How much does an electric car really cost? 

We all know they save a fortune in fuel, but what about the other aspects of electric car ownership? Could they be an expensive nightmare or a financial saviour?

Tom Barnard

4.3.2020

If you’re thinking about taking the plunge into electric car ownership, you’re bound to have hundreds of questions. It’s a big investment and you’ll want to make sure it’s not going to become an expensive mistake. Buying a petrol or diesel model is the safer, familiar option which doesn’t require you to change anything or explain your choice at dinner parties.

But if you’ve got this far, you’ll know there are some big advantages to going electric. Never having to visit a petrol station again and waking up to a full ‘tank’ must appeal. The silence while driving, and of course the environmental benefits. 

But how much does an electric car really cost to run? Are there expenses which the sales staff aren’t telling you about? Will you be able to sell it on in a few years’ time?

Never have to see these again. Unless you need to mow the lawn or buy some charcoal for the barbecue.

Cost of charging an electric car

First, let’s look at the ‘fuel’ costs. If you charge at home on the average domestic electricity rate of 14p/kWh then you’ll be able to travel for about 100 miles for about £4 in a family-sized electric car such as a Nissan Leaf or VW e-Golf. If we assume that a petrol or diesel car of the same size can manage 45mpg and a gallon of fuel is £1.28/litre, then the same journey will cost around £13. Multiply that by 10,000 miles for a year’s motoring and you’ll see that the electric car will be about £900 less to fuel per year.

That saving will be eroded if you need to regularly need to charge in public though. There are still some charging points which offer electricity for free, but most need payment of some description. This varies according to the type of charger and the location. An AC charge from the sort of point you’d find in a car park might be only 15-20p/kWh while a rapid (DC) charge at a motorway service station from Ecotricity is 39p per kWh. That’s still cheaper than petrol or diesel, but not much. So, it’s best to only use these to get enough juice to get you home, where you can fully charge at a cheaper rate. You’ll spend less on coffee and doughnuts too, as you won’t be hanging around a service station for so long.

Like most things at service stations though, you can get charging for much less at a supermarket. Rapid charging at a Tesco or Aldi is about 24p/kW, which is low enough to mean you could get a reasonably-priced 80% charge in 30 minutes while you do a weekend shop. It could make electric car ownership realistic, even if you don’t have off-street parking.

Like Haribo and sandwiches, buying electricity at a service station is pricier than going to a supermarket.

What happens to my electricity bill when I get an electric car?

Unsurprisingly, your electricity bill is going to shoot up when you get an electric car, but it won’t be horrific and will certainly be by less than your fuel bill. There are ways of making sure you can cut the cost further too, by shopping around for the best energy rates. Use a comparison site to check the keenest deals for suppliers, and bear in mind you’re your estimated usage from the previous year isn’t going to be representative of your new needs – look for ways to get the electricity rate per kW/h as low as possible. A higher standing charge with a lower rate per kW/h is the way to go.

The cheapest way of ‘fuelling’ an EV is usually to look for an energy supplier which uses a smart meter. It means you can set your car to start charging when the electricity rate is cheapest, usually in the middle of the night. Energy companies love this as demand for power is much less in the early hours while everyone is sleeping and charging cars in this down period makes use of power which would otherwise be wasted.

The future is likely to bring even cheaper (or even free) off-peak electricity for drivers who are prepared to let their car batteries be used for Vehicle-to-Grid schemes. You can find out more about those in our explainers.

When thinking about your bill, it’s worth remembering that some electric cars are more efficient than others too. Just as a big, heavy petrol SUV will use more fuel than a city car, a bigger electric car will need charging more often and for longer than a small hatchback. A BMW i3, for example, is almost half the weight of a Mercedes EQC.

The difference isn’t as noticeable as the cost of running an EV is so much less than a petrol or diesel car. But it’s still worth bearing in mind that a bigger, heavier EV will need to spend longer plugged in and might not be able to get to 100% full in the time slot when your supplier offers the cheapest electric rate.

Range Rover Evoque charging at house Charging at home is the usually the cheapest way to fill a battery

How do I get a charge point installed? What do they cost?

If you’re thinking you can get by with just the three-pin plug socket which you usually use for the lawnmower and Christmas lights, forget it. Unless you have a tiny electric car like a Renault Twizy, the small amount of electricity you can get through a conventional plug is just not going to be practical for a car you need to use every day. A Tesla Model X for example would take nearly two solid days to completely charge from a so-called “granny charger”. They’re useful in an emergency or if you are going to stay somewhere overnight (on holiday or visiting relatives for example) but you won’t be wanting to use it every day.

So, you’re going to need to get a dedicated charge point installed at your house. Besides being safer and faster, most of the points have tethered cables, which means they’re permanently attached to the charger, so you don’t need to fish them out of your boot every time you want to plug in.

Getting a point installed should be fairly painless, depending on where you want it screwed to your house. If you are buying the car from a dealer, they’ll be able to help guide you through the process, which is normally just handed over to a company such as PodPoint.

The good news is that the government (and sometimes the car maker too) will throw some money into the pot to help with your installation as part of the Office for Low Emission Vehicles (OLEV) grant. In Scotland there’s even more cash available, with an additional £300 up for grabs from the Energy Savings Trust Scotland.

There are a few requirements and regulations around it, but if you have a relatively modern house and an easy-to-access location, you could (should) get the charge point for free. You might be offered an upgrade to a faster charger too, which might be worth it if you have a car which is capable of taking it or want to make your point ‘future proof’.

Bear in mind though that the installer won’t be happy if you have old wiring, an antique fuse board or want to install the point somewhere unusual. They will happily spend a few hours at it but are not going to tunnel under your ornamental pond and block paved driveway to run a cable. If you think you might need a bit more work, it might be best to get your own electrician to do the basic preparation and upgrades and call the installer in last.

If you’re in rented accommodation or a communal car park, you’re going to have to make some calls to ask permission for the work too. Most landlords and management companies will have had some experience of this by now, but don’t expect your neighbours to pay for your car charging from a communal electricity bill. 

It sounds like hassle, but you’ll only need to do it once and then you have your very own filling station on your driveway.

Your very own filling station on your drive. As long as you don't have an ornamental pond in the way.

What about charging at work?

Many employers see the environmental benefit of electric cars or are preparing for the influx of EVs following the changes to benefit-in-kind taxation. They will usually be happy to invest in chargers in workplace car parks. Construction company Skanska, for example, has installed 74 points in its head office for visitors and employees to use.

If you’re pushing to have them at your work, it’s worth seeing if there are any grants available to help with the cost. You should also encourage your company to think about dedicated charge points rather than just a series of three-pin sockets. 

If you win the battle, be prepared for some resistance and sniping from other employees who feel bitter that they have to pay for their fuel while you get your car filled up for free while you work. You might have to consider making a contribution to the cost of the energy to placate the water cooler whingers. 

The tax man won’t complain though - the government allows you to charge your car for free at work without having to pay anything to the inland revenue.

As more people get electric cars, there might be a battle for spaces. So, if there is only one charge point in your car park, consider moving your car at lunchtime so other employees and visitors can have a go if they need to.

Finally, don’t just plug in to a socket and start charging your car without clearing it with your employer first. Unless they’ve given you permission, you could be accused of stealing. In the view of the law it could be no different to nicking a few quid from the till every day or filling your pockets with Post-It Note pads and staplers.

Nice employers will install a charge point for staff at the office.

Is an electric car worth the money?

There’s no getting away from the fast that electric cars are expensive to buy. Look at the price lists of the most common models and it’s enough to send you running back to a petrol or diesel car. For example, the list price of a humble-sounding Vauxhall Corsa-e can top £33,000, which is the same as a BMW 3-Series with a petrol engine.

But there are things to bear in mind. First, the government will give you a grant of £3,500 to help buy an electric car, and the road fund licence (what used to be called the tax disc) is free for the life of the car (unless the car is a plug in hybrid and costs over £40,000 – see here for an explainer of this rule because it’s brain-bogglingly complicated).

Then you’ll need to factor in the fuel cost savings and any other incentives you might pick up locally to you, such as free parking or congestion charge exemption. Also take a look at the finance costs, as electric cars generally hold their value better than a petrol or diesel and that makes lease, PCP or PCH schemes cheaper as you are only paying the money that your car will lose in value while you have it. As it will be worth more when you sell, it costs less per month. So, do some sums and work out what your total cost of ownership will be once everything is taken into account - you might be pleasantly surprised.

An electric Corsa is now the price of a BMW 3-Series. But it will cost buttons to run.

But why are electric cars so expensive?

Compared to a conventional car, electric vehicles are really quite simple. While a petrol or diesel has to control and harness thousands of tiny explosions and transfer the power of them to the wheels through a complicated gearbox, an electric car just has a big motor and a battery.

But it is that battery which is the expensive part of that electric car. It uses precious metals and needs specialist manufacturing processes which still aren’t being done on a big enough scale to get costs low – although this is improving.

It means that you need to think about the size of battery you really need for your new electric car. Something with a massive range is going to be much more expensive and heavier than the same car (or a rival) with a smaller power pack. Ask yourself how far you’ll really need to go without stopping and remember most nights it will be filling up while you sleep. If the only long journey you do is to see your gran at Christmas, then you’ll be much better off with a smaller battery which is fine for most of the year and will need charging on the way to your gran’s for 30 minutes. It’ll save thousands on the purchase price and be cheaper to run overall.

Car makers have started to realise this too and are giving up on the constant battle to have the longest range. The new electric MINI for example has a 36kWh battery which will be perfectly acceptable for most drivers, according to BMW’s research. But keeping it small keeps the cost down.

The cost of an electric MINI shouldn't bring you to your knees

What about fixing electric cars? Is that pricey? What goes wrong?

If the battery is so expensive, what happens when it goes wrong? The reliability of electric cars was one of the biggest question marks when they started to become more popular at the beginning of the last decade. It was new technology, and no-one knew if it was reliable. 

We are all used to our smartphones and laptops needing a new battery after a few years of hard use, but replacements cost less than £100. For an electric car, it’s thousands.

The cause wasn’t helped by models like the Reva G-Wiz which used old-tech Ni-Cad batteries which faded into uselessness after a few short years.

But now we have a decade of experience to see what’s happened to all of those batteries in cars like the Nissan Leaf, Mitsubishi i-MiEV and Renault Zoe – and the news is generally good. Total failures are very rare, and although they do fade and degrade over time, it’s not disastrous. Taxi companies have run Leafs to 150,000 miles and more and the batteries are still useable.

As an added bonus, the batteries actually have a decent second-hand value even if they have degraded. The cells are reused as energy storage in people’s homes and industry, helping to make the most of renewable electricity from wind and solar.

Other than this, pure electric cars have far less to go wrong than the equivalent petrol or diesel and this shows when you get your servicing bill. There’s no oil to change, emissions to check, fuel to filter or clutch to fix. As the brakes are used less thanks to regenerative braking (where the energy used to slow down is sent back to the battery) those parts last longer too. Most of the other bits are shared with ‘normal’ cars, so are easily available and cheap. As an example, BMW offer a service plan for £15 per month for its all-electric i3, which is £3 cheaper than a petrol MINI and £5 less than a BMW 1-Series.

The only expense which might cost more than you’re used to is tyres. As electric cars produce a surprising amount of power as soon as you press the accelerator pedal and are heavier than a petrol equivalents, the poor rubber can take a bit of a beating if you drive enthusiastically. The makers tend to suggest some quite specialised ‘eco’ tyres are fitted too, so the bills can be a bit of a surprise. Bear that in mind before you specify the ‘bling’ 22-inch wheels on the options list.

The Kwik Fit fitters will not have much luck selling you an new exhaust

Insurance

Now that electric cars are a mainstream choice, there’s no problem insuring them in exactly the same way as any other car. The cost does tend to be slightly more expensive on average, possibly because they tend to be faster than a conventional petrol car and need specialist repairers if there’s an accident which damages the battery.

The cost isn’t likely to be prohibitive unless you are a particularly risky driver though.

Insurers are happy to cover electric cars, but prefer it if you don't bend them in half. (Pic credit: Dekra)

Company Car Tax and electric cars

If you are lucky enough to be given a car by your company, you’ll be keen to get into an electric car as the potential savings can run into thousands of pounds a year. The reason is the new rules around benefit in kind taxation, which mean pure electric drivers will pay no money to the Inland Revenue for the 2020/21 tax year. Compared that to the emission-based taxes on petrol and diesel cars which can run into thousands. 

For example, if you are running a diesel Audi SQ7 and a high-rate tax payer you’d would have to pay more than £20,000 in extra income tax every year. The cost for a Tesla Model X in the 2020/21 period will be zero. It goes up slightly in 2021/22, but only to £600. That sort of saving could pay for a new kitchen and a holiday – every year. 

Have a look here for a more in-depth look at the rules and savings.

Drive a Tesla, get a new kitchen.

Electric car resale values – do EVs have good residual values?

Anyone who bought a used electric car in the past few years may have experienced an odd phenomenon. Their car has actually gone up in value. This usually only happens to rare classics and limited-edition exotica, but because of the sudden interest in electric cars there is now a huge demand for EVs which don’t have the big price tag of a brand-new model – especially as the supply of some cars is restricted.

It helps that the price of some of these used cars around 2015-16 was really rock bottom. A Nissan Leaf could lose more than half its value in a year, as customers were wary of the technology and had been scared into thinking a big bill for a new battery would be imminent. This is happily turned out not to be true, and electric cars have proven to be cheap to run and reliable. As a result, the demand for them has been growing and they are now sought-after.

There are a growing number of specialist dealers too, who will actively seek out used electric cars. Other traders, who were initially sceptical or wary of these strange and unfamiliar machines, are now less scared of the technology and recognise that they are good for business. This is great news for all electric car owners as it means your car will hold its value and ultimately be cheaper to own – although it might hurt a bit when you have to pay more for the car in the first place!

To ensure your electric car maintains the maximum value when you come to sell, there are a few other pointers besides the usual “don’t scrape it” advice. Firstly, the service history is arguably even more important than on a petrol or diesel car, as the dealer will check the condition of the battery. This will be essential to maintain the warranty, but will also provide proof to a potential buyer that all is well.

There are ways to look after your battery to make sure it has the longest life too. Your owner’s manual will have advice. It might not be possible or practical to do it all of the time, but if you can get by without charging to 100% all of the time and avoid leaving the car fully charged for a long period, then it makes sense.

Second, make sure you include all of the cables when you come to sell. These are pricey to replace, with some costing around £600 and they can often go missing. 

Finally, the best way to improve the value of electric cars is to talk about them. Tell your friends and family how good they are and how it can fit into their lives. Besides increasing demand overall, you might find a willing buyer at a price which saves everyone a bit of cash.

Blue used Nissan Leaf for sale Old Leafs aren't falling this year (Pic: Autotrader)

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