Electric Vehicle Savings
Thinking about joining the EV revolution? Understand what costs and savings are involved.
Time to put your money on green?
It may seem that everybody is going EV mad. Celebrities such as Leonardo DiCaprio, Cameron Diaz and George Clooney have very publicly jumped on the volts-wagon. And it seems there are new electric cars and vans announced almost every week. With both exciting vehicles to choose from and the government encouraging EVs, is there a reason not to go electric?
As with most things, costs will be down to individual choice of vehicle and its pattern of use. But let’s look at the wider pros and cons when comparing electric and petrol to see if the figures stack up - even when you don’t have a Hollywood budget. Here are four steps to help understand savings with your electric car.
4 Electrifying Saving Tips for An Electric Vehicle
Road Tax
Whatever you use your EV for, the good news is that Vehicle Excise Duty (VED) - or road tax - is zero.
In contrast, petrol and diesel cars are taxed by emissions in year one (which is absorbed in the ‘on-the-road’ price). This could be anywhere up to £2,245 for a vehicle emitting over 255g/km of CO2. Subsequent years have a flat road tax of £155 per year (£145 for hybrids) plus an additional £335 per year if the vehicle’s list price is over £40,000.
Whatever the price of your EV, road tax is still zero.
Benefit-In-Kind Tax
Where you’ll really benefit with an EV is if your company provides a vehicle for personal use. This is classed as a benefit and is based on a vehicle’s emissions, your income tax bracket and the vehicle’s P11D value.
The good news for EVs is the benefit-in-kind (BiK) tax is just 1% in the 2021/2022 financial year. This will go up to 2% for the 2022/2023 tax year but is still considerably less than a petrol or diesel.
BiK rates for petrol and diesel cars vary by model but are much higher than for EVs. As an example, a typical petrol or diesel model emitting 100 g/km of CO2, will attract a BiK rate of 25%.
To calculate your company car tax, you’ll need to use the following formula:
BiK Tax = vehicle P11D value x vehicle BiK band x your income-tax bracket
The great news is that there is a huge variety of electric vehicles to choose from and with website filters, you can set a budget and see what’s available.
In general, the smaller the EV, the cheaper to run, although larger models tend to have better ranges as they have increased space to hold batteries.
Of course leasing allows you to go electric without the worry of committing to ownership and therefore means you can move up or down in size at the end of the lease as your personal or business requirements change. Leasing also means you don’t have to consider aspects such as depreciation: you know up-front how much it will cost to drive your EV each month.
Leasing also brings you the latest models and perhaps most importantly, the newest technology. Batteries now deliver incredible ranges - the funky Honda-e offers up to 136 miles on a charge, the capable and spacious KIA e-Niro an impressive 282 maximum range and Tesla Model 3 promises an astonishing 352. That’s as far as many cars will travel on a tank of petrol!
Also consider that maintenance should be lower on an EV. There are far fewer moving parts than in a traditional engine and even features such as regenerative braking reduce wear on brake discs and pads.
You can use our easy filtering tool to check out the log-term lease deals we have for electric vehicles here
It is worth doing your homework on energy company tariffs before you switch to an EV. Start by getting quotes from as many energy providers as you can - especially those providing energy from renewable sources. Energy companies are aiming to encourage off-peak charging - that’s when general demand across the country is low - and they’re doing this by offering attractive night-time rates.
Let’s look at some real costs and rough comparisons between charging an electric car and refuelling with petrol or diesel.
How much to charge?
At time of writing, Octopus energy is offering electricity at 5p per kWh off-peak (from half past midnight to 4.30 in the morning). It claims 100% renewable energy too. Therefore, to charge a KIA e-Niro with its 64kWh battery is just £3.20. Even using standard day rate for charging is still just under £13.
The e-Niro quotes a range of up to 282 miles but let’s use a more realistic 230 mile range. That’s 1.4p per mile (or 5.7p per mile at the higher daytime charge rate).
The cost at a public, rapid charging point will be around 30p per kWh which works our at 8.3p per mile.
Contrast this with petrol or diesel. The average cost per litre of petrol (again, at time of writing) is 126.6p. One gallon therefore costs £5.75. And if your car achieves 40mpg, it’ll cost you 14p per mile. Even with a super-efficient diesel managing 60mpg (average price 129.2p per litre), that’s still 10p per mile.
So charging at home off-peak costs a quarter of peak rate electricity and a sixth of the cost at a public charger, yet they are all still cheaper than using an internal combustion engine. It also means you don’t need to feel guilty about an occasional day-time top-up.
But what do I save?
Comparing the low tariff charging to the petrol car managing 40mpg and covering a typical 10,000 miles a year, the saving is £860.
Don’t forget…
You will need to factor in the one-off cost of installing a dedicated home charger. Costs can vary but you should be able to find one for around £450 (which includes the government OZEV grant). This of course would be off-set against fuel savings in your first year.
Summary
EV off-peak: 1.4p pence per mile*
EV daytime: 5.7p pence per mile*
EV public charger: 8.3p pence per mile*
EV petrol: 14p pence per mile*
Okay, you’re all excited by an EV but perhaps range and charging locations are a concern. Hybrids are a sensible option here and if you are keen to reduce your consumption of fossil fuels, a plug-in hybrid (PHEV) could allow you to do most of your driving in EV mode with a regular fuel option when the battery is flat.
Many PHEVs will achieve between 30 and 40 miles on battery power alone when fully charged. They can drive in EV mode at motorway speeds too. This means most local driving and commuting can be done in EV mode, thereby making the most of the cheaper electricity.
If you’re not confident enough to go fully EV, leasing a PHEV may be just the thing. Perhaps you’ll find you’ll go EV next time after discovering most of your journeys have been on battery power alone anyway.
PHEVs aren’t quite so good on road tax; even if you drive around using just your battery, you’ll still pay road tax (see above).
On the fuel front, you will need to charge the battery for a PHEV to make financial sense. Just driving around with your petrol or diesel engine because you can’t be bothered to charge your PHEV could cost more than driving a fully petrol/diesel model. This will be down to the extra weight of the batteries over a ‘regular’ car; it will also be down to the smaller engines favoured in PHEVs - they are designed to be used as the back-up rather than all the time. In fact a Which? report suggests PHEV engines may be around 61% less efficient - important then to plug-in!
How much can you save on electric cars?
It is hard to calculate the exact amount you will save when switching to electric as every electric car, energy tariff and driving pattern varies. However, the cheaper pence per mile of electricity vs. petrol and lower road tax stand-out as providing the biggest savings for customers.
Picking the right vehicle for the job - not bigger than you need - and being able to understand leasing costs up-front - all ensure that your motoring costs are both minimised and managed.
For more information on the different lease options we have, check out our website and see how much you could save by going electric.
Electric Car Manufacturers
