You are here: Home - Household Bills - Understanding -

Are electric cars worth the money?

0
Written by: Adam Hope
18/05/2016
The popularity of electric cars is on the rise, but just how affordable are they and are they a practical option for everyday drivers?

According to data from the Society of Motor Manufacturers and Traders (SMMT), electric car sales are soaring with plug-in electric vehicles now accounting for approximately 1.4% of all new vehicle registrations.

With promises of a full charge for a little as £2, tax exemption, government grants to help you buy and even free parking in some places, it’s easy to see why they’re growing in popularity. However, with higher list prices, mileage limitations and fears of extortionate battery replacement costs, the question remains as to whether fully electric vehicles (EVs) are really a viable option when it comes to affordability and practicality.

Purchase price

Plug-in electric cars are undoubtedly more expensive to buy than their petrol or diesel counterparts. Take the popular, fully-electric Nissan Leaf for example. Starting at £21,530 for the entry-level model, it’s over £11,000 more than the similarly sized and spec’d Nissan Note – which starts at just £9,995. The upfront premium of buying an electric car is certainly apparent and will undoubtedly be pricing some drivers out of the market.

That being said, the UK government offers a grant towards the purchase of new plug-in cars – in an effort to help the country meet its ever-stricter emissions targets. The grant covers 35% of the cost of the car – capped at a maximum of either £2,500 or £4,500, depending on the vehicle’s CO2 emissions and range. With a number of models qualifying for the full grant, the scheme opens the prospect of purchasing an electric vehicle up to many more drivers.

When combined with the numerous finance offers on the table, the upfront cost of an electric car suddenly seem much more affordable. While car finance is calculated based on credit score, the amount borrowed and the repayment period, for many, finance deals make EVs a more affordable option.

Running costs

With no road tax or fuel, one of the main selling points of EVs is their low running costs. With promises of a full charge for just £2-3, depending on the make and model, the fuel savings are certainly tempting. While range varies between models, according to data from the Energy Saving Trust, a typical EV will get around 100 miles out of a full charge – and covering the same distance in a petrol or diesel car would cost between £9 and £13 in fuel, making EVs significantly cheaper per mile.

With the electric car market still in its infancy, many insurance providers have yet to catch up – with many mainstream insurers failing to integrate plug-in models into their online quote systems, driving electric car owners to specialist insurance providers. Typically, electric cars are classed in higher insurance groups than their petrol or diesel counterparts – an unfortunate result of their higher list price and insurers being less comfortable venturing into the unknown – making them marginally more expensive to insure. That being said, the primary factor affecting the majority of insurance premiums is the driver, rather than the car – so as with petrol and diesel models, a clean licence and lack of prior claims should keep costs down.

Maintenance costs

When it comes to maintenance costs, many drivers are surprised to learn how affordable electric cars are. Despite the expensive and technologically advanced components, electric cars have far fewer moving parts than their fuel-burning counterparts. General servicing, such as replacing oil, filters and spark plugs, doesn’t really apply to EVs – and thanks to the electric motor’s regenerative braking taking most of the brunt, wear and tear on brake pads and discs shouldn’t be an issue either.

While day-to-day maintenance costs are low, one major component that worries many potential EV drivers is the cost of a replacement battery. Performance electric car manufacturer Tesla hit the headlines in recent years, with owners reporting batteries dying from a lack of regular use. The firm tried to charge its customers £25,000 for a replacement battery before caving and honoring an 8-year warranty.

Despite the extortionate replacement costs, worries surrounding battery issues are, for the most part, unfounded – as many manufacturers offer warranties covering its lifetime. As long as your electric car’s battery is charged and discharged regularly, it should last around 150,000 miles – enough for a decade of driving before it begins to deteriorate. The cost of a replacement battery for a Nissan Leaf is just shy of £5000, and is likely to have been recouped in fuel savings by the time it needs replacing (if it ever does!).

Practicality

The one recurring issue which has constantly undermined consumer confidence in electric cars is their range. With the majority of fully electric plug-in models maxing out at 100 miles, it’s a worry that’s put many would-be customers off. That being said, how often do you really drive 100 miles in a day? In reality, for the majority of city dwellers and short-distance commuters, the range of today’s EVs is more than sufficient for day-to-day driving. But that doesn’t stop range limitations from playing on people’s minds – requiring a second car to facilitate longer journeys or having to plan for regular and lengthy stops to recharge en route.

Hybrid vehicles offer a strong compromise for those lacking trust in the plug-in market, offering lower emissions than the majority of other vehicles – as well as the range of fully fossil-fuelled alternatives.

Environmental savings

No discussion around the argument for electric cars can be complete without factoring in the environmental ‘savings’ that accompany them. Their green nature is undoubtedly one of the key selling points and, while reduced carbon emissions may not directly translate into money in your pocket, it’s a key consideration. Many consumers will happily pay more for environmentally sound goods in the supermarket – so can the same theory apply to cars? For some, the ‘green premium’ is well worth the cost.

Whether you’re considering an electric car to calm your environmental concerns, or looking for cut back on your monthly travel costs, it’s important to do the maths. While running costs are significantly lower, model prices vary dramatically – so if you’re looking to make a saving, it’s vital to factor in the purchase price, servicing, insurance and fuel (or electricity costs) over the long-term – a set of sensible calculations which apply to any car purchase.

Adam Hope is a car blogger for The Car Loan Warehouse

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Revealed: the cheapest places to sell your home in Britain

Which 10 places cost the least in estate agency fees, and which 10 are most expensive?

Close