Are electric cars really a better investment than a petrol or diesel equivalent? Find out here
There are plenty of reasons to buy an electric car, but there are also plenty of concerns about whether it’s actually a good investment or not.
Check out our complete guide to find out why it’s worth it to invest in an electric car.
Financial advantages of owning an electric car
There are so many ways you can save money with an electric car that make it a more economical investment than a petrol or diesel car.
Affordable electric cars
Because the technology behind electric cars was so new in the early days, it was expensive.
And this made the cost of the cars expensive too.
Which in turn put most electric cars out of the reach of most people, so they got a reputation as a luxury item. Available only to those with significant financial means.
However, as the technology has developed and improved, it’s become cheaper to manufacture electric vehicles.
And as the manufacturing costs have come down, so has the cost to the consumer and today, electric cars are far less expensive than they used to be and in many cases, cost less than their petrol and diesel equivalents.
There’s more choice in electric cars now than ever, with plenty of attractive models available from big brand names at decent prices.
In addition, the UK government helps you to pay for your electric car by contributing 35% of the cost up to £2,500 with the plug-in grant.
This discount is usually reflected in the dealer’s sales price.
While it’s true that electric cars still have a higher upfront cost due to the battery, it’s a trade-off for cheaper running costs compared to traditional fuels.
If you want the benefits of an electric car without the upfront price tag, you can always look into leasing or buying second hand instead.
Electric car running costs
As well as being better for the environment, one of the main selling points of electric cars is that electricity is cheaper than petrol or diesel.
Powering an electric car costs much less when you compare the price of fully charging a battery with filling a conventional tank of fuel.
According to Buy a Car, it costs 3.7p per mile to fuel an electric BMW i3 compared to 14.2p per mile for the petrol equivalent BMW 318i.
Their comparisons also reveal that the popular electric Nissan Leaf would cost 4.1p per mile, compared to 9.6p per mile for the diesel Nissan Pulsar and 13p per mile for the petrol Nissan Pulsar.
Electric models tend to come out around three times cheaper to fuel than petrol or diesel models.
There’s also the fact that driving a car fuelled by petrol or diesel will have additional emissions charges that zero-emission electric cars won’t.
Fuelling an electric car is also more convenient because there are more options available, from public rapid charging to charging at home overnight.
Despite the common misconception that fuelling a conventional car is easier and anxiety about being able to find electric charging stations, there’s actually been twice as many public electric chargers as petrol stations in the UK since 2019.
Electric vehicle charging stations cost
While the number of public charging stations is ever-increasing and it’s easy to find electric car chargers near you with Zap Map, many public chargers can be costly to use.
It’s best to invest in installing a home charger and get up to £350 off with the Government’s Electric Vehicle Homecharge Scheme.
Depending on the type of charger, it can cost from £450 to £1500.
After this upfront cost, you can start saving money over time by charging your electric car at home overnight on an off-peak tariff.
If you don’t have private off-street parking for this, you can write to your local council about installing on-street chargers with the On-Street Residential Chargepoint Scheme.
Converting lamp posts into on-street chargers is a great way to get around private parking issues in urban areas, and wireless induction pads are also in trial stages.
There’s also the possibility of charging your electric car at work, if your employer chooses to take advantage of installation discounts through the Workplace Charging Scheme.
This means you could charge your car for free or with an employee discount during the work day.
There’s also many free public chargers at places like shopping centres, which you can find with the ‘free to use’ filter on Zap Map.
Aside from the cost of installing a charger, the cost of charging an electric car varies from free to an average of 3-4p per mile.
The cost will always depend on the electricity tariff for the charger you use, but the current UK average is 14.4p per kilowatt-hour, according to Power Compare.
So, fully charging an electric car with a 40kWh battery on the average tariff would cost £5.76.
For cars with larger batteries like Tesla models, which range from 75-100kWh, a full charge will obviously cost more but will also last longer before needing a top-up or recharge.
Electric car maintenance costs
Another benefit of investing in an electric car is that fewer moving parts means a lower likelihood of breakdowns and fewer maintenance expenses.
While combustion engines have lots of different parts that can break and need replacing and require regular oil changes, electric cars don’t.
Most electric vehicles include regenerative braking technology, so even parts like brake pads experience less wear and tear.
According to EDF Energy, this means that service and maintenance costs are at least 30-50% lower for electric cars than cars with combustion engines.
However, you’ll still need to get MOT tests for an electric car and recommended check-ups at least once a year.
Though it’s been more difficult in the past to get electric car maintenance due to its specialised nature and fewer mechanics trained to work with them, this is changing over time.
Electric vehicle range
One of the biggest worries holding people back from buying an electric car is ‘range anxiety’, or the fear that electric car batteries can’t hold enough charge to last their required journey lengths and they’ll run out on the go.
This was a valid concern when early electric vehicles had lower ranges that didn’t exceed 100 miles.
However, advancing technology means more and more electric models have increasing ranges comparable to petrol and diesel cars.
On average, the lowest electric car ranges are around 50 miles and the highest more than 200 miles, resulting in an average electric car range of 153-173 miles in the UK.
High-end supercharged electric models like Teslas have huge ranges exceeding 300-500 miles, and many newer lower-priced models coming out in 2021 and beyond are expected to have ranges of at least 300 miles.
And even if you do get caught out on longer journeys and need a top up charge, there are public chargers everywhere to help you get by.
There’s also the worry that electric car batteries don’t have the longevity of petrol and diesel engines and batteries.
Rechargeable electric car batteries come with warranties of 3-8 years and 60,000-100,000 miles, but they’re expected to last 10-20 years before the battery expires.
According to second-hand car market Motorway, the average lifetime of a petrol or diesel car is 16 years before scrappage.
Meanwhile, My EV reports an estimated lifespan of 17 years or 200,000 miles for electric car batteries based on an annual mileage of 12,000 miles.
Statistics from the UK government show that the average annual mileage for drivers in the UK is less than 10,000 miles, so electric cars could last even longer.
As older petrol and diesel cars continue to age and are replaced by vehicles with newer technologies that last longer, electric cars become a better and better investment.
Electric car tax exemptions
Road tax in the UK, or Vehicle Excise Duty, is calculated based on a vehicle’s carbon dioxide emission levels.
This means drivers of heavily polluting petrol and diesel cars have to pay increasing taxes, while drivers of emission-free electric cars won’t pay a penny.
With the average emissions of petrol cars in Europe being at 122.4g of carbon dioxide per kilometre, drivers of these vehicles in the UK can expect to pay taxes of at least £220 for the first year and £155 from the second year onwards.
Meanwhile, drivers of zero-emission electric vehicles will save hundreds of pounds in road tax, especially compared to the highest-polluting petrol and diesel models that can clock up to £2,245 in their first year of vehicle tax.
There are even more tax benefits available for electric company cars as well.
If these tax incentives aren’t enough, consider the increasing number of Clean Air Zones in the UK.
More and more cities are attempting to decrease air pollution and combat climate change by charging petrol and diesel drivers to drive in these areas.
Some cities intend to ban petrol and diesel vehicles from driving in these zones completely.
Electric vehicles won’t be affected by these restrictions and drivers can go into city centres without worrying about paying hefty fees every time.
This includes the Congestion Charge in central London, which electric vehicles are exempt from until 2025 when the cleaner vehicle discount will be discontinued.
The ability to drive free of tax and local emissions charges and the comparable savings makes an electric car an excellent investment.
Other electric car incentives
Aside from financial savings, there are many benefits to driving electric cars that make them a worthwhile investment.
Low emissions, less pollution
Not only do you avoid emission-based taxes and charges, but by driving an electric car you’ll be contributing to cleaner air and a healthier and more pleasant environment to live in.
No more choking on exhaust fumes – your neighbours and the planet will thank you.
You can drive guilt-free knowing you’ve reduced your carbon footprint and get eco-friendly points among your peers.
And you can even step up your environmentally-conscious credibility by switching to a renewable energy provider to charge your car at home.
Quiet and relaxing to drive
Noise pollution is also an issue in urban areas, so driving electric cars can cut down on the noise.
Everyone’s rolled their eyes at a narcissist gunning their engine at some point, and constant traffic noise can be detrimental to people’s quality of life.
You’ll never have this problem with a smooth and silent electric car.
They’re so quiet that they legally have to be fitted with an Acoustic Vehicle Alerting System, which emits a low hum so pedestrians and other drivers can actually hear electric cars coming.
Driving electric cars is enjoyable and easy compared to traditional cars because of their fast responsive systems, which makes them more efficient in stop-and-go traffic.
Using the latest technology
Another reason that electric vehicles are more expensive to buy new is because they’re equipped with all kinds of smart technology.
Possible safety features and luxury monitoring and controls include:
- Intuitive single-pedal acceleration and deceleration
- Adaptive cruise control and braking
- Lane assist and park assist systems
- High-res intelligent displays (showing current range, power usage, fastest route plans, and nearest charging stations)
- Smartphone apps for real-time info and remote control
Technology like this makes driving electric vehicles very safe and comfortable, and saves you money by preventing accidents and maximising battery power.
Access to zero-emission zones
As we’ve mentioned, more and more cities in the UK are creating clean zones in their city centres which either charge non-electric cars a fee for entry to the zone or ban them from entering completely.
Electric cars can access these zones toll-free and drivers won’t face restrictions on where they can drive or park.
Some local authorities even offer incentives like access to carpool lanes and discounted or free parking for zero-emission vehicles, which can now be made easily identifiable with green number plates.
Part of a growing movement
The fact is that electric cars are the future.
Internal combustion engines are becoming an ancient and outdated technology, and new petrol and diesel vehicles will be banned in the UK from 2030.
Meanwhile, the electric car market is growing year on year with record numbers.
The RAC reports that there are currently 239,000 zero-emission electric cars on the roads in the UK (with more than 100,000 of them registered last year alone), plus 888,000 hybrids.
The numbers show a steady increase in electric vehicle sales since 2010, with rapid upward growth kicking in in 2018.
Consumer interest in eco-friendly alternatives is continuously growing as governments around the world take action to combat climate change.
Will you be one of the many people investing in electric vehicles now or get left behind?
Do electric cars hold their value?
With less parts to wear down over time, the main concern for electric car depreciation is the degradation of the battery.
People were very sceptical about battery life when electric cars first hit the market, but ever-advancing technology has proved the doubters wrong.
Changing laws around vehicle emissions and concerns for the environment have since created a bigger demand for electric cars, meaning there’s a healthy secondhand market if drivers want to sell and move on to a new model.
The value of all cars starts to go down as soon as they drive out of the dealership, depreciating by 15-35% in the first year and losing about 60% of their value after 3 years.
However, electric cars have proven to depreciate more slowly than petrol and diesel cars.
Car Wow estimates that electric vehicles retain 48.9% of their value after 3 years or 36,000 miles, compared to 40% residual value for non-electric vehicles.
Prestige electric models like the Mercedes EQC and Tesla Model S can even retain up to 60-65% of their value according to Drive Electric.
Here are some eye-opening examples of depreciation rates over 3 years and 30,000 miles for electric and non-electric equivalents:
|Electric model||Loss in value||Non-electric model||Loss in value|
|Renault ZOE||-£6,000 (37.5%)||Titanium Ford Fiesta||– £7,000 (56%)|
|BMW i3||– £16,525 (42.6%)||BMW 120d M Sport||-£18,125 (66.9%)|
|Jaguar I-Pace||-£15,470 (23.9%)||Jaguar F-Pace S 3.0 V6||-£29,515 (74.2%)|
Diesel models like the Jaguar F-Pace above are experiencing much higher levels of depreciation due to controversy over emissions and the ticking clock on cars with combustion engines.
In short, electric cars are a good investment because they hold their value well and usually depreciate less than petrol or diesel counterparts.
Buying a secondhand electric car
As one of the issues with investing in an electric car is a higher upfront price, you can get around this problem by searching for a second hand electric car for sale.
It’s possible to get a real bargain by looking for used electric cars with a low mileage and sound service history, such as ex-test fleet cars.
Battery warranties will pass onto the new owner if the car is sold during the warranty period.
Totally EV advises looking for models with the lowest depreciation like the VW Golf, which maintains up to 75% of its value after 3 years.
Remember to always check the charging habits of former owners, as batteries can degrade faster if they aren’t charged properly or rapid chargers are used too much.
The verdict: are electric cars a good investment?
So, we’ve looked into some of the major concerns and related costs of investing in electric vehicles, and these findings tell us that:
YES. Electric cars are worth the investment.
✔ Often eligible for government grants to bring costs down
✔ Cheaper to fuel and maintain over time
✔ Exempt from road tax and emissions charges
✔ Retain value better than average
✔ Futureproof due to advanced technology and lack of emissions
While 2030 might seem a long way off yet, and combustion engine models can still be sold secondhand after that, it’s obvious that petrol and diesel cars are slowly on their way out.
It’s well worth investing in an electric car now and accessing all the savings available to you, including getting an EVHS discount on expert EV home charger installation.