Would an electric car save you money? Study breaks down the costs


With petrol prices reaching new highs, more Britons than ever are considering the switch to an electric car, but many will question how much they can save on runnning costs. 

Research suggests that drivers who go all-electric can save an average of £3,862 over seven years, factoring in both electric charging vs petrol prices and buying costs.

This largely comes as the cost to ‘fuel’ an electric car for 8,000 miles a year works out 61 per cent cheaper than a petrol equivalent. 

Electric cars are almost always more expensive to buy outright that petrol cars, but slower depreciation and higher projected residual values helps narrow buying and finance costs.

The Nissan Leaf was one of the three cars evaluated as the best value EV on the market when compared to their petrol or diesel equivalents, with savings up to £3,210

The latest Electric Car Cost Index from LV=General Insurance looked at total costs for pure electric cars, comparing them to similar petrol models.

Of the 13 models considered by LV, the Nissan Leaf, MG5 Long Range Excite and the Mini Electric Level 1 came out on top as the best value electric cars on the market compared to petrol alternatives.

The analysis, in partnership with battery electrochemist Dr. Euan McTurk of Plug Life Consulting, looked at both outright purchase and financing, and the running costs for 13 popular electric car models and their petrol or diesel equivalents. 

Their findings show that the Nissan , MG, and Mini worked out cheaper than their petrol equivalent, whether bought outright, leased, or taken via PCP finance. 

All 13 cars worked out cheaper than the equivalent petrol model if bought outright, assuming an owner ran them for around seven years. 

Meanwhile, seven of the 13 came out cheaper across a four-year lease term, with four cheaper than the petrol alternative on a three-year PCP agreement.

The study looked at a range of models across the purchase spectrum, confirming that the outright cost of buying an electric car is still higher than the petrol or diesel equivalent.

Switching from a 3dr Mini Cooper to a Level 1 Electric could see savings up up to £6,225 over seven years if bought outright

Switching from a 3dr Mini Cooper to a Level 1 Electric could see savings up up to £6,225 over seven years if bought outright

Buying an electric car outright

The savings on electric cars were driven by a lower average running costs, which came out to £1,147.21 annually, compared to £2,201.58 for a petrol car. 

Over the years that gap adds up to a substantial sum. 

The study evaluated a range of entry level EVs like the Volkswagen e-UP, Fiat 500e and Vauxhall Corsa-e, all coming in at just below £26,000, through to high-end cars from £40,000, such as the Tesla Model 3, Hyundai Ioniq 5 and the Skoda Enyaq iV 80.

Of the cars analysed the average cost of an EV came to £32,683, just under £7,000 more than the average petrol or diesel car at £25,685. 

However in some cases the gap is closing – the Vauxhall Corsa-e is only £2,175 more expensive than its petrol equivalent, and the difference between the Mini Electric Level1 and Mini Hatch Cooper S Classic is now less than £5,000.

Thanks to lower running costs and a longer projected ownership, drivers who bought outright any of the 13 EVs made savings compared to a similar petrol car, ranging from £586 on the Fiat 500e Red, to more than £10,500 for the Tesla Model 3. 

The average saving over the seven years was forecast as £3,862.05, with ten of the 13 cars saving more than £2,000 during the ownership period.

The MG5 Long Range Excite was evaluated as one of the best value EVs with estimated annual savings of £1000 compared to a fuel-guzzling Skoda Octavia

The MG5 Long Range Excite was evaluated as one of the best value EVs with estimated annual savings of £1000 compared to a fuel-guzzling Skoda Octavia

Lease and PCP electric cars 

Most new cars are now bought outright and are sold on finance.

Interestingly, the research indicated that leasing an electric car appears to be a more financially beneficial option than taking out a PCP contract. 

Apart from the VW ID3, each is significantly cheaper to lease over a four year period than get via a PCP on a three year contract, factoring in an upfront deposit of an average of £3,190.

Only a handful of the EVs have cheaper annual lease costs than their petrol or diesel equivalents, including the Peugeot 2008 coming in at £4,546 compared to £4,562, and the Fiat 500 for £3,037 versus £3,833 for the equivalent petrol model. 

Taking into account the cheaper running costs, seven of the 13 cars analysed provide savings over a four year lease, ranging from £1,918 for the Volkswagen e-UP to £5,527 for the Fiat 500e. 

The average saving across all 13 cars on a four year lease is £774, with only four of the cars providing savings over a three year PCP contract, as the MG5 Long Range Excite recouping the most at £2,270.

AVERAGE SAVINGS ON AN ELECTRIC CAR VERSUS PETROL/DIESEL EQUIVALENT
Electric              Petrol or Diesel      Total saving (inc residual value)  Running cost savings 
Make and Model  Make and Model Bought outright – owned for 7 years 4 year lease 3 year PCP Annual Month
Nissan LEAF 40 kWH N-Connecta Ford Focus 1.0 ecoboost 125 Zetec £3,211 £2,081 £308 £946 £79
Tesla Model 3 Saloon Standard Plus 4dr Auto BMW 320i M Sport 4dr Auto (Pro Pack) £10,585 £4,976 -£3,129 £1,703 £142
Volkswagen ID.3 Life Pro Performance 62kWh 5dr Auto Volkswagen Golf 8 Life 2.0 TDI 115PS 7-speed DSG 5dr £2,418 -£3,307 -£1,347 £772 £64
Kia e-Niro 64kwh 4+5dr Auto Kia Niro 1.6GDi Hybrid 4-5dr DCT £1,719 -£678 -£2,937 £852 £71
Volkswagen e-UP 32kWh 5dr Auto Volkswagen Up 65ps Up 5dr manual £2,620 £1,918 -£3,603 £994 £83
MG ZS EV Trophy 51kWh MG ZS Exclusive 5dr 1.5 VTI-tech £2,138 -£1,039 -£6,023 £1,110 £92
Peugeot E-2008 GT 50kWh 5dr Auto (vs Peugeot) Peugeot 2008 GT 1.2L PURETECH 103 S&S £1,283 £3,070 -£984 £928 £77
Skoda Enyaq iV 80 Skoda Kodiaq SE 1.5 TSI 150 PS DSG £5,813 -£3,747 -£2,332 £1,435 £120
Hyundai Ioniq 5 Ultimate 58kWh 170PS Hyundai Tucson Ultimate 1.6 150PS Petrol 2WD Manual £2,459 -£2,264 -£5,039 £1,007 £84
MG5 Long Range Excite Skoda Octavia Estate SE 1.5 TSI 150 PS 6G Manual £5,473 £2,445 £2,270 £1,017 £85
Fiat 500e Red Fiat 500 Red £586 £5,527 -£1,619 £734 £61
Mini Electric Level1 Mini 3dr Hatch Cooper S Classic £6,225 £2,641 £309 £1,241 £103
Vauxhall Corsa-e SE PREMIUM (ELECTRIC 11KW) Vauxhall Corsa 5dr SRI EDITION 1.2 (130PS) £5,676 -£1,562 £2,119 £967 £81

Which electric car is the best value for running costs? 

The savings electric car drivers can make come from substantially cheaper running costs, saving £1,054 on average annually for 8,000 miles compared to a petrol or diesel car.

Savings rise to £1,435 on average for the Skoda Enyaq iV versus its petrol equivalent, and up to £1,703 on the Tesla Model 3 vs BMW 320i.

The biggest annual saving comes from charging the vehicle compared to rising petrol or diesel prices. 

On average, EV drivers pay £467.40 to charge their car each year, based on driving 8,000 miles, while petrol and diesel drivers pay £1,199.40 to do the same mileage – a difference of £732. 

If drivers have an electricity tariff with a reduced off-peak overnight rate, then the annual cost of charging an EV is reduced to just £180.59, on average.

Electric Mini owners could see monthly savings of more than £100 on their running costs compared to petrol models, with even bigger savings with off-peak overnight charging

Electric Mini owners could see monthly savings of more than £100 on their running costs compared to petrol models, with even bigger savings with off-peak overnight charging

Average maintenance for an EV, including a service, replacement tyres and brakes, comes to £304 a year compared to £498, almost £200 cheaper, as fewer moving components make cars cheaper to maintain.

The assumption is also that electric cars are more expensive to insure but insurance premiums are on average cheaper for the EVs analysed vs the petrol or diesel models came out to £297 versus £310. 

Insurance is cheaper on seven of the 13 vehicle pairings, with some cars including the ID.3 and Vauxhall Corsa-e substantially cheaper than their internal combustion engined equivalents, at 22 per cent and 33 per cent respectively.

The average cost to charge an electric vehicle for 8000 miles of driving is estimated to be £700 cheaper per year than topping up at a petrol station in a similar make and model

The average cost to charge an electric vehicle for 8000 miles of driving is estimated to be £700 cheaper per year than topping up at a petrol station in a similar make and model

The other significant saving for electric car drivers comes from not having to pay tax on the vehicle; for petrol and drivers this is on average £193.68 annually which works out, over a seven-year ownership, to £1,355.76.

Gill Nowell, Head of EV at LV= General Insurance, commented: ‘Despite the upfront sticker price of an electric car being higher than the equivalent petrol or diesel car, it pays to look at all the costs involved. 

‘Even with escalating fuel and energy costs, if people can afford to make the switch to an electric car, either new or second hand, then charging up with energy at home rather than filling up at a petrol station is far cheaper – and better for the environment and our local air quality.’

While Dr Euan McTurk of Plug Life Consulting, added: ‘With petrol and diesel prices going through the roof, this is a timely reminder that electric cars can save money as well as emissions. 

‘Higher mileage drivers will save even more money by going electric, so if you do more than 8,000 miles per year, you’ll recoup your outlay much faster, and your savings will be even higher. 

‘Plus, because electric vehicles are so mechanically reliable, as they get older, they’ll spend much more time on the road and much less time in the garage than a petrol or diesel car of the same age, saving you considerable time and money – this bodes well for people looking to buy a second hand EV.’ 

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