The Economics of Electric Car Financing

According to the SMMT, more than a third of registrations for the month were electric vehicles (EVs). Furthermore, electric car sales accounted for nearly 17% of total sales last year, surpassing new diesel cars for the first time.

Given the climate crisis, the increase in EV sales is not a surprise, said MoneySuperMarket. The comparison site emphasized the many advantages of electric vehicles, especially low operating costs and zero emissions.

However, according to the AA, electric cars are still an expensive option. While it is possible to get a new petrol car for less than £10,000, there are few electric cars available for less than £20,000. The average cost, as pointed out by NimbleFins, is £50,000.

MoneyWeek noted that the idea of owning an electric car is attractive as it allows you to contribute to the environment and there is a wide range of models available on the market, avoiding the need to drive a clunky and ugly vehicle.

In addition to being environmentally conscious, explained the financial website, an electric car tends to be more economical to operate compared to a conventional vehicle, considering fuel costs, subsidies granted and emission reductions.

However, as a general rule, electric vehicles (EVs) have a higher initial cost, and many of the previously popular government subsidies have been reduced. The Department of Transportation previously provided subsidies for hybrid cars and plug-in electric vehicles in order to reduce purchasing costs and encourage sales. However, these incentives were removed last year, on the grounds that “a mature market for ultra-low-emission vehicles” had been created.

Vehicle charging is also a challenge, especially in public places. EV owners who have a charger at home have the advantage of being able to charge their vehicle overnight when electricity rates are lower. This can result in savings of up to £130 per 1,000 miles, according to The Times. However, “savings drop to £40 for drivers using public chargers”.

Historically, the Department of Transportation also financially assisted in purchasing home chargers, but now this option is only available to homeowners, apartment renters, or individuals who install chargers at workplaces. Instead, the current focus of support is on taxis, motorcycles, vans, trucks, wheelchair accessible vehicles and public charging points.

Is it cheaper to finance an electric car in the UK?

In the UK, you can find finance options for electric cars that can make them more economical in terms of total cost of ownership. There are a few reasons for this:

Government grants: The British government offers subsidies and incentives for purchasing electric vehicles, such as the Electric Vehicle Subsidy Program (Plug-in Grant), which can significantly reduce the purchase price of a new electric car.

Tax Exemptions: Electric vehicles are exempt from certain taxes, such as Vehicle Excise Duty and Congestion Tax in some urban areas, which can result in additional savings.

Lower energy costs: The cost of recharging an electric vehicle is generally less than the cost of fueling an internal combustion car. In addition, there are special overnight electricity rates, which offer lower prices during the overnight recharge period.

Cheaper to maintain: Electric cars have fewer moving parts and don’t require the same maintenance as combustion vehicles. This can result in lower maintenance and repair expenses over time.

However, it is important to consider that the initial prices of electric cars are usually higher compared to internal combustion vehicles. Therefore, it is critical to carefully weigh the long-term financial benefits, including fuel and maintenance savings, against the higher initial cost of the electric vehicle. Each situation may vary depending on the car model, the financing options available and the individual use of the vehicle. It is recommended to research and compare different offers and make calculations to determine which vehicle option is more economical for each specific case.