Electric cars are too expensive? New figures suggest not

Can you really save the guts of €4,000 in one year by switching to an electric car? That's the claim being made by UK finance website Money.co.uk, which has surveyed the potential savings to be made from swapping petrol for battery power across Europe.

The findings show that, perhaps unsurprisingly, it's the Scandi nations that lead the way on potential savings. Money.co.uk's figures show that Denmark offers the best savings, with a frankly ridiculous €26,332 saving to be made in the first year alone. That's primarily because Denmark's vehicle taxation scheme makes petrol and diesel models even more frighteningly expensive than they are in Ireland – something to remember the next time you start complaining about the cost of VRT.

Norway is next up, with a potential saving of €17,013 in the first year alone. Again, high taxation levies on combustion-engine cars, coupled with substantial subsidies for EVs, tip the balance heavily to the electric side.

Next up? Us. According to the calculations, Irish buyers stand to make a saving of €3,900 in the first year if they switch from petrol to electric.

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This figure comes with some significant caveats. First of all, this assumes that you're covering 16,000km per year. Secondly, it assumes that you're doing all – not just most – of your battery charging at home, on the 25c per kWh electricity rate, as quoted by Eurostat. Finally, it compares just two cars – the Nissan Leaf and the VW Golf. Which is fine as it goes – the Leaf and the Golf are comparable on size, and for the most part on cost. It assumes you're going for the cheapest model in each case, and the cheapest Leaf has a mere 40kWh battery and a range of only 275km on the WLTP cycle – not great if you're trying to cover that 16,000km every year (although that is only 43km per day, if you include weekends. It's more like 60km per day if you're taking out weekends and bank holidays).

Other expenses are also not included, such as insurance (which may or may not be cheaper for an electric car), motor tax (which is only slightly cheaper for an EV compared with an average family car with a combustion engine), or motorway tolls (which are cheaper for EVs). It also doesn’t allow for discounted electricity costs, which may give you a little cost wiggle room to indulge in some rapid DC public charging when out and about. If ever there were a case of “your mileage may vary”, then this is it, but the overall point is well made – running an EV certainly costs less than running a car with a combustion engine, especially with fuel nudging €2 per litre at the pumps.

Worse cases

The country with the lowest saving was Portugal – just €194 a year in potential savings – but there were worse cases. According to the calculations, in both the UK and Germany, it will actually cost you more to run a Leaf than a Golf, to the tune of about €800 in each country.

The advice is to break out your calculators, dig deep into your Junior Cert maths memories and do your sums carefully before deciding. "Switching to an electric car or van means zero emissions from the vehicle, cheaper road tax as well as escaping charges for emission zones in cities. But there's no denying the range limitations, longer charging time and generally higher purchase prices. So, make sure [to] weigh up your options against petrol/hybrid vehicles to see which is most suited to your specific needs" says James Andrews of Money.co.uk. "Although electric vehicles are becoming more common, access to rapid chargers is still harder than finding a petrol station. While millions will be able to charge at home or at work, if that's not an option, you need to make sure you have public points available nearby before you commit to a purchase. If you aren't sure if you can commit to a 100 per cent electric vehicle yet, hybrid vehicles could bridge the gap while the infrastructure and technology develop further. You don't need to solely rely on charging points, and hybrids still emit less pollution than conventional petrol cars."

Do Money.co.uk’s claims add up? According to the Sustainable Energy Authority of Ireland (SEAI), you will save money, but possibly not as much as is being claimed.

The SEAI comparison differs from the Money.co.uk one in that it includes maintenance costs, price, fuelling costs, tax and purchase grants, and covers 18,000km rather than 16,000km. Petrol and diesel prices are due an update, which may increase the savings, we were told, but so also the electricity prices will need a review, based on the most recent increases, so there may be some further swings from both but the general figures as they stand should be accurate.

One point worth noting is the very high level of carbon tax that is levied in Norway on new petrol or diesel cars, which will contribute to the much bigger savings in that country.

Up-front cost

The SEAI’s figures show that your annual energy costs peak at €1,267 for a diesel-engine Golf, but are just €282 for the Leaf. That saving will fluctuate with changes in petrol and electricity prices, but the overall gap should more or less remain. Over 10 years the SEAI suggests that the total cost of ownership for the Golf (and a 2.0 TDI diesel model is used as the basis for this comparison) will be €55,650, whereas the Leaf will cost you €40,870, assuming 18,000km per year. That averages out to an annual saving of €1,478 – substantial, but not quite the €3,900 first-year savings being claimed. Then again, if you could save €14,000 over 10 years on a mortgage, you’d not be long switching.

According to the SEAI, there are five key things that are holding consumers back from buying electric. The main one is cost, and it is certainly true that many buyers still see a new EV as being just too expensive. The SEAI, though, claims that much of this is down to “hyperbolic discounting” – which basically means that most of us are looking at the up-front purchase price, and not the overall lifetime running costs.

That’s tied in with another issue – status-quo bias, which is not a fondness for long-haired English rock bands, but a general reluctance to move beyond what you know. Social norms tie into that – if you’re keeping up with the Joneses, you’ll probably buy what they’ve bought – as does information overload. With the constant, rolling hype over EVs, some consumers are taking refuge in the simplicity of buying what they are familiar with. A final barrier is the opposite: information problems, whereby people simply haven’t taken the time – or have not been able – to read up on the pros and cons of EVs.

The SEAI recognises that the information gap is possibly the most significant one to bridge. “Communicating the lower overall cost of ownership to potential owners is key,” says Andrew O’Callaghan of the SEAI. “There are also questions to be asked about how we label and communicate overall running costs to the end consumer.”