Electric cars back in vogue after petrol prices hit record

The dwindling popularity of electric vehicles has been reversed in a week after record rises in petrol prices pushed drivers back towards the new technology.

Average pump prices hit £1.59 per litre of petrol this week while diesel was at £ 1.67. There were reports of some stations charging more than £2 for a litre of diesel. The surge in cost followed announcements from the British and American governments that they would phase out any use of Russian oil, pushing up the price of crude towards $139 a barrel.

The news sent drivers into a frenzy and caused a 37pc rise in those looking to buy an electric vehicle, according to online marketplace Carwow.

Hugo Griffiths from the website said: “Motorists are looking to mitigate the impact rising petrol prices have on their household budgets. Two in three motorists tell us costs are a key consideration for them as they decide whether to go electric.”

The latest fuel price rises reversed a trend of falling demand for electric vehicles following increases in household energy costs.

On AutoTrader, another online car marketplace, only one in six buyers considered an electric alternative last month – down from one in four in September, when petrol prices rose and there was a national shortage of fuel.

This came after households were told electricity bills would dramatically rise as the cost of wholesale gas did. A price cap on electricity rose in October 2021, will rise by another 54pc in April and potentially double again in October 2022.

However, the latest rise in petrol prices has wiped out the negative impact of increased electricity costs.

A Kia e-Niro with a 180-mile range will cost £11.05 to charge fully from April, compared with £8.11 today. The equivalent mileage in a petrol Kia Niro at today’s prices would cost £21.94, however. Meanwhile, a full charge on a Hyundai Kona Electric with a 300mile range would cost around £ 18. The equivalent mileage in a Kona SUV would cost £55.31.

The payoff for electric vehicles has remained roughly the same, following price rises in both camps. Last year consumer group Which? found it would take 10.9 years in saved fuel, servicing and tax costs to make up the cost difference between a Mini EV and its petrol equivalent, the Mini One. The Mini EV was around £864 cheaper to run each year than the petrol, but cost £9,395 more to buy.

A Mini 3- door Hatch, the cheapest petrol version available, costs £ 9,595 less than the Mini Electric, the cheapest electric version. From April, it will cost £925 more to run each year, taking 10.4 years to break even.

Alison Bell of Venson Automotive Solutions, a fleet management service provider, said: “As household bills increase, the growing cost per mile will hit us all, regardless of what we drive. But the reality is that it costs half the price of a full petrol tank to fully charge an electric battery, and with both electricity and petrol prices rising, this is likely to remain true for the foreseeable future.”

There are significant tax benefits for electric vehicle owners. Employers offering electric cars are currently liable to pay less tax than those offering petrol or diesel equivalents. Employees also benefit from reduced tax.

A company car used for personal use is defined as a “benefit in kind”, which usually means the employee must pay some tax on the benefit they receive. Drivers will be taxed at their income tax rate on a percentage of the car’s value, with the percentage based on the amount of CO2 the car emits.

For example, a Ford Fiesta petrol 1.1 75 Trend 3dr worth £16,620 would attract a 28pc benefit- in-kind tax charge of £4,654. At 20pc, a basic-rate taxpayer would have to pay £931.

However, for a similar electric vehicle the benefit-in-kind tax charge would be 1pc for the 2021-22 tax year, rising to 2pc from next tax year.

Purely electric vehicles are also exempt from road tax. Londoners with electric vehicles are also exempt from the congestion charge and ultra-low emission zone – Ulez – in the centre of the city. This will affect more people from next year. Last week the Mayor, Sadiq Khan, announced that the capital’s levy on polluting vehicles would be extended to the whole of greater London.

However, AutoTrader’s Erin Baker said the higher price tag for electric cars was still the biggest barrier for most customers. Electric vehicles are 37pc more expensive than their petrol or diesel equivalents, despite the gap closing slightly this year.

Ms Baker added: “When you look at the people who are currently searching for electric cars it’s predominantly older, richer people living in affluent parts of the country. Sooner or later we will run out of people rich enough to buy electric cars, and the drop in demand could be an early indication of what’s to come.”

Alex Thomas from motor finance company Carvine said government incentives were not enough.

“When push comes to shove, incentives won’t be enough to drive car owners to buy an electric vehicle,” he said. “With the growing pressure on people’s incomes, we’re likely to see a dip in the current market.”