very possible to buy an electric car, van, taxi, bus, etc. and drive hundreds of thousands of miles, much longer than you would run. a petrol or diesel car.’
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