According to the latest Society of Motoring Manufacturers and Traders (SMMT) data, battery electric models now make up 14.3% of new car sales in the UK, overtaking diesel (7.7%) and plug-in hybrids (6.7%) by a significant margin. So does that mean it now makes good financial sense to buy an EV, as well as an environmentally motivated one? Let’s take a look at some key concerns for consumers.
Cost to buy and lease
It’s both good and bad news here. While the cost of battery electric models has increased in the past year owing to inflation, unprecedented supply shortages, and even the increasing prices of raw materials for building lithium-ion battery packs, there are some new models and bold fledgling brands looking to capture buyers at the cheaper end of the market.
Perhaps the most significant in the UK is the MG4, which has undercut rivals like the VW ID.3 significantly with its £26,995 starting price, while also offering a competitive range, driving experience, and interior. The Chinese invasion of the European market is only just getting started, with the BYD Atto 3 now launching as a medium-sized SUV with a 260-mile range for under £37,000 – less than the price of a Qashqai e-Power in Tekna trim.
Tesla with Elon Musk at the helm has shown it isn’t afraid to slash prices – an almost unprecedented strategy for traditional carmakers. Overnight, Tesla cut the price of its Model 3 and Model Y by up to £8k; a move that sent shivers down the spines of rival car bosses.
But one of the main problems is that EVs still cost noticeably more than their petrol or diesel counterparts, and this all adds to the monthly repayments on HP or PCP deals, or even a personal loan from a high street bank. This can often negate any saving that you’ll make when charging up, even at home.
Leasing deals are somewhat lagging behind, and still appear expensive versus traditional internal combustion models, but cars like the Renault Zoe and electric Fiat 500 are available with relatively affordable monthly payments.
From being undervalued on the used market in the early days as consumers expected three-year old electric vehicles to suffer from dying batteries, proven reliability and increased demand has seen residuals outpace ICE models. However, Auto Trader reported a softening of used EV prices in January 2023, with the average price of an EV for sale on its site down by 0.9% to £36,445.
The main driver for this appears to have been the supply of used EVs outpacing demand for the first time. While EVs have traditionally been scarce on the used car market, a large number of ex-fleet and lease cars that were on two and three-year deals are now coming onto the used market for the first time.
While it was once a no-brainer that you could charge up an EV at home or even in public for peanuts (or even for free in some cases), the surge in energy prices has seen charging costs shoot upwards. Not only that, but incentives like free charging that were designed to entice people into EVs are gradually being switched off as electric car ownership goes mainstream.
In September 2022, it was widely reported that the cost of a pay-as-you-go public charge had increased by 42% in four months. The data from RAC Charge Watch saw the price of a charging a 64kWh battery to 80% at a Rapid charger now cost £32.41, on average, up £9.61 from May 2022 and an increase of £13.59 in May 2021. By March 2023 this had increased to £36.07.
While the RAC’s March 2023 data found that home charging using a 7kW wallbox still costs around 10p per kWh, on average, this doubles for rapid public charging and increases to 21p per mile when using rapid chargers of over 100kW, making it more expensive than the 19p per mile figure it quotes for a diesel equivalent averaging a relatively conservative 40mpg.