Drivers encouraged to research the financial benefits of EVs in wake of budget announcement
Becky Mundie | 04/01/2023
We're urging drivers to look beyond the road tax headline for electric vehicles and consider some of the other financial factors at play.
At a Glance
EV drivers will be required to pay road tax beginning in 2025
But there are still many financial reasons to switch to electric
Hearing that EV drivers will be required to pay road tax from 2025, many will be turned away from the electric switch. With this and the increasing electricity prices, people are thinking electric cars and charging are the more expensive option.
But don't be put off by the news! We're encouraging drivers to look past the headlines and research to consider some of the other financial factors at play.
“There is a division between those who understand and - ideally - buy into electric vehicles and those with a more cursory awareness, based on snippets picked up in passing,” says Gareth Greppellini, Commercial, Marketing and Sales Director of Egg. “Until now, road tax exemption for EVs was an advantage both groups were largely aware of. It would be a real shame if the new budget policy put drivers off investigating the other financial benefits of choosing an EV as their next vehicle. We within the industry have a responsibility to bring this to life with simple and affordable solutions.”
Egg provides and installs home EV chargers, as well as solar panels and batteries which can enable drivers to charge their EVs using solar power, even outside daylight hours. With a mission to inspire a clearer path to clean energy, Egg is committed to building better understanding of sustainable technologies with clear, jargon-free information that can help customers make informed decisions.
“EV drivers that Egg has spoken to cite financial reasons over and above environmental ones for making the switch from petrol or diesel,” continued Greppellini. “This is significant and reflects the fact that higher initial investments in EVs can balance out over time due to lower running costs. We urge drivers to look beyond the road tax headline and consider some of the other financial factors at play.”
Financial reasons it might make sense to switch to an EV
Exemption from charges
EV drivers will begin paying road tax in April 2025, so there are still more than two years for drivers to benefit from that exemption, along with others. EV drivers do not pay the London Congestion Charge - the £15 charge applicable daily in peak hours (excluding Christmas Day to New Year’s Day bank holiday). On top of this, EVs are not subject to the £12.50 per day Ultra Low Emission Zone (ULEZ) charge that also applies to some vehicles in London and which will expand even further across Greater London in August 2023. Drivers of older or more polluting cars could find themselves paying £27.50 per day to drive in the capital from that point. EVs are also exempt from similar Clean Air Zone schemes that operate in cities such as Bath, Birmingham, Bradford and Bristol. Not all petrol and diesel vehicles (also known as ICE vehicles) are liable for these charges, but since requirements vary from place to place, EV drivers at the very least avoid the hassle of having to check if their vehicle is eligible or running the risk of a fine.
Charging an EV will always be cheaper than filling up with fuel, even with rising energy costs. For those with the means - which includes having off-street parking - charging at home is the most affordable and convenient option. Egg’s home charger comes with installation included and a repair-or-replace promise under its Egg Plus plan, giving drivers full peace of mind for a total cost of £990. Tethered and untethered options are available. Drivers can buy the untethered charger upfront for £882 and then pay £3 monthly for Egg Plus over 36 months; or spread the costs with 36 monthly payments of £24.50 at 0% APR plus £3 per month for Egg Plus (i.e. £27.50 per month for 36 months). With the same total cost either way, Egg customers have the flexibility to pick the payment option that suits them best. Some customers opt to pay upfront while they have the money to hand. Others prefer to pay monthly, to manage their outgoings or so their money can keep earning interest in their account for longer.
The actual cost of charging varies according to many factors including the vehicle model, battery capacity and the customer’s energy tariff, but to provide perspective, one full weekly charge is often sufficient for the average driver. The RAC reports that fully charged EVs have ranges of between 100 and 300 miles depending on the model, while MOT data shows the average car in Britain was only driven 104 miles per week in 2021. Public charging does cost more than home-charging, although charger locator tool Zap-Map calculates that more than 10% of public chargepoints remain free to use.
Lower maintenance costs
To put it very simply, electric vehicles contain fewer moving parts than ICE vehicles, meaning there are fewer parts that might go wrong. This should lead to lower maintenance and repair costs for EVs. It is difficult to pin an exact number on the saving, however EDF Energy estimates that an electric car costs at least 30% less to service and maintain, whilst the AA cites a 2018 study saying EVs cost 23% less to run than petrol vehicles on average.
The resale potential
From 2030, the sale of new petrol and diesel cars will be banned in the UK, meaning EVs must be readily available and charging infrastructure must be sufficient for widespread adoption by that deadline. Those looking to buy a new car soon should think ahead to what its resale value will be in a few years’ time. Towards the end of the decade, it is fair to presume there will be higher demand for EVs in the used car market as drivers will, by then, be more comfortable with EV technology and more familiar with the cost benefits of driving an EV. Industry sources including CarWow and Autotrader suggest ICE vehicles depreciate faster than EVs.
Buying a new EV is undeniably more expensive than buying an equivalent ICE vehicle, however not all EV drivers own their cars, or take out a personal lease. Increasingly, drivers are able to opt for electric when choosing a company car, with many companies signing up for salary sacrifice schemes that benefit their employees when doing so. Through salary sacrifice, employees pay for their company car from their monthly gross (pre-tax) salary, which in turn reduces the amount of income tax and National Insurance removed from their take-home pay packet. Company cars will often be leased to employees with extras such as insurance, breakdown cover and servicing included, which removes extra hassle for drivers of company EVs - plus companies can sometimes secure discounts on vehicles through bulk orders. Drivers unable to shell out upfront to buy an EV may find that utilising a salary sacrifice scheme makes an electric vehicle more affordable than previously thought.
“The future of driving is electric and we at Egg are invested in navigating drivers through the step-change,” said Gareth Greppellini. “Whether someone is in the market for a new car within the next year, or not for another five, we hope to shift the mindset towards the idea that their next car should be electric.”
Egg’s EV Charger Plan is available subject to credit check. Credit provided by Phoenix Renewables Ltd trading as Egg which is regulated by the Financial Conduct Authority (FRN 965996). Terms and Conditions apply, see www.crackingenergy.com/legal.
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