Those that choose to switch to an electric vehicle may do so for environmental reasons, but many may have also made the switch due to their low running costs. However, the ever-increasing price of electricity could lose EVs the cost advantage versus fossil fuel cars.
In the UK, the average price of petrol has fallen below £1.50 per litre for the first time since Russia invaded Ukraine, while the price of electricity has been steadily climbing with the UK Government set to cut some of its energy bill support at the beginning of April. This has meant that electric vehicles have lost some of their advantage when it comes to being cheaper.
Despite closing the gap, petrol prices would need to fall even further to overtake the low running costs of an electric vehicle. According to figures from myenergi, the cost per litre of petrol would have to drop below £1, which has not happened in the last 14 years.
Under the government’s Energy Price Guarantee, the average dual fuel unit price for electricity on standard variable tariffs with direct debit is limited to 34p per kWh. For an electric car averaging just over 3 miles per kWh, this equates to a cost of 11p per mile. With fuel at £1.50 per litre, a petrol car averaging around 45 miles per gallon will cost 15p per mile – and would only become cheaper to run if prices fell below £1 per litre.
It’s also possible to reduce those prices for electric vehicles by having a more efficient EV, or by having a time-of-use tariff for electricity. Octopus Energy’s Intelligent Octopus tariff offers 10p per kWh between the hours of 11:30pm and 5:30am, for example, which with the same 3 miles per kWh efficiency would mean a cost of around 3p per mile.
Of course, those with solar could also benefit from completely free charging, but those on long journeys may feel the sting a little bit more. With some public EV chargers costing a whopping £1 per kWh, it may be cheaper to use a petrol-powered car, as that charging session could cost as much as 33p per kWh.
Jordan Brompton, Co-Founder and CMO of myenergi, noted, “The vast majority of electric vehicle charging happens at home and often overnight – and that remains significantly cheaper than fuelling a petrol or diesel car. While some public charging costs have risen noticeably in recent months, very few drivers rely on the rapid or ultra-fast chargers on the public charging network for their everyday charging needs.
“That’s good news for existing and prospective electric car drivers, since not only can those with home charging take advantage of Time of Use home energy tariffs with cheaper overnight electricity, but an increasing number will have the ability to charge for a marginal cost of zero, using their own renewable generation in the form of rooftop solar panels.
“Far from waning demand, we are seeing interest in electric vehicles absolutely booming. While some models are more readily available, the average lead time for a new electric car is around nine months – far longer than the lead time for a new petrol or diesel car – underlining that this is still very much a supply-constrained market.”