The cost of having an electric car Vs a petrol one
The government had been keen to promote the wider use of electric vehicles (EVs) and amongst the incentives they have offered, is to make EVs free of road tax, otherwise known as Vehicle Excise Duty. But now in an effort to shore up government finances, that incentive is being scrapped and in fact an extra charge is being put on some electric drivers of more expensive cars.
So how does the finances of going electric, add up and is it financially worth it?
Q: What is happening with road tax?
Currently, EVs are exempt from road tax, but this exemption will end in April this year.
You will need to pay the lowest first year rate of vehicle tax set at £10 from 1 April 2025. From the second tax payment onwards, you will pay the standard rate. This will be £195.
For electric car owners, the news gets even worse. New electric and zero emission vehicles registered on or after 1 April 2025 with the list price exceeding £40,000 will attract the standard rate, plus the expensive car supplement for the first 5 years from the start of the second licence.
That's an additional £410 per year on top of VED payments for the first five years after it's registered. Previously EVs were exempt, but will no longer be from April 2025.
So EV owners are going from paying £0 to around £600 a year.
At the same time, the government is scrapping the £10-per-year discount for hybrid vehicles
Q: But I hear there is a way round paying the tax, at least for next year?
Yes Martin Lewis has come up with a good wheeze which means you at least save a few hundred pounds. If your EV was first registered on or after 1 April 2017, make sure you re-tax it in March 2025 (it can be anytime BEFORE 1 April 2025, but to maximise the savings you should do it in March). Doing this means you'll push back the deadline for paying tax on your EV to when it's next due for renewal in March 2026 (assuming you renew in March 2025).
MSE says "It doesn't matter what month your EV expires, you can re-tax it anytime using your car's registration number and the reference number on your V5C Registration certificate (logbook) printed in your name. The Government website will ask "Are you sure?" to which you just click to accept."
Q: How does the cost of buying an electric car compare with a petrol one?
Electric vehicles are often more expensive than the petrol versions, although from personal experience I think the price differential has come down since manufacturers are trying to persuade reluctant buyers to swap to EVs.
According to MSE a Petrol Fiat 500 costs £13,000 and the electric version costs £25,000
There's less of a price difference with the Nissan Qashqai where the petrol version costs £30,000 and the electric version costs £35,000. Meanwhile there is actiually no difference, according to MSE between the electric and petrol versions of the Vauxhall Frontera, both with a price tag of £23,500.
Q: Is charging the car cheaper than buying petrol?
The short answer is yes.
However the cost varies widely if you charge at home, on the street or on the motoroway.
Q: So how much do a save?
Well it depends on the type of car you have (See my gripe #2 about this below)
But using ZapMap's price comparison tool (which is rather good) I compared an electric Vs petrol vauxhall Corsa. The cost per mile for the electric car was 6.8 pence a mile while the petrol version 12.8 pence. If you were doing 100 miles a week you would save £314 over the year by going electric.
Clearly the more you travel, the better the savings and the more sense it makes to go electric, from a purely financial point of view.
Q: Where is the cheapest place to charge?
ZapMap claim there are 2,400 places you can charge your car for free, so look out for them especially in supermarket parking lots. But given the time restriction you can stay in some of the carparks, you may not get far on the free charge.
Generally the cheapest other place to charge is at home and some electiricity proividers offer special tariffs where you can charge the car overnight at a lower rate.
Q: How easy is it to find a place to charge?
This is the big question. Lots of writers talk about EV owners getting "range anxiety" - meaning they are worried the car will run out of charge before they get to the destination. I think it is a rather unfair term - as it implies drivers may be overly worried when it is a very fair concern.
While the number of chargers is growing, the density of chargers (the number per square mile) is not high. So as a driver in London or Glasgow - you are not so much interested if the number of chargers rises in the whole country, if they haven't got more in the streets near you.
What's more it can take all day to charge a car on a slow charger - so one charger serves one car per day, whilst a petrol pump can serve hundreds of cars. So you need hundreds more electric chargers than you do petrol stations.
Q: How easy is it to operate the charger?
Here in my view is a real scandal and my #1 gripe.
When you go to a petrol station, you put the petrol pump in the car, press a button and then pay by credit card.
In every electric charger I have used, you have to sign up to an app. Then you supply your address, credit card details and lots of stuff about who you are.
Some then try and sell you a subscription - where you pay a monthly fee for lower electrcity rates. So you have to work out if you will use that particular provider's charging points enough, to make the subscription worthwhile.
That's made even more complex by the fact that I think I must have about 10 different apps for 10 different providers - all of whom want different information and require you to have their app before you can use their charger. It's like a BP petrol station refusing to serve you because you have a loyalty scheme with Shell and not them - which is outragous.
I've heard that new chargers may start working without the necessary sign-up schemes, but I have never found one.
Then, in my personal experience, about 1/3 of the time - the chargers don't work at all. SourceLondon seems to be the worst in my experience and I have never managed to use a SourceLondon charger without a huge problem. In my experience, Ubiriticity is the most reliable,
Finally when you get to the charger, and have signed up to the app, you need to hope that there is a mobile signal, otherwise you won't be able to charge the car because your app won't work.
Q: You said you had another gripe?
Yes, where as a petrol car prominantly displays the miles per gallon it does, I never see a similar measure for electric cars. So while I am sure a Tesla users more electricity per mile than a Vauxhall, I have never been bored enough to trail through all the small print to find it. That makes it hard to compare EVs fr electricity consumption and I just don't think that situation serves the consumer well.
Q: What about servicing bills?
Well there are very few moving parts in an EV, so there is less to go wrong and the bills should generally be cheaper. However, if something does goes wrong, it may no be easy to fix. If the computer says no, the cost may be quite high
Q: So should I buy electric?
Financially speaking, I have not been convinced that this is a good money decision. It might be, depending on the model you buy and the mileage you do, b ut it varies case by case. But we live in an increasingly challenging environment and going electric should help the environment and for that reason alone - I have bought electric.
For all its drawbacks, I think electric is the way to go.
Q: I hear there are advantages to buying an EV as a company car - what are they?
If you have a company car, the Inland Revenue judge that this is extra income and tax you on what the belueve the value of tghe car is to you as a service. This is called a tax on a Benefit-in-Kind (BIK). The amount you are taxed sdepends on the CO2 output of the car, its value and your income tax bracket. AutoExpress estimate that on a £30,000 list price car a basic rate taxpayer would pay £1,500 extra in tax each year.
So here is the advantage of an exlectic car. A BIK extra tax does apply but it is very much lower, just a fraction of the petrol version at 2%
The discount will gradually disappear but at the moment - it is a big financial advantage.
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