Could you save money by switching to an electric vehicle?

Many experts agree that electric vehicles – or EVs – represent the future for motoring. 

They produce fewer emissions than petrol or diesel cars, so in that respect, at least, they are better for the environment. They can also be cheaper to run, although the rising cost of electricity means this advantage has become a bit less clear cut.

The government has also given EVs a big boost by banning the sale of new petrol and diesel cars from 2030. While you will still be able to drive such cars after that date, getting fuel and spare parts/maintenance for them is likely to become increasingly challenging.

Many drivers (me included) are currently pondering whether to make the switch to electric – and growing numbers, of course, have already done so. So in this article I thought I’d address the question of whether you really can save money with an EV.

But first, let’s answer the most basic question…

What are the main types of EV?

Electric vehicle technology is developing all the time, but broadly speaking there are five main types.

1. Battery Electric Vehicle (BEV)

These vehicles run entirely on electricity and therefore do not produce any tailpipe emissions. You can charge them at home, which tends to be most economical, or via an external charging point.

The most obvious drawback with BEVs is that they have a limited range on a single charge, typically 100-300 miles. Examples include the Nissan Leaf, Vauxhall Corsa-e, Renault Zoe and Tesla Model 3.

2. Plug-In Hybrid Vehicle (PHEV)

These cars have a battery, electric motor and internal combustion engine (ICE). They can be driven using the ICE, electric motor, or both, and can be recharged from an external power source.

A PHEV will typically start in electric mode and run until the battery is empty. Once that happens, the petrol or diesel engine kicks in, meaning there is no battery range limitation. Typical PHEVs have a range of 30-50 miles on batteries alone.

These cars are typically more expensive than BEVs – and cost more to run – but they do give you the safety net of being able to switch to petrol/diesel on longer journeys. 

PHEVs are really a stepping stone to full electric vehicles. They may escape the 2030 ban on petrol/diesel cars, but the sale of new vehicles will likely be banned from 2035.

Examples include the Mitsubishi Outlander PHEV, BMW 330e and VW Golf GTE.

3. Self-Charging Hybrid

Self-charging hybrids are sometimes referred to simply as Hybrid Electric Vehicles or HEVs for short. 

Unlike PHEVs, you don’t plug in self-charging hybrids to recharge them. HEVs combine a battery with a conventional internal combustion engine. The battery recharges as you drive, taking power from the engine and regenerative braking. 

HEVs are efficient in towns and cities and are typically cheaper than BEVs and PHEVs. On the downside, they are less efficient for longer journeys and have a severely limited electric range. The sale of HEVs is likely to be banned in the UK from 2030. 

The best known HEV is the Toyota Prius (now also available as a PHEV) and the Hyundai Ioniq Hybrid.

4. Mild Hybrid Electric Vehicle (MHEV)

MHEVs aren’t really hybrid electric vehicles in the usual sense. They have a small battery and electric motor/generator which supplements the main engine, but they cannot function on electrical power alone.

Fuel economy is improved (in stop-start urban driving especially) and there is a small reduction in CO2 emissions. In addition some MHEV models incorporate technology that allows the engine to switch off while coasting. Because MHEVs can’t run solely on electric power, however, like petrol and diesel cars they are set to be banned from 2030.

Examples include the Suzuki Swift, Ford Puma and Audi Q8

5. Fuel Cell Electric Vehicle (FCEV)

This type of vehicle is powered by hydrogen. Mixing hydrogen with oxygen produces electricity, which powers the vehicle.

FCEVs have some big advantages compared with other types of EV. They take no longer to refuel than a conventional car and only emit water vapour (steam). Only a few manufacturers have invested in this technology, however, so the choice is extremely limited.

The only hydrogen fuel cell car available in the UK at present is the Toyota Mirai. This has an impressive range of up to 400 miles, but is expensive even by EV standards. In addition, according to the RAC there are currently only around 20 hydrogen filling stations in the UK.

EV Pros and Cons

Electric vehicles have some clear advantages over conventional ones, but also some drawbacks. I’ll start with the positives.

Pros

• EVs produce fewer harmful emissions than petrol/diesel cars. If this is important to you, it may be a big incentive to switch. However, EVs aren’t all good news for the environment: emissions created when producing them are higher than for conventional vehicles, and used EV batteries are difficult to recycle.

• You can also save on running costs. The Energy Saving Trust states that a full charge in a pure electric vehicle will give a typical range of over 200 miles and costs approximately £8-12 if charging at home. By contrast, driving 200 miles in a petrol/diesel car will cost around £26-32 in fuel. Cost savings will be most significant when owners charge at home and have access to an off-peak overnight electricity tariff (e.g. OctopusGo).

• Electric vehicles – especially BEVs – have fewer mechanical parts than petrol/diesel cars. That means they typically have lower servicing and maintenance costs.

• You will pay less or no vehicle excise duty (VED). Currently, most EVs are exempt, but that will change from 2025. The first-year rate will still be lower for EVs, but after that all vehicles will be charged at the same standard rate, currently £165 per year.

• As an EV owner you will also pay lower (or be exempt from) congestion charges, clean air zone fees, charges for entering London’s Ultra Low Emission Zone (ULEZ), and so on.

Cons

• Electric cars are expensive. The average price of a new EV in Britain is around £50,000. Even the cheapest models such as the Nissan Leaf 39 kWh will set you back around £29,000. You can of course lease an EV or buy one on HP or PCP (as I discussed on Mouthy Money a few months ago), but this is still not a cheap option.

• You might be able to save a bit by buying second hand. The second-hand market for EVs is in its infancy, however, and vehicles sold this way are still not particularly cheap. 

• As already mentioned, range can be a major concern with EVs. If you mainly drive short distances this may not matter to you, but if you regularly have to travel further afield it might.

• There are still nowhere near enough EV charging points on Britain’s road network (the same largely applies overseas). They can be expensive to use and there are also many reports of them breaking down. According to one recent survey, Londonderry in Northern Ireland has the highest number of broken EV charging points in the UK, with a staggering 30% not working.

• Charging an EV is more time-consuming than filling up an ordinary car. The technology is slowly improving, but even so you can still expect to spend 30-40 minutes minimum at a standard charging point.

• If you don’t have a garage or at least a front drive, charging at home (normally the cheapest and easiest option) may be difficult or even impossible. This applies especially if you live in a flat or apartment without any nearby parking.

Closing thoughts

Electric vehicles clearly have their attractions and eventually we’re all likely to have to adopt them (or stop driving). They do have their drawbacks, however, and as things stand currently may be more suitable for some drivers than others.

While running costs can be lower (though probably not by as big a margin as you would imagine) the up-front cost of buying an EV is likely to be significantly greater. 

In coming years the price of EVs compared with petrol/diesel cars is likely to fall somewhat. So if you don’t desperately need new wheels now, there is certainly a case for waiting a year or two.

The above applies especially if you often drive longer distances. Apart from the worry of finding a (working) charger, many EVs are less efficient than conventional vehicles on long journeys.

In closing, I hope this article has given you food for thought if you are considering ‘going electric’. As you can see, there is no clear-cut answer to the question whether you will save money this way.

It’s therefore essential to weigh up carefully the pros and cons as far as your driving habits and personal circumstances are concerned before making the transition.

As always, if you have any comments or questions about this article, please do leave them below.

Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.

Photo Credits: Unsplash