Are electric vehicles really cheaper than their fuel equivalents?

Thinking about an electric vehicle? There are a whole host of reasons to go green, but is saving money one of them? Let's take a look… 

  • Are electric vehicles (EVs) cheaper in the long run?
  • Are tax, servicing and insurance cheaper for EVs?
  • Is charging your car cheaper than filling it with fuel?

Are electric cars cheaper to run than fuel cars?

Well, during our Electric Car Cost Index research with Dr Euan McTurk of Plug Life Consulting, we found that three of the 13 electric cars we looked at (Nissan Leaf, MG5 Long Range Excite and the Mini Electric Level 1) work out cheaper whether you bought one outright, leased one or purchased via PCP.

 

Although the other electric cars we looked at were more expensive to buy outright than their fuel equivalents, all 13 cars we looked at were cheaper to run over a period of seven years than their fuel equivalents.

 

Plus, seven of the 13 cars we researched are cheaper across a four-year lease term and four of them are cheaper on a three-year PCP agreement.

 

The savings on electric cars are heavily driven by lower average annual running costs which average around £1,147.21 for an electric car compared to £2,201.58 for a petrol or diesel car.

 

Average annual maintenance for an EV, which includes a service and replacement tyres and brakes, is almost £200 cheaper (£304 vs £498), mainly because they have very few moving components, making them considerably less likely to break down as they age and they're also much cheaper to maintain.

Is charging a car cheaper than filling one up with fuel?

The biggest annual saving comes from charging the vehicle vs having to pay for petrol or diesel. On average, EV drivers will pay just £467.40 to charge their car each year, based on driving 8,000 miles, while petrol and diesel drivers pay £1,199.40 to do the same mileage. That's a difference of £732. If drivers have an electricity tariff with a reduced off-peak overnight rate, then the annual cost of charging an EV is reduced to just £180.59.

 

 


Are electric vehicles cheaper to own and run than their fuel equivalents?

Vehicle comparisons

Electric car Petrol/Diesel car Total saving over 7
yr ownership
(including residual
value)

Total saving over
4yr lease

Total saving over
3yr PCP
Annual running cost
savings
Monthly running cost
savings
Nissan LEAF 40 kWH
N-Connecta
Ford Focus 1.0 ecoboost
125 Zetec
£3,210.63 £2,080.92 £308.23 £945.65 £78.80
Tesla Model 3 Saloon
Standard Plus 4dr Auto
BMW 320i M Sport
4dr Auto (Pro Pack)
£10,585.47 £4,976.11 -£3,128.57 £1,703.27 £141.94
VW ID.3 Life Pro
Performance 62kWh
5dr Auto
VW Golf 8 Life 2.0
TDI 115PS 7-speed DSG 5dr
£2,417.82 -£3,306.96 -£1,347.00 £772.41 £64.37
Kia e-Niro 64kwh
4+5dr Auto
Kia Niro 1.6GDi
Hybrid 4-5dr DCT
£1,718.96 -£677.99 -£2,937.41 £852.15 £71.01
Volkswagen e-UP 32kWh
5dr Auto
Volkswagen Up 65ps
Up 5dr manual
£2,620.42 £1,918.33 -£3,602.67 £994.21 £82.85
MG ZS EV Trophy 51kWh MG ZS Exclusive 5dr
1.5 VTI-tech
£2,137.65 -£1,038.80 -£6,022.73 £1,109.84 £92.49
Peugeot E-2008 GT 50kWh
5dr Auto (vs Peugeot)
Peugeot 2008 GT
1.2L PURETECH 103 S&S
£1,282.84 £3,070.05 -£983.62 £927.75 £77.31
Skoda Enyaq iV 80 Skoda Kodiaq SE
1.5 TSI 150 PS DSG
£5,812.63 -£3,747.38 -£2,331.52 £1,434.80 £119.57
Hyundai Ioniq 5 Ultimate
58kWh 170PS
Hyundai Tucson Ultimate
1.6 150PS Petrol 2WD Manual
£2,459.25 -£2,263.84 -£5,039.25
£1,007.46 £83.96
MG5 Long Range Excite Skoda Octavia Estate
SE 1.5 TSI 150 PS 6G Manual
£5,473.40 £2,445.27 £2,269.85 £1,016.79 £84.73
Fiat 500e Red Fiat 500 Red

£586.16

£5,527.26

-£1,618.95 £734.49 £61.21
Mini Electric Level1 Mini 3dr Hatch Cooper
S Classic
£6,225.48 £2,641.45 £308.97 £1,240.95 £103.41
Vauxhall Corsa-e SE PREMIUM
(ELECTRIC 11KW)
Vauxhall Corsa 5dr
SRI EDITION 1.2 (130PS)
£5,675.97 -£1,562.42 £2,118.74 £967.08
 
£80.59

Is an electric car cheaper to buy than a fuel car?

The purchase price for electric cars is still higher than equivalent petrol or diesel cars. Our study explored a range of models, from entry level electric vehicles (EVs) like the Volkswagen e-UP (£22,585), Fiat 500e (£25,495) and Vauxhall Corsa-e (£25,805), all the way through to high-end cars such as the Tesla Model 3 (£42,990), Hyundai Ioniq 5 (£42,295) and the Skoda Enyaq iV 80 (£40,130)

Across all the cars we looked at, the average cost of an EV was £32,779, while the average cost of a petrol or diesel car at £25,685. That's just over a £7,000 difference, but the gap is beginning to close. The Vauxhall Corsa-e is only £2,175 more expensive than its petrol equivalent, and the difference between the Mini Electric Level1 and Mini Hatch Cooper S Classic is now less than £5,000.

Thanks to the lower running costs of an EV, drivers who outright buy any of the 13 EVs we looked at will regain some of their initial purchase costs over an ownership period of seven years, ranging from £586 on the Fiat 500e Red to over £10,500 for the Tesla Model 3. The average saving for an EV owner over seven years is £3,862.05, with ten of the 13 cars saving over £2,000.

With the rising cost of living amongst other financial factors and the hangover from the coronavirus pandemic, we know that buying a new car outright is not feasible for most of us. However, leasing an EV is cost effective (more so than taking out a PCP contract) and you'll benefit from those reduced running costs straight away.

Apart from the VW ID3, every car we looked at is significantly cheaper to lease over a four year period than via a PCP on a three year contract, according to insights provided by vehicle leasing company CBVC. The monthly and annual prices on the table in this article also factor in an upfront deposit, which is on average, £3,189.72.


The assumption is that electric cars are more expensive to insure but that’s not the case anymore. Insurance premiums are on average cheaper for the EVs analysed vs the petrol or diesel models - £297 vs £310. Insurance is cheaper on seven of the 13 vehicle pairings, with some cars including the ID.3 and Vauxhall Corsa-e substantially cheaper than their ICE equivalents, at 22 and 33% respectively

The other significant saving for electric car drivers comes from not having to pay tax on the vehicle, which for petrol and drivers is on average £193.68 annually. Over a seven-year ownership this equates to £1,355.76.

What's the best value electric car?

 

According to our latest Electric Car Cost Index, the Nissan Leaf, MG5 Long Range Excite and the Mini Electric Level 1 are three of the best value electric cars for drivers considering going green.

 

This research was done in partnership with consultant battery electrochemist Dr. Euan McTurk of Plug Life Consulting, who examined the purchase (outright ownership), financing (lease and PCP) and running costs (fuel/charging, maintenance, insurance, tax) for 13 popular electric car models and their petrol or diesel equivalents. The purpose of this research is to demonstrate the true cost of being an electric car owner.

What do the experts say?


Gill Nowell, Head of EV at LV= General Insurance, commented
:

“Despite the upfront sticker price of an electric car being higher than the equivalent petrol or diesel car, it pays to look at all the costs involved. Even with escalating fuel and energy costs, if people can afford to make the switch to an electric car, either new or second hand, then charging up with energy at home rather than filling up at a petrol station is far cheaper – and better for the environment and our local air quality.”

Consultant Battery Electrochemist Dr Euan McTurk of Plug Life Consulting, commented:

"With petrol and diesel prices going through the roof, this is a timely reminder that electric cars can save money as well as emissions. Higher mileage drivers will save even more money by going electric, so if you do more than 8,000 miles per year, you’ll recoup your outlay much faster, and your savings will be even higher.  Plus, because electric vehicles are so mechanically reliable, as they get older, they’ll spend much more time on the road and much less time in the garage than a petrol or diesel car of the same age, saving you considerable time and money – this bodes well for people looking to buy a second hand EV.”

In April 2019, we launched the UK’s first car insurance product developed solely for electric cars. This insurance provides tailored cover to meet the specific needs of electric car owners and includes cover for home charging cables and wall boxes, the supply of electric or hybrid courtesy cars and access to a network of specialist electric car repairers across the country. 

For everything EVs, visit https://www.lvelectrix.co.uk/

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