Is An Electric Car Expensive?

Electric car charging using an on street public charger.

There are many perceived barriers preventing people switching to an electric car. One of the biggest is that EVs cost more than a fossil car. They might cost a bit more to buy, however, is total cost of ownership any greater?

Because my car is my business the figures have to add up when buying a new car. So the total cost of ownership in the time the car will be with me is the most important factor and always well researched. So as a comparison the cost of ownership of a Peugeot 208 petrol and electric models has been analysed here and compared here to see which has the lowest cost of ownership.

Electric and Petrol Car Ownership Costs

The Peugeot 208 is an interesting model because it’s the first car from a mainstream legacy European manufacturer where the same model of car is offered with a range of power units including electric making an electric to fossil comparison easy. The electric versions have up to now been a separate model in manufacturer’s ranges such as the Nissan Leaf and Renault Zoe. It’s also Peugeot’s entry level car rather than a luxury high end model so more relevant to a lot of buyers.

For this comparison figures have been compiled for an average new car buyer doing 10,000 miles a year together with a high mileage driver at 20,000 miles a year. Also this comparison is for new cars as the second hand market is fragmented at the moment with demand outstripping supply making EVs disproportionately expensive. Because new cars sold now will be the used cars in a few years, new car buyers choices will influence the future used market.

Buying Depreciation

Whilst it’s easy to look at an electric car purchase price in isolation and think it’s expensive, when we buy a car what we’re really doing is funding the depreciation. We buy cars, use them for a few years and sell them for less than they cost to buy. A £25,000 car you use and sell for £20,000 is a cheaper car than a £15,000 car you use for the same time and sell for £5,000.

However you buy a car, either with finance or cash from your savings, the depreciation will be the same. With over 90% of new cars being bought using finance, PCP is becoming a popular way to buy a car. PCP essentially finances only the depreciation. Consequently, finance companies need to have an accurate prediction of the value of the car at the end of the agreement as their profit relies on it. Even if you’re not planning to finance a car on PCP a PCP quote is useful to give a prediction of the future value of the car and what depreciation might cost. For this reason PCP prices have been used in this comparison as a reasonable estimate of monthly depreciation costs and being the most likely way a new car is financed.

Fossil, Electric Car Cost Comparison

Let’s look at some figures based on Allure Premium specification 208, a mid range specification, on 48 month PCP with £2,000 deposit, 10,000 miles a year. Prices from peugeot.co.uk October 2020.

10,000 Miles a Year

Engine£ per Litre or kWMiles Gallon
or kW
Monthly Fuel CostMonthly PCPTotal Monthly Cost
1.2L PureTech 100 6 speed manual1.204599.6255.00354.96
1.2L PureTech 130 8 speed Automatic1.204599.6297.00396.66
Electric 136 50kW battery0.15431.24363.00394.24

Powertrain Options

The base model 208 active is the only model with more manual gearbox choices than automatic. Manual gearbox engines are low power, low specification, probably to keep emissions down. So the best fossil comparison to the performance of the electric version is the 8 speed 130 petrol automatic resulting lower cost of ownership for the electric version.

Economy

In the comparison there are reasonable guesstimates for some figures including using 45 MPG which is on the low end of Peugeot’s petrol consumption figure. Fuel consumption figures like EV ranges can be optimistic so this was used along with a reasonable estimate of 4 miles a kW for the electric motor. Driving style can certainly have an enormous affect on economy as well.

The rate per kW of 15p for electricity for the EV is the highest domestic amount you’re likely to pay. However, most EV owners charging overnight at home will get an EV friendly tariff where costs can be as low as 4p kW. With smart tariffs you can even get paid to charge your car at times when the grid has too much electricity. While Rapid charging on a long journey will cost more, for most EV owners rapid charging is a rare occurrence. Because the 208 will leave home fully charged with up to 200 miles range it’ll go a lot further every day than a 10,000 mile a year driver’s average daily mileage.

Other Costs

These are basic costs, there are other costs not included in this comparison all of which would be less favourable for the fossil car. VED, which is £0 annually on an EV, servicing costs which are also lower on an EV.

20,000 Miles a Year

Engine£ per Litre or kWMiles Gallon
or kW
Monthly Fuel CostMonthly PCPTotal Monthly Cost
1.2L PureTech 100 6 speed manual1.2045199.92280.00479.92
1.2L PureTech 130 8 speed Automatic1.2045199.92326.00525.92
Electric 136 50kW battery0.15462.48405.00467.48

When the mileage goes up the EV starts to become much less costly to own due to the lower running costs. Even the low specification manual engine costs more. The petrol engines are likely to have much higher service costs at a higher mileage as well.

Electric Car Costs Less

In conclusion, apart from the poverty specification manual engine for the 10,000 mile a year driver a mid range 208 electric car will cost less to own over 4 years, importantly, as the annual mileage goes up the EV becomes the less costly to own. Over 4 years at 20,000 miles the EV is £2,805.12 cheaper than the 130 8 speed automatic. Electric cars really do cost less than fossil cars.