Going electric could help you save
Tired of paying high petrol prices? New electric cars offer savings on fuel, road tax and insurance, finds Sam Meadows
Environmentally conscious drivers hope to save the planet, but increasingly they are saving their wallets too. As part of the Government’s “road-to-zero” plan, the sale of new petrol and diesel cars is set to be outlawed by 2040 in a bid to make Britain’s roads more environmentally friendly. Last week an influential panel of MPS called on the Government to bring this date forward by eight years, calling the current plans “vague and unambitious”.
Demand is already growing – with searches for electric vehicles on used-car listings site Auto Trader up by 65pc in a year – but several experts argue that petrol-free cars won’t truly take off until they are cheaper to own than their traditional counterparts.
Adrian Del Maestro, of PWC Strategy&, the strategy consultancy arm of the auditors, said: “Consumers need to be aware of the economics of having an electric vehicle. There’s a lot of publicity around the environmental impact. People aren’t so aware of the financial benefits.”
Analysis by Telegraph Money, combined with academic studies, suggest that while the upfront outlay of buying an electric car still outweighs that of a traditional petrol or diesel, the annual cost is already around £1,500 cheaper for electric – and this gap will only widen. So where are the savings to be made?
Buying the car
Traditionally, electric cars have been more expensive. Data from Auto Trader shows there is a premium on buying electric vehicles. The average price of a used car in September was £12,853, while the average cost of a used electric vehicle was £17,754. But this is rapidly changing.
A group of researchers from the University of Leeds analysed the annual cost of car ownership in 2015 in the UK and concluded electric ownership is around 10pc cheaper, even though electric vehicles depreciate in value at a faster rate than petrol.
And Fiona Howarth, of energy supplier Octopus Energy’s specialist electric vehicle division, said electric cars are starting to hold their value far better than in the past.
She added: “There are a few factors driving that. Demand has increased massively, but crucially people are becoming more confident in using an electric car and charging it at home.”
Refuelling
This is where electric vehicles really win the day. Britain’s fuel taxes mean petrol costs far more than the electricity. The Leeds researchers calculated the annual petrol cost was £4,062, while electricity costs were just £653.
Ms Howarth said they typically expect an electricity bill to grow by at least 58pc when a customer gets an electric vehicle which, using average energy bills, would roughly align with the Leeds study. She said the savings against petrol were so high that some drivers can effectively pay for a finance deal on a brand-new car. Some energy suppliers, including Octopus, have tariffs designed specifically for owners of electric vehicles. The Octopus Energy Go tariff offers cut-price renewable energy for four hours a night making it cheaper to charge at home.
It is possible to charge by plugging into the mains, and the cost of a specialist socket is typically around £1,000 according to a PWC report, due to be published tomorrow. Mr Del Maestro also pointed out that around 30pc of homeowners do not have private parking, so could not charge at home. There are currently only 14,000 public charging points, but he said a number of companies are exploring ways to extend the network.
Insurance and other costs
The other major cost associated with car ownership is usually insurance, and here, too, the benefits of electric vehicles are starting to be seen.
Last year, research by Comparethemarket.com, the price comparison website, suggested electric owners paid around 50pc more than petrol drivers for their insurance. Telegraph Money asked the website to run the numbers again and this time the average electric car premium was £612, more than £100 cheaper than the average all-round premium of £731.
Electric cars worth less than £40,000 are also exempt from paying an annual road tax, which can cost hundreds of pounds for petrol cars.
Go Ultra Low, an electric car
awareness campaign, said it can be 70pc cheaper to maintain and service a fully electric car.
The future picture
Over time, experts argue that the incentives for an electric commute will only get stronger.
The plug-in car grant is currently worth up to £3,500 off a new electric car, but even if the Government were to remove its subsidies, various industry figures believe the cost gap could be closed by 2025.
The future could even bring some new money making opportunities for electric car owners.
The development of a “smart” grid will eventually allow car owners to sell the electricity held in their vehicle’s battery back to the grid at a time of day when the price is high, before recharging overnight, when the cost will be lower.
Ovo Energy, a supplier, now offers a “vehicle-to-grid” service for just this purpose and claims that this could save drivers £250 a year – but only if they have a Nissan Leaf.
It can be 70pc cheaper to maintain and service a fully electric car