Will an electric car save me money?
- Are there hidden costs of owning an electric car?
- What electric vehicle tax savings are there?
- How much does it cost to charge an electric car?
- Is there free electric car charging?
- Do you really save money with electric cars?
- Are electric cars expensive to insure?
- Will an electric car save me money?
Are you ready to go electric, but not quite sure how financially viable it is? Looking for more information on the costs and savings of Electric Vehicles (EVs)? Or maybe you just want to simply know: “will an electric car save me money?”
Well, if you can relate to any of these questions you’re in the right place. In this article, we explore how you can enjoy tax savings, the costs of charging an electric car and the best tips on how you can save money with your vehicle.
Are there hidden costs of owning an electric car?
So, you may be wondering are there any hidden costs of owning an electric car? The answer to this isn’t a simple yes or no, it depends on what you count as hidden. For example, one cost you will incur with your EV is when charging.
There are many ways to go about doing this. Now, it can be a struggle to only use public chargers to fill up your EV if there aren’t any available or it’s not compatible with your vehicle, however, it is completely possible, and there are plenty of people that are doing it today!
What is the typical cost of a public charger?
- Non-rapid charging: 12p per kWh*
- Rapid charging: 15p per kWh*
- Ultra-rapid charging: 50p per kWh*
*Correct at the time of writing 24/03/2022
Although this can sometimes be more expensive than charging from home, it is still significantly more affordable than filling up an internal combustion engine (ICE) vehicle. ICE cars include vehicles with petrol or diesel engines.
Another option is to install a home charger for your vehicle. In terms of charging your EV, this is where you save the most money as you have the option to charge it overnight at a lower cost. We’ll go into the costs of charging a bit later on.
At the time of writing (August 2022) a 7.5kWh charger can be around £899 to install at home, however, this cost could increase if your electrics can’t cope with powering your vehicle charger.
If this is the case, you’ll need to upgrade your household electrics. This could include buying and installing a new consumer unit as your current fuse box may not be large enough to safely power your EV charger.
Why the upgrade?
Running everything on electric at the same time is likely to be unsafe for the home and could create a fire hazard. Your current fuse or consumer box may not be powerful enough to charge a whole vehicle and could impose health and safety risks for everyone in your home.
This is why if you want a powerful charger for a car at home, it has to be installed by a professional to avoid any unwanted risks.
With all this in mind, you’re most likely wondering how much it will cost you to install an at home charger. Truthfully, the cost of a home installation will completely depend on your home and home electrics.
However, you will still save money by switching to an electric in the long run compared to driving a petrol or diesel car.
Here are a few possible costs that are involved in charging your EV:
- Charger and charger installation – this can range from £899 to £1,100 for both*
- Upgrade of consumer unit – on average is between £375 and £550*
- Electricity to charge the EV from home – on average this can be around 15p per kWh. Take a 60kWh car and this will cost £15 for a full charge. (Changing your electric provider can alter the costs of charging).*
- Out of home charging – the time can massively alter depending on where you charge it, for example if you’re at the supermarket you can charge it for free with a 7kWh charger, but we’ll touch more on out of home charging later on.*
*Correct at the time of writing 24/03/2022
All of this may seem like a big cost upfront but once it’s been paid for all you have to think about is the cost of charging it, at home and out and about.
What about servicing and maintaining your electric car? Funnily enough, maintaining an electric car battery can be a lot cheaper than taking care of a combustion engine vehicle.
What electric vehicle tax savings are there?
We’ve spoken a bit on whether there are any hidden costs of owning an electric car. So, what about any savings that come with owning one, specifically tax?
For any business owners or employers thinking of investing in a work vehicle, this will be valuable news to you. One of the biggest tax savings that comes with owning an EV is company car tax.
What is this?
As an employer you are charged tax on your company car. EVs compared to petrol and diesel, offer a much lower tax rate. The tax year of 2022/2023 company car tax will be 2% of how much the vehicle is worth. Compare this to the company car tax of petrol and diesel vehicles of up to 37%, you’ll be saving quite a bit of money on your electric car.
Employees can also enjoy brilliant tax savings through a salary sacrifice scheme. This is when an employee sacrifices a portion of their salary in exchange for an electric work vehicle.
What about road tax? Road tax is based on the CO2 emitted from a vehicle, so this comes under the same bracket as electric company car tax savings.
What does this mean for you?
This essentially means the tax you pay for your EV is the same whether you’ve got it through a salary sacrifice as a company car, or you’ve purchased it as an individual.
What about VAT savings? Is there any way you can reclaim VAT on your electric car?
If you are a private individual, you cannot reclaim VAT on any vehicle.
Now, if you are a business, then the good news is, you can as long as you finance the vehicle on a lease, such as Contract Hire or Finance Lease. If this is the case you will be able to claim 50% of the VAT on the monthly rental for a car and 100% for a van as long as the business is VAT registered.
If you are using a car for 100% business purposes and not taking the vehicle home then you can claim 100% of the VAT on the monthly rental, you should keep a detailed mileage and destination log in case of an HMRC inspection.
How much does it cost to charge an electric car?
The cost of charging your EV varies between your home, place of work and a public charging point, and of course your vehicle.
Let’s use the example of a family-friendly EV that offers 200 miles of range thanks to its 60kWh battery.
Planning a weekend break away? As mentioned before, you can charge your car from the comfort of your home. For a home charger, this will cost you around £15 for a full charge.
One other source of fueling your family-friendly electric car is to use a rapid charger. These charging points can be found on motorway service stations and will cost you (using the 60kWh EV example) £6.50 for 30 minutes of charging which offers a 90-mile charge.
Is there free electric car charging?
Now we’ve touched on the costs of charging an electric car, what about free charging points? Are there any at all? You’ll be pleased to know that, yes, there are many places where you can charge for free!
Are you out at a supermarket? These offer public charging points and often provide free charging whilst you do your shopping. Two birds one stone! For example, there are plenty of Tesco stores providing free EV charging of up to 22kW.
On your way to work and running low on charge? Your workplace may have available chargers. If not, most employers can install charging points and usually offer EV charging free of charge (no pun intended). Otherwise, you can charge your EV for a cost, usually the same price as charging it at home – this is still cheaper than filling up on fuel!
Why not reap the benefits of charging from work and read more on the Workplace Charging Scheme?
It’s worth remembering that most EV drivers do not charge their cars to 100% in one go due to time. Most EVs at any one time are charged between 20% and 80%.
Do you really save money with electric cars?
So, we’ve already covered that you can save money by making the move to electric as the costs of filling up your EV aren’t nearly as comparable to the costs of paying for petrol or diesel. One major factor is the fact you can fuel your electric vehicle for free. I can’t say I know a single public petrol and diesel fuel provider that offers this.
When your electric car has to go in for a service or regular maintenance, this is a lot more affordable than its petrol and diesel counterpart. The standard ICE vehicle needs oil changes, engine filters, and this is needed at a minimum of every year or so. Whereas an electric motor doesn’t need the same sort of care, as it’s just fitted with electronics.
Both ICE and EVs will need wear and tear items maintained such as the brake pads, tyres and refilling the washer fluid. However, with an EV there’s no engine to service. Arguably, you save on annual maintenance with an EV.
Another saving people often forget are city congestion charges. When you’re cruising through cities in your full EV, you can enjoy your drive to its fullest knowing you won’t have to pay a penny for simply passing through.
Are electric cars expensive to insure?
Another cost you must think about when buying any vehicle is the insurance. How does an EV compare to a standard ICE vehicle? Is it more affordable?
In the past, electric cars have been known to be generally more expensive in terms of insurance when compared to petrol and diesel cars. On top of this, because EV parts are not as common to find and therefore less are available for when your car needs repairing – this will rack up the price of insurance.
How long will it be like this? Well, as EV are becoming more common and with the upcoming 2030 ban on ICE vehicles, it’s very likely the electric car market will soon boom. What does this mean for you? Buying EVs will become a lot more affordable than today and by default, insurance prices will drop.
Will an electric car save me money?
So, you may think: will an electric car save me money? As discussed, it completely depends on how you go about buying one, maintaining it, charging and the insurance you have on it.
All these factors will determine the savings you will get with your vehicle. Generally speaking, of course, there are many savings that automatically come with driving an electrified vehicle.
If you want to actively take advantage of the ultimate way to enjoy great money-saving value while going electric, we recommend the following:
- Lease your EV. Why is this? There’s a lot of uncertainty around what EVs will be worth in the used car market.
- Be wary of how you drive. Just like a petrol or diesel car, if you accelerate at full pelt everywhere, this is going to use a lot more fuel. Then by default, you’ll spend a lot more money.
- Don’t drive in cold weather. Take this one with a pinch of (grit) salt. The warmer the environment is the longer the battery lasts – to an extent. Essentially when you’ve got the heaters on full blast and lights on in the wintery dark mornings, you’re going to be using a lot more electricity than you would on warmer and brighter days. However, on the flip side in the hot summer months if you prefer to use aircon over having the windows down this will also drain your vehicle’s fuel.
- Select the appropriate electricity tariff. If you decide to install a home charger for your car, picking the right electricity tariff is crucial if your goal is to save money as utility companies can misquote.
- Don’t get bogged down on the range. If you usually do one long trip once a year, paying for a long-range EV won’t be worth it. It’ll just mean you have to stop to charge your cars for a few hours on the way.
Will an electric car save me money? Well, you may think “electric cars are more expensive than petrol cars”, but the truth is this: an electric car will not only save you time, energy and the planet, but yes, in the long run, money will also be a very beneficial saver.
Why would you want to miss out on these great benefits?
It may seem like a big cost to begin with, but if you take the plunge and see going electric as an investment rather than a cost, you’ll begin to enjoy the benefits instead of questioning them.
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