Electric Vehicles: Boom or Bust?
In seven years’ time, the UK government plans to ban the sale of all new petrol and diesel vehicles. After this point anyone wanting to purchase a new vehicle will have to make the switch to either an electric vehicle or hybrid.
However, with the recent increase in electricity prices and the lack of public charging infrastructure is the UK ready to make the switch?
Cost per mile
For many years one of the bestselling points of an electric vehicle was the low running costs and the fact that the cost per mile was considerably cheaper than running a petrol or diesel vehicle. However, in recent months due to the rapid increase in electricity costs this isn’t always necessarily the case, especially when using public rapid chargers.
According to the RAC Charge Watch, in May 2022, whether you charged your car at home (8p per mile), used a rapid charger (13p per mile) or an ultra-rapid charger (15p per mile), it was more cost effective than running a petrol (19p per mile) or diesel (20p per mile) vehicle. However, fast forward to January 2023 and although the cheapest per mile cost is still using an electric vehicle charged at home costing 10p per mile, the next cheapest per mile cost is petrol at 17p. Rapid and Ultra Rapid chargers have shot up to 20p and 21p respectively which is now the same cost as diesel at 20p per mile.
So if you are able to charge your vehicle at home you are going to pay considerably less per mile than someone who owns a petrol or diesel vehicle, however, with a third of the country not having access to off-street parking when at home, they will have to rely on the more expensive public chargers.
As a vehicle owner it is not just the cost per mile in fuel/electricity that you have to consider, it is also the purchase price compared to the resale value and whether you are getting affordable motoring during the time you own the car. Electric vehicles are some of the more expensive vehicles on the market with the average new electric car costing £52,000. Hopefully an expensive initial outlay means that you can reap some rewards when you come to resell the car second hand at a higher cost than a petrol or diesel vehicle. However, it has recently been identified that the prices of used electric vehicles have been falling in recent months, with Autotrader reporting that used electric car process have fallen -2.1% from December to January, compared to the 0.2% rise in car prices in that same time.
Government grants for electric vehicles have changed significantly over the last few years. Since 2011, people have had the opportunity to take advantage of grants that either reduced the cost of buying a new electric vehicle or lowered the price of having an electric vehicle charge point installed at home – both extremely helpful when trying to convince people to switch to electric. However, over the last couple of years these grants have significantly dwindled leaving us with few options when it comes to claiming EV grants.
When the Government first introduced the Plug-In Car Grant 12 years ago, new car buyers were able to claim back up to £5000 off the cost of a new electric vehicle. In 2016 the scheme was altered, introducing categories of cars, meaning that hybrids qualified for much less money. Then, in 2018 the grant was reduced to a maximum of £3,500 and cut out hybrids all together. It was announced in June 2022 that the plug-in car grant would be stopped completely and replaced by a new grant that only a limited number of vehicles are eligible for including wheelchair accessible vehicle, vans, trucks, motorcycles and taxis. More information about the grant and how to apply can be found here: Plug-in Vehicle Grants.
Another grant which a number of EV owners benefitted from was the Electric Vehicle Homecharge Scheme, which provided 75% of the cost of an electric vehicle charge point installation, up to £350. This grant was extremely beneficially for those making the switch to electric by cutting down some of the initial outlay needed to get set up. However, this grant was stopped in April 2022. The scheme has now been replaced with the EV Chargepoint grant, which provides 75% off the installation for those people who live in flats, or landlords and the Workplace Charging scheme for those business owners looking to install charge points for their employees and/or customers.
One of the biggest areas of concern as the number of electric vehicles on the road increases, is whether or not the UK has a sufficient charging infrastructure to support this. As previous explained only two thirds of the UK have off-street parking, leaving a third of the country to rely other means of charging their vehicle. According to the Department of Transport, as of the start of 2023 there were 37,055 public chargers with the majority of those falling into the fast charging category (between 7-22kWh). With approximately 663,700 electric vehicles on the road in 2023, that means there is one public charger per 18 vehicles in the UK. It is this ratio that led to the vast queues seen at motorway service stations over Christmas 2022 when many Tesla drivers were stuck waiting for the chance to plug their car in.
There have been many reports of electric vehicle owners organising their journeys and planning specific places to stop in order to charge their vehicle, only to find when they arrive the EV charge point is broken, or a non-EV car is parked in the space, or another EV owner leaves their EV plugged in for longer than necessary taking up a valuable charging station. This then results in them having to find a new spot to charge their car, disrupting their well-planned journey. Perhaps this is the reason that nearly 50% of EV drivers choose to use public charging devices once they have reached their final destination, compared to the 6.1% who will use them on route?
There is also a huge disparity in the number of public chargers available across the country with London providing 131 per 100,000 of the population, as opposed to the North West which only offers 31 and Yorkshire and the Humber offering 36. The lowest number of chargers is in Northern Ireland, with just 19 per 100,000 of the population. If the government is going to meet their target of 300,000 by the time the ban on sale of new petrol and diesel vehicles comes in they are going to have to install a further 3,130 chargers per month, compared to the 806 they are currently installing.
Tax & Insurance
One of the biggest attractions of purchasing a new electric vehicle has always been the fact that you would not be eligible to pay road tax. However, in November 2022 it was announced that from 2025 electric cars, vans and motorcycles will have to start paying road tax. From 1 April 2025 if you own an electric vehicle you will need to pay £165 a year to tax your vehicle (if it was registered after 2017), or if you own a car with a list price of more than £40,000 then you will have to pay the premium rate of £520 a year. As the average price of an electric car in the UK is £52,000, that means a significant proportion of electric vehicle owners will end up paying the higher tax rate.
Another additional cost for all vehicle owners is insurance. Unfortunately for electric vehicle owners it will cost more to ensure your EV than a petrol or diesel vehicle. This is because electric vehicles contain lots of specialist parts, many of which are still quite new to the market and therefore sometimes difficult to get hold of. Then once you have found the correct parts you have to find a specialist mechanic to fit them. Insurance policies for electric vehicle also differ from traditional car policies in that they will give you the option to insure not only the car but the charging cables and wall boxes, options to add legal cover in case someone trips over the charging cable and battery cover. It is definitely worth looking into the finer details with any insurance policy, but with EVs especially so to make sure everything you need covering is included.
Unfortunately, vehicles have faults and from time to time they will break down, even electric vehicles. Even though electric vehicles need much less maintenance than a tradition petrol or diesel car as they have much fewer moving parts, they can still experience faults and will still need mechanics to look after them when they do go wrong. Currently the UK has an abundance of qualified EV mechanics to look after the number of electric vehicles on the road which is great. However, we are facing a skills shortage and a recent publication by the Social Market Foundation highlights that by 2027 we will start to see a shortage of trained EV mechanics. By 2030, the governments deadline to stop selling petrol and diesel vehicles, we could potentially be lacking 25,100 trained technicians. There are various reasons for this looming skills shortage including recruitment challenges, existing technicians unwilling to upskill and manufacturers making the technology harder for smaller workshops to work with, forcing customers to return to the original purchase garage. Unless significant changes are made such as making the industry more appealing to young people, developing a plan to upskill existing technicians and create fair competition between small and large garages, we are going to run out of enough EV technicians in the next 5 years.
Electric vehicle batteries have a life span upwards of 10 years, or 100,000 miles of use. However, the way in which you charge your battery can have detrimental effects which will reduce this life span. For example, frequent use of rapid chargers or continually full charging and then entirely depleting can cause the lithium ion batteries to degrade quicker. If you charge your electric vehicle to 80%, rather than 100%, you will help keep the battery healthier for longer. After this point, the battery will need replacing, an additional cost for any electric vehicle owner. The cost of this has significantly reduced since 2010 when batteries cost approximately £763 per kWh, compared to now where they will approximately set you back £87 per kWh. This means the average electric car battery will cost £5378.43, with the most expensive coming in at £10,440 for the Mercedes EQS, and the cheapest at £2836.20 for the Mini Electric. Not only will you have to pay for the replacement battery, you will need to pay for labour to remove the old battery and install the new one – something to keep in mind when looking at extra costs.
Electric vehicles are often sold as the green transport alternative and the world’s answer to cutting greenhouse emissions, but just how environmentally friendly are electric vehicles? To get a true idea of the impact an electric vehicle has on the environment you have to look at 3 main areas; manufacturing, in-use and end of life.
Firstly, manufacturing. It is widely acknowledged that the manufacturing of electric vehicles creates more emissions than that of a petrol or diesel car. It has been suggested that CO2 emissions from EV production can be 59% higher than the production of petrol vehicles. This is mainly down to the energy intense method of creating lithium ion batteries, and also that many of the places where electric vehicles batteries are made rely heavily on electricity generated in coal power stations such as China. However, many of these countries are looking to reduce their reliance on coal and other non renewable sources of electricity and make the switch to renewable which would decrease the emissions generated. Another issue with lithium ion batteries is the critical raw materials required to make them. These materials are often mined in countries with an already poor environmental record, risking further damage to their ecosystems. Mining these materials is also very energy intensive, yet again relying on non-renewable energy sources.
Once an electric vehicle has been manufactured and hits the road, it will save an average of 1.5 million grams of CO2 in just over a year as it has no tail pipe emissions unlike a traditional petrol or diesel vehicle. EVs also do not use engine oil, so this is one less chemical that has the potential to damage the environment. The only environmental concern comes from how the vehicle is charged. If the battery is recharged using electricity generated by renewable means such as wind or solar then there is little impact, however, if the electricity is generated in more traditional methods such as at a cool or gas power station then greenhouse emissions will be released during its generation.
What happens to the battery once it needs replacing? Currently there are no standardised battery recycling processes and they cannot be put into landfill due to the environmental damage they would cause, plus they contain many valuable materials. Different car manufacturers are currently putting various schemes into place, such as Volkswagen who by 2040 wants to see all the new materials put into batteries since 2019 reused.
From charging infrastructure to additional taxes, vanishing government grants and an uncertain future of used electric car prices, there is much to consider when deciding whether to make the transition from petrol to electric. So is now the time to invest in an electric vehicle and will the UK be ready to make the switch in 2030? Without some significant intervention from the government it seems as though the 2030 target to stop the sale of all new petrol and diesel vehicles will be a difficult one to reach, only time will tell…