Are EVs cheaper to run than petrol or diesel cars right now? We have the answers!

It’s no secret that despite the best efforts of car makers to promote them, electric cars are proving quite a hard sell to private buyers. 

While business and fleet sales are strong, thanks to big company-car tax benefits for drivers making the transition to electric vehicles, plus the desire to project a ‘green’ image, the latest figures from the Society of Motor Manufacturers and Traders (SMMT) point to a declining level of interest among buyers who have to pay for their own new cars.

The SMMT’s chief executive Mike Hawes told the recent Electrified conference in central London that whereas private buyers used to make up a third of the EV market, “it’s down to about a quarter now”. That was reflected in the SMMT’s September 2023 sales figures, which revealed that new registrations of battery-electric vehicles to private buyers had fallen 14 per cent compared with September 2022.

It’s a worrying trend for car makers committed to the EV transition, especially because the government confirmed recently they’d have Zero Emissions Vehicle (ZEV) Mandate sales targets to meet from January next year. Across the industry there have been calls for a new package of taxpayer-funded incentives to help encourage private buyers to make the transition, too. 

Not everyone agrees that state hand-outs are the answer, though, and we’ll most likely have to wait until the Chancellor’s Autumn budget statement in November to learn whether the Government intends to reverse an earlier decision to discontinue incentives for private buyers of EVs – the UK’s plug-in car grants were axed in 2022.

Speakers at the SMMT Electrified conference acknowledged other barriers to consumer take-up of EVs, including high levels of chargepoint anxiety caused by the patchy national roll-out of installations, and public perceptions, including one that electric cars are still prohibitively expensive. 

They called for government action to address the former, but comments from Volkswagen Group UK’s managing director Alex Smith caught our attention on the latter point. He boldly claimed that when you look at the total cost of ownership, and not simply the sticker price, the EV-versus-ICE playing field has started to level out.

“At the moment, electric vehicles are regarded by the private consumer as relatively expensive, and it’s true to say that in the retail price of an electric car versus an equivalent petrol or diesel car you will find a premium,” Smith said. “The technology is new and the volumes and economies of scale are not fully realised. But when you look at the operating costs, when you look at the fuelling cost of petrol usage versus electricity use, especially if the majority of charging is done at home, then the argument becomes far more compelling.

“So I think incentivisation in the private market still has a role to play, and we also need to continue to make sure that our explanations to consumers are crystal clear in terms of the affordability over the whole ownership cycle, rather than just at the point of initial purchase.”

According to Smith, the market was always going to reach a point where early adopters would have to be replaced by mainstream buyers. At that point the consumer mindset changes, he suggests, with a requirement for a really high degree of rational convincing and “higher bars in terms of the conditions they would demand before making a switch to the new technology”. Smith went on to highlight the relative costs of two comparable Volkswagen models.

“If we compare ID.3 with Golf 2.0-litre TDI,” he said, “yes the ID.3 has a list price which is £4,000 more expensive. But when you start to adjust for the usage cost saving for someone charging predominantly at home and the lower service costs, over the lifecycle of the electric vehicle, it’s still compelling from a rational point of view.”

We’ve sought to verify Smith’s claims using our ‘Total Cost of Ownership’ (TCO) calculations over three years of ownership. The tables below include manufacturer PCP costs, to which we’ve added an estimate of the cost of fuel or electricity for a driver covering 10,000 miles per year, insurance cover for a mid-40s professional with nine years’ no-claims discount (AA Insurance), plus maintenance and service costs (CAP HPI).

While cost is by no means the overriding objection to an EV purchase for many, anyone considering an EV should be making a similar TCO analysis. 

Petrol and diesel vs electric total cost of ownership

You can see our results of our total cost of ownership calculations in the tables below where we compare a Volkswagen ID.3 with a Volkswagen Golf, two Vauxhall Corsas and a Nissan Leaf with a Nissan Juke.

Volkswagen ID.3 vs Volkswagen Golf

These family hatchbacks from the VW brand run each other close. These figures include a £3,000 VW deposit contribution on ID.3, £2,000 on Golf.

Vauxhall Corsa Electric vs Corsa 1.2 Turbo 

Vauxhall’s electric supermini can’t get close to its petrol sibling, despite deposit contributions of £4,400 for the EV and £2,750 for the 1.2 Turbo.

Nissan Leaf versus Nissan Juke

Nissan’s Leaf EV takes on its petrol-powered Juke stablemate, in 2wd auto guise for fairness. Nissan’s deposit contribution is £1,250 for both cars.

Verdict

If ever ‘doing the maths’ was appropriate advice, it’s when looking at the cost of buying an EV, because it seems there’s no hard-and-fast rule. The three-year costs of VW’s EV and ICE options here are close enough that the difference is negligible, but you’d have to be very invested in a Corsa Electric to overlook an extra cost of £6,000 over the same period. Nissan’s ICE and EV contenders get closer to cost parity, but the difference is still close to £4,000 in favour of the petrol variant.

In short, while we can’t fault Alex Smith’s sums, make sure you do your own!

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