LVC Central Ltd

Electric Vehicles v Internal Combustion Engines

Electric cars are so expensive – is that really true?

You may have noticed that EV’s seem to cost a lot of money, does ‘Going Green’ come at a price – or is there more to it than that? Whilst it is definitely true that an EV has a higher list price than an equivalent petrol or diesel vehicle, there are other costs that need to be factored in to work out the real cost:

• Depreciation
• Road Fund Licence
• Insurance
• Fuel
• Servicing
• Taxation

If you choose to lease a vehicle, then the cost of the road fund licence and the expected rate of depreciation are already factored into the monthly rental payments – but what about the other costs?

A recent study has shown that the cost to repair an EV is typically 25% more than a standard ICE car. Why is it so much more?

When an EV is in an accident the process is drastically different to the process for a petrol or diesel vehicle – EVs need specialist recovery. They cannot be towed and must be lifted onto a flatbed truck. The repairer must have safe storage areas, charging facilities, and EV qualified technicians

Another study has also shown on average the repair can take 14% longer to carry out, due to the complexity of repairs, and parts lead times & availability. So, when added to the fact that at present, EV’s have a higher rate of depreciation than a petrol or diesel, surely this means that an EV must cost more to run?

Despite being much more complex than a vehicle with an internal combustion engine, an EV costs less to service. This is because they have so many less moving parts that require maintenance or replacement. There is no engine oil to change and EV’s generally wear out their brakes more slowly as some of the braking capacity is done by the electric motor itself. 

Although the cost of electricity has increased significantly over the last few years, this doesn’t necessarily mean that it now costs more to charge-up an EV than refuelling a conventional car. Some energy suppliers are now offering home smart-charging plans that have a much lower tariff for overnight charging.

But what about charging at work? There is the Workplace Charging Scheme (WCS) that offers grants of up to 75% of the cost of purchasing and installing EV charging points at workplaces. There is currently no Benefit in Kind taxation charging an EV at work – it is not treated as a taxable benefit. Businesses can typically claim back the VAT on buying & fitting EV chargers – as well as the VAT on the electricity supplied.

And whilst on the subject of taxation – here’s the big one. The Benefit in Kind taxation rate for having an EV as a company car is much, much lower than a petrol or diesel car!