EV vs ICE: the cost of ownership
Direct Line has calculated annual running costs for EVs to be an average £1,742 per year, or £33.50 per week, versus £2,205 per year, or £42.40 per week for ICEs – a difference of 21%.
And it’s estimated that conventional fleets can cut their fuel costs by around 80% by switching to pure EVs.
Aside from insurance – which can be 25% higher for EVs due to production costs – the overall cost of owning an EV is generally less than an ICE vehicle.
So why are the costs cheaper?
Cheaper to refuel
Compared to petrol and diesel, refuelling a car with electricity is more cost effective. Assuming the average EV travels around 3.5 miles per kWh – 100 miles would cost around 5p per mile. However, with petrol costing around £1.24 per litre, a petrol-powered car would cost roughly 11p per mile.
Cheaper to maintain
As previously mentioned, EVs have less moving parts than ICEs and therefore lower maintenance costs. Annual tax and maintenance costs are estimated to be 49% lower than for ICE models.
Grants, incentives & exemptions
There are also various government grants and incentives to help reduce the costs of EV ownership. Although the discounts available aren’t quite as good as they used to be, drivers can apply for a plug-in car grant, potentially receiving £2500 off the purchase price for vehicles up to £35,000.
EV owners are exempt from ULEZ charges, which as of October extended up-to (but not including) the North and South Circular roads – which can cost as much as £12.50 a day. There are also further savings on road tax (0% for pure EVs) and other congestion charges. Additionally, company car drivers currently only pay 1% Benefit in Kind (BIK) tax in the 2021/22 financial year.
AutoTrader found that a 1-year-old EV only loses 12% of its value versus a 24% loss for ICEs. As used EVs are becoming more popular, their residual value has increased. On the contrary, petrol cars have a lot more depreciation, as do diesel vehicles, due to reputation damage in recent years.
Drive Electric recently calculated several EV and ICE comparisons to understand the difference in cost ownership. Taking two popular vehicles below (source).
A fully electric Hyundai Kona can save around £1,081 compared to its petrol equivalent, while an electric Mini can save approximately £874: