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EV vs Hybrid vs ICE: Are Electric Cars Worth It?

Are you thinking about joining the electric revolution and buying an electric model? ICE vehicles still made up a strong number of new car sales in 2023. But are the benefits of electric enough to make you switch?

hybrid v electric

In this blog:  What are the key differences?  |  The cost of ownership  |  Why you should consider an EV as a company car

*Updated in February 2024.

 

Despite the fact that we are only a few years away from the end to the sale of new internal combustion engine (ICE) cars and vans, they were still a dominant market contender in 2023. According to the Society of Motor Manufacturers and Traders (SMMT), petrol retained its top position, with a market share of 42.3%. However, this is a decline from its 46.3% share in 2021. Also promising is the fact that electric vehicle (EV) market is continuing to experience growth. Battery electric vehicles took a 16.6% market share of registrations last year, an increase from 11.6% in 2021 and above diesel, which saw a drop from 8.2% in 2021 to 5.1% in 2022.

But are electric cars worth it? For those considering making a new vehicle purchase, offering company EVs, or upgrading their fleet, we have created:

  • A summary of the core differences between battery power versus ICE
  • A comparison of a fully electric vehicle and a hybrid EV

 

Electric vehicles vs petrol Vehicles – what are the key differences?

1. EVs are more energy efficient

The average Internal Combustion Engine (ICE) has an efficiency of only around 40%, with 60% lost via heat and friction so they consume far more energy travelling the same distance as an EV. EVs also consume less energy in stop-and-start traffic. As a result, ICEs consume far more energy travelling the same distance as an EV. 

2. EVs are smoother to run

EVs are well known for running smoothly and silently. As they use an electric engine instead of an exhaust system, they naturally operate with less noise pollution, whilst also having a smoother acceleration and deceleration.

On top of this, their lower centre of gravity provides better handling, comfort, and responsiveness. EVs also tend to use less energy in stop-and-go city traffic.

3. EVs tend to have lower maintenance costs

The relatively high initial outlay cost of buying an EV are offset by reduced costs in other areas, such as maintenance. EVs have far less moving parts and therefore cost less to maintain, and experience less wear and tear.

That being said, EVs do still require some maintenance. Brakes, tyres, and other consumables should be inspected periodically, in line with the manufacturer’s instructions. These inspection schedules tend to occur less frequently than combustion engine vehicles as EVs are lighter on tyres and brakes because of regenerative braking.

electric cars vs hybrid carsMost EVs can be supported by main dealerships. However, independent service centres equipped to service EVs are currently few and far between.

4. It’s better for the environment

Transport is the UK’s largest emitting domestic sector. Road transport is the main source of nitrogen dioxide. Driving an EV means you are not contributing any tailpipe emissions to the atmosphere during your journeys. According to Bloomberg, a standard combustion engine passenger vehicle in the U.S. uses approximately 11 barrels of oil equivalent per annum. And, as they are not powered by fossil fuels, EVs are much more friendly for our environment.  

This is even more so the case when the energy used to charge EVs is clean. The overall life-cycle emissions from EVs with a decarbonised power system could be 70-90% lower than those of ICE cars. A Reuters study found that a Tesla Model 3 would need to be driven for 13,500 miles (21,725 km) before it does less harm to the environment than a Toyota Corolla.

5. It is better for public health

Prolonging life and reducing negative health impacts are another bonus. An independent review of the UK government’s approach to net zero highlighted that air pollution contributes to between 28,000 and 36,000 deaths in the UK annually, before confirming that cars and taxis contributed 58% of domestic transport carbon monoxide emissions and 32% of nitrogen oxide emissions in 2020.

Thousands of people with health conditions (such as asthma) stand to benefit from the cleaner air. One study in China suggested 17,500 deaths could be prevented if just over a quarter of privately owned cars and a slightly larger share of commercial vehicles were electric.

EV vs ICE: the cost of ownership

It is no secret that EVs are, at present, an expensive purchase. As demand for EVs increases, however, it is expected that costs will come down. An alternative is to buy a second-hand vehicle – MoneySavingExpert found an 11-year-old Nissan Leaf starting at about £5,000.

Cheaper to maintain

Because fully electric models have less moving parts, they cost less to maintain. Research suggests on average, EV maintenance costs are 30% less than petrol vehicles over the life of the vehicle. As ultra-low emission zones become more and more prevalent, you will not have to worry about being charged when driving through these areas. And, until April 2025, EVs are exempt from Vehicle Exercise Duty (VED). Insurance costs are also becoming comparable with insurance for petrol or diesel cars. 

Exemptions for EV drivers

EV owners are exempt from charges when travelling in certain areas, such as London’s Ultra-Low Emission Zone (ULEZ). Other than Christmas Day, the Zone operates 24/7 and covers all areas within the North and South Circular Roads. Vehicles not meeting the emission standards (unless exempt) are required to pay the £12.50 daily charge.

Bath, Birmingham, Bradford, Bristol, Portsmouth, Sheffield and Tyneside also have clean air zones of varying levels, whilst Greater Manchester is listed as having a zone in the future.

electric cars vs hybridAdditionally, EVs are currently exempt from vehicle excise duty (VED), though that is due to change from April 2025 as per the Chancellor’s announcement of policy changes in November last year.  Other benefits include those for company car drivers, who currently only pay 2% Benefit in Kind (BIK) tax until 2025.

Less depreciation

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.

Why should you and your employees consider an EV as a company car?

Given current low BiK rates and VED exemptions for EVs (until April 2025), leasing EVs to your employees via a salary sacrifice scheme can provide a lucrative benefit.

Low road tax

All vehicle owners must go through the process of taxing their vehicle, but because Vehicle Excise Duty (VED) is calculated according to CO2 tailpipe emissions for all vehicles registered since March 2001, most EV owners will be exempt from any charge. Depending on emissions, plug-in hybrid are subject to a £0-105 charge in the first year of ownership, and a £145 annual charge for subsequent years.

Low BiK rates

Benefit in Kind (BiK) Rates were as low as 0% for the 2020/21 tax year. Although they have now moved up to 2% until 2025, it is still a great bonus and massive area of saving compared to ICEs, which can incur BiK rates up to 37% based on their emissions. And, from 2025, the BIK tax rate increase will be limited to only 1% a year for three years.

Salary sacrifice scheme

Many businesses (such as Mer) are now offering their employees the opportunity to lease their EV via a salary sacrifice scheme – i.e. pay for it in a similar way they make their pension contributions. Such an arrangement will involve a business purchasing/leasing an EV as a business expense and passing the cost straight onto the employee. They can deduct the cost of the EV from the employee salary pre-PAYE, where tax and NI is taken. So, the employee pays less tax and the net cost of leasing the EV is reduced – all at no cost to the employer, other than administration time.

Putting it into context: a 20% standard rate taxpayer will save £20 in tax for every £100 of monthly lease, with 40% taxpayers saving £40. Additionally, those earning less than £4,189 can save £12 in National Insurance, or £2 a month if earning above this threshold.

 

Hybrid/Plug-In Hybrid Electric Vehicles

So what about a fully electric vehicle vs a hybrid vehicle? 

A hybrid EV has both a conventional petrol or diesel engine and an electric motor and batteries. The internal combustion engine (ICE) charges the vehicle’s battery (most vehicles achieve this by repurposing wasted energy), and the electric motor typically engages when extra power is required, like when the vehicle is accelerating. 

Plug-in hybrids are very similar. They have a battery and electric motor as well as a petrol or diesel engine, however they are able to drive for much longer distances on electric power than hybrids can, as their batteries are larger. Unlike with a hybrid vehicle, the battery cannot be recharged by the vehicle– it must be plugged in. 

Pros

  • No fears around losing charge: Whilst pure EVs are reliant on battery power only, hybrids/plug-in hybrids can switch to petrol or diesel power if the battery loses power. So, drivers do not have to worry about range as much as with full EVs. 
  • Environment: In comparison to ICE vehicles, hybrids/plug-in hybrids produce less CO2 
  • Good fuel economy: Hybrids /plug-in hybrids suit stop-start driving, as they can use electric power whilst travelling at low speeds around town. The electric motors also aid the ICE under harsher acceleration. Both techniques help to lower the amount of fossil fuels used. Through regenerative braking, hybrid vehicles repurpose kinetic energy, which is typically lost in conventional ICE vehicles. 
  • Lower upfront and maintenance costs: These models are bit cheaper than full EVs. In hybrids, regenerative braking also helps reduce the stress on the brake pads, which saves costs for replacement pads. 

Cons

  • Environment: Whilst better than ICE vehicles, hybrids/plug-in hybrids are not as environmentally friendly as a fully electric vehicle, as there is still a petrol or diesel engine. This means they do produce CO2 and other polluting emissions.  
  • Charging: This applies to both hybrids and fully electric vehicles. The state of the UK’s charging network is, at this moment in time, not comparable to the ease of refuelling an ICE vehicle. However, this is not a reason to be put off – the public charging network is expanding by the day, and EV charging will become increasingly easier as this transition continues. In July this year, Zap-Map reported a 40% increase in the total number of charging devices since July last year. 

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