How much can you save per year by driving an all-electric car? While grants can reduce the purchase price of an electric vehicle by £4,500, it's no secret that an electric car costs more to buy than a comparable internal combustion engine (ICE) car. But there are significant savings to be found in annual running costs that help to offset the initial price difference. Each year, you can save thousands of pounds in vehicle tax incentives and fuel costs. And the more you drive, the more you can save.
|Savings over 5 Years: Electric Car vs Petrol Car^|
|Vehicle Tax Savings||£720|
|Estimated Fuel Savings||£5,500|
|Total Savings over 5 Years||£6,220|
Vehicle Tax Savings with an Electric Car
Road tax is largely a function of CO2 emissions. The lower the emissions, the lower the road tax. If the list price (i.e., the published price before any discounts) on your electric car is less than £40,000, you won't have to pay any road tax. Ever. Electric cars with a list price over £40,000 (e.g., Tesla cars) will be subject to a supplemental rate of around £310 per year after the first year, payable for five years.
Electric Car Vehicle Tax
|Year 1||Years 2 - 6||Year 7 and Beyond|
|Electric Car List Price < £40,000||£0||£0||£0|
|Electric Car List Price >£40,000||£0||£310 per year||£0|
Vehicle Tax Savings: Electric Car vs Petrol Car
Over five years of driving an electric car you would save £720 in vehicle road tax. With an average emissions of 130 g/km, most cars fall into the £160 vehicle tax band for the first year, then £140 in Year 2 and beyond. Over five years the savings tally to £720 (£160 plus 4 times £140).
Fuel Savings with an Electric Car
It costs around 3p - 5p per mile to power an electric car. Someone driving 12,000 miles per year would spend around £300 - £600 per year on electricity costs, depending on your cost of electricity, the make/model of car and the driving conditions. How does this annual fuel cost compare to a petrol-fueled car? In the following table we compare fuel costs for an average electric vehicle and a comparable petrol car.
|Fuel Savings by Driving an Electric Vehicle^|
|Annual Petrol Cost for Petrol Car||£1,600|
|Annual Electricity Cost for Electric Car||£500|
|Fuel Savings per Year||£1,100|
|Total Fuel Savings over 5 Years||£5,500|
Government Grants to Reduce Purchase Price
As Category 1 cars, the BMW i3, Renault Zoe, Nissan Leaf and Tesla cars are eligible for a grant of 35% of the purchase price, up to £4,500. To incentivize people to buy low-emission cars, the government is offering grants which effectively reduce the purchase price of the car. The dealer will include the value of the grant in the price - you don't need to do anything extra to get the grant.
There are 6 categories of grants, based on the level of a vehicle's CO2 emissions. The all-electric cars available in the UK market (i.e., BMW i3, Renault Zoe, Nissan Leaf and Tesla cars) all fall into Category 1, as their emissions are less than 50g/km and they can travel at least 70 miles between charges. Basically, the current all-electric cars available in the UK will all get £4,500 knocked off the purchase price by the dealer.
^ Assuming petrol cost of £1.1/l, fuel efficiency on a petrol car of 37 mpg, annual mileage of 12,000 and electricity cost of 16.7p/kWh.