Counting the cost of an electric car

We know electric cars are great for the environment, but there’s a problem… they’re expensive.

Great for the environment and quiet to drive, electric cars are growing in popularity, but not by as much as you might think. Sales of electric vehicles made up just 2.7% 1 of new car sales the first half of 2019. 

A study by the AA 2 showed that while half of young people would like to own an electric car, older drivers are less keen, with only a quarter interested in eco-friendly models. Reasons vary, but the most common concerns are range anxiety – the fear that power will run out before you can recharge – and the high upfront cost. 

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Insurance and other costs

They have a point. New electric cars are expensive to buy. Even the cheapest on the market, the Renault Zoe, costs around £14,000 after you’ve factored the government’s Plug In Car Grant, which gives a saving of £4,500 off the list price of zero-emission models. If you’re after something a bit fancier, a BMW i3s starts at £33,480 and a Tesla Model S at £54,500, after the government grant.

They can cost a little more to insure too. A 35-year-old woman in London can expect to pay around £387 to insure a 2017 electric Nissan Leaf, compared with £363 for an automatic Qashqai with a petrol engine, or £324 for a manual Micra with a diesel engine. 

The positives

Despite the upfront cost, an electric car could still prove a worthy investment.

For a start, they are exceptionally cheap to run. Research by electric vehicle experts Go Ultra Low claims you can charge at vehicle at home for as little as £3.88 3

If you drive the UK average of 650 miles a month, you could save an impressive £793 a year on fuel according to Go Ultra Low 4.

It’s cheapest to charge your car at home overnight if you have Economy 7 or Economy 10 tariffs. If you have off-street parking you’re in luck, but if you park your car on the street, or have off-street parking you don’t own the freehold to, you’ll have to charge your car elsewhere. 

The UK has more than 16,500 charge points on public streets and in car parks, service stations, workplaces, hotels and restaurants. It will soon be compulsory for motorway service stations to offer them and plans are afoot to turn some lampposts into charging points too. Convenient if you live in a built-up area. 

Some charge points are free to use but others, like those at motorway service stations, will have a small fee. To fully charge a BMW i3 at a service station, for example, you can expect to pay £5.94 – that’s 6.7p a mile 5.

Costs will vary depending on the provider but are unlikely to come close to the price of filling up with petrol or diesel fuel.  

Add to this discounts on car tax – drivers of pure electric cars pay nothing, as long as the car costs less than £40,000 – and, if you drive in London, you’ll be exempt from the congestion charge too. 

The negatives

If your property is remote or you travel off the beaten track regularly, an electric car may not be practical until infrastructure has caught up. 

The UK government is investing heavily in the charging network – installing points every 20 miles along England’s strategic route network – so the situation is improving fast.

But charging can take a while. Even rapid charge points take around 20 minutes to fully charge a battery, making overnight home charging the cheapest and most convenient option. 

If you have access to a charge point and think an electric vehicle might be for you, it’s wise to factor in potential depreciation.

Although cheap to run, some electric cars don’t seem to hold their value very well. A 2014 Nissan Leaf sells for between £7,500-£9,000 (a 50-40% decrease), and a 2015 Renault Zoe can be found for less than £6,000 6 (57% decrease). Teslas, however, hold on to their value much better.

Consider also the cost of replacing parts. Some electric batteries will only last for around 10 years, so, depending on how long you plan to own the car, you might have to replace one at some point. 

Transformative tech

Technology is improving at an unprecedented rate. 

“We will see longer-lasting, cheaper batteries and electric cars with an improved range in the near future,” predicts Steve Ashford, Aviva’s Head of Underwriting. “Wireless car charging, for example, is set to be launched by BMW this year and we can expect more innovation in this area.”

In addition, as electric cars become more widely used (Uber, for example, is planning to electrify its whole fleet), manufacturing will increase, the cost of parts will fall and electric will become more affordable. 

“The cost of making and repairing these vehicles will fall, which will, in turn, reduce the cost of buying and insuring them,” explains Ashford.

Could an electric vehicle save you money? 

  • Do you have somewhere, like an off-street parking space or nearby charge point, where you can charge the car?
  • Do you use your car for frequent, short journeys (like a daily commute to work)?
  • Can you afford an upfront cost of at least £15,000?

If you answered mostly ‘yes’, an electric vehicle might save you money.

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