Will an electric vehicle break the bank or save a fortune? 

Kate Hughes
Insurance expert
5
minute read
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Posted 9 March 2022

If you’re thinking about buying an electric vehicle (EV), you’re not the only one. 

According to data from Society of Motor Manufacturers and Traders (SMMT), one in six new cars bought in 2021 were electric as drivers embrace environmentally friendly forms of transport. 

But while we've probably all heard that going electric is potentially better for the planet, how does it affect your bank balance? 

‘Affordable’ isn’t the word that springs to mind when you buy an electric vehicle - but when you drive it away, the savings soon start to add up 

As the name suggests, electric vehicles run on electricity – either partially or wholly – which is supplied through a battery inside the vehicle. 

But there’s often an assumption that it is more expensive to own and insure an EV than conventionally powered petrol or diesel cars. 

It’s true that the upfront purchase price of a new electric model can often be higher – and the bigger the battery and range, typically the more expensive the car. 

In the long term, however, electric vehicles can work out cheaper as they have lower fuel and maintenance bills. 

Homes with an electric charge point already installed sell for around 13% more than a house without 

‘Affordable’ isn’t the word that springs to mind when you buy an electric vehicle - but when you drive it away from the dealership, the savings soon start to add up. 

The cost of running an electric car for a year is 31% cheaper than the cost of running a petrol car, according to new research from Compare the Market. 

The figures show the average cost to run an electric vehicle for 12 months is £1,264 compared with £1,843 for a petrol vehicle – a difference of £579. 

The research analysed the cost of insurance, fuel, and road taxes. 

For drivers of electric vehicles, car insurance amounts to more than half of the annual running costs (at £690 for a typical premium). 

These motorists also pay an average of £519 per year to charge their car. 

The running costs for petrol cars are substantially higher because while as drivers of these vehicles pay an average of £680 for car insurance, they currently pay £943 for the fuel each year. 

Owners of petrol cars also typically need to spend at least £165 per year on road tax, while electric vehicles are exempt. 

If you want to compare the running costs of your current set of wheels to an electric version, check out our handy calculator here

What’s more, the savings continue even when you’re off the road. 

Research by Rivervale Leasing found that homes with an electric charge point installed sold for 13% more than the local average, as buyers looked for future-proofed homes. 

With the average home in the UK now worth £268,000 according to the Office for National Statistics, that suggests a nice little uplift of almost £35,000. 

It’s the saving on fuel where EV drivers are really quids in. 

You can work out how much it will cost to charge your EV by multiplying the price of electricity (pennies per kilowatt hour or kWh - you can check what you pay per kWh on your electricity bill) by the size of the battery. 

Obviously the lower your tariff, the lower the cost of the charge. 

Some energy providers will offer off-peak or smart off-peak tariffs, which cost less and can be helpful if you charge your car overnight. 

But to keep it simple, we did the maths for you. 

According to the most recent figures from Compare the Market, annual charging typical costs for an electric vehicle are £519.29 on average. 

When you compared this to the average annual fuel costs for petrol car at £942.26 thanks to the high prices at the pump, you can see why running an EV for the last three years has personally saved me a fortune. 

You might even be able to sell electricity back to the grid to use at peak times. Ask your provider about any vehicle-to-grid schemes to find out more. 

Depending on the model, you could find your EV are still worth 60% or more of their new price after three years of being driven 

3 things to do right now...

Compare the total cost of buying and running an electric car or a combustion engine vehicle, to give you a true picture of the bills involved.

Remember the EV world is changing fast. For example, insurance prices are coming down and the number of chargers is going up.

If you’re keen to go electric sooner rather than later, now is the time to make the most of the remaining grants and deals, so start investigating EVs now before they disappear.

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Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.