Does owning an electric vehicle make financial sense?

Electric Cars

In July 2019, the sales of Battery Electric Vehicles (BEV) rose by nearly 160 per cent, reaching its largest market share ever. Yet, only one in four people claim they’d consider buying a fully electric car in the next five years.

With sales of EVs increasing, but consumer scepticism still strong,  Charles Stubbings, of Moneybarn explores whether owning an electric vehicle makes financial sense.

Shop around

Before looking into brands and models, decide on your criteria. This should be based on how you intend to use the vehicle, the length of your daily commute for example and most importantly, your budget.  

Although the cost of purchasing an electric vehicle is often more than a petrol or diesel model – EVs start from around £20,000 – running and maintenance costs tend to be cheaper. 

More and more mainstream magazines and news sites are reviewing the most popular EVs on the market. Understanding the spec, handling and limitations of EVs will help you decide which one is best for you.

Government schemes

The government has pledged to significantly reduce vehicle emissions by 2050 and has introduced several schemes aimed at making it cheaper and easier to switch to a greener vehicle.

The government’s Plug-In Car Grant offers a discount of up to £3,500 on eligible cars and up to £8,000 on eligible vans and was updated in 2018 to eliminate hybrid vehicles in favour of low emission, fully-electric vehicles. 

This year, the government updated its Electric Vehicle Homecharge Scheme, in a bid to reduce UK emissions, offering up to 75 percent (capped at £500 inc. VAT) off the total cost of charge-points and installation costs.

Other efforts to improve sustainability in the UK include a proposed law on new-build homes, which will be required to include infrastructure for electric vehicle charge points as part of the ‘Road to Zero’ Strategy. This would see vehicles automatically charge during off-peak electricity tariff times, bringing costs down for EV drivers.

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Running costs

EVs cost, on average, 23 per cent less to service and maintain than their petrol alternatives, and it’s currently over 70% cheaper to charge an EV for a 100-mile drive than covering the same distance with a tank of petrol.

Plus, installing a home EV charging point is even cheaper than using public charging points. Private charging points can cost as little as 5p per kWh, meaning a 60kWh electric vehicle could drive a 100-mile journey for just £3.  

Road tax exemption

Road tax, or Vehicle Excise Duty (VED), is what motorists pay to legally drive on UK public roads. How much you pay depends on how environmentally-friendly your car is and can cost up to £2135 per year.

However, pure electric vehicles are exempt from road tax, unless it has a list price of over £40,000, after which you’ll be subject to a separate tax, which you’ll pay for the first five years of vehicle ownership.

Hybrid Electric Vehicles (HEV) are required to pay road tax, which is set at a reduced annual tax rate of £135.

For vehicles first registered before March 2001, road tax is calculated based on the vehicle’s engine size rather than CO2 emissions.

The sound of silent

Despite the government’s attempts to make EVs more accessible, insurance costs are, on average, 14 percent higher than that of a petrol or diesel vehicle.

That said, often drivers step out of a large engined petrol or diesel model to find equal or better performance in an EV and see their insurance fall.

The main reason sited for higher premium is an EV’s silent motor. While this is truly a perk, it can pose a danger to pedestrians and cyclists, as EVs driving 12 mph or less are virtually silent, making pedestrian collisions 40 percent more likely.

Changes to manufacturing laws in June 2019 require EVs to be fitted with an Acoustic Vehicle Alert System (AVAS), producing noise at slow speeds which should see such risks reduced.

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The Founder of driveEV. A driving and new technology fan enjoying learning all about the future of motoring. I drive a BMW i3.

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