Is there, today, an economic incentive to drive electric? To estimate the actual cost of a vehicle, it is necessary to take into account all of its expenses from the moment of purchase all the way until the time it is resold. And over time, electric seems to come out on top. Learn why.
Passenger cars are at the centre of efforts to reduce greenhouse gas emissions. Significant progress has already been made, thanks to vehicles that consume less and less fossil fuel. The solution will also require the more widespread adoption of electric vehicles, which emit no polluting exhaust fumes.
But what is their real overall cost? The purchase price should not be the only criteria taken into account. To determine the overall cost of a vehicle, it is necessary to consider all the costs of ownership and use. Several factors come into play.
The carrying cost of a vehicle is calculated by taking the purchase price, then subtracting any aid or incentives, as well as its resale price.
The purchase price of an electric vehicle is sometimes perceived as an obstacle to buying one. But thanks to technological advances, it will soon become more and more accessible. Production costs, starting with those associated with the manufacture of electric motors, will decrease.
The same goes for batteries: they are already starting to find a second life storing electricity produced by renewable energy sources. Not to mention that vehicle range will be boosted, the number of charging stations will go up, as will the availability of rental and carsharing solutions. With the emergence of the second-hand market, electric vehicles will become even more accessible in the future, and will be used in more optimal conditions.
Already, several countries have set up incentives that partially offset the additional purchasing costs. These “nudges” can come in several forms: environmental bonuses, tax credits, exemptions from registration fees, VAT deductions, exemption from circulation taxes and even a free car registration document. The subsidies can reach €4,000 in Germany, €7,300 in the United States and €8,000 in Norway. Spain just adopted the Moves plan, which provides for a government subsidy of up to €5,000, in addition to a minimum €1,000 discount from car dealers, amounting to a total assistance package of €6,000 for the buyer. France is well positioned, with an environmental bonus of €6,000, which can, under the right conditions, turn into a conversion bonus reaching up to €11,000 when a petrol or diesel-powered vehicle is traded in.
The purchase price must also be considered in relation to the resale price. Now, in the context of a growing environmental consciousness, electric vehicles will continue to spread around the world. Their supply will expand. The market for used electric vehicles will grow at the same pace as the market for new ones. It will become easier and easier to find used electric vehicles, as well as to resell them. In France, for example, there are more and more ZOEs available that are less than 4 years old, with less than 50,000 km on the odometer.
If the cost of owning an electric vehicle is higher today than that of a combustion-powered one, the situation is changing. All the indicators are green!
A vehicle’s running cost includes the energy needed to drive it, its maintenance, insurance, and also the cost of parking and tolls.
When it comes to fuelling up, things are clear. Not only does an electric vehicle consume less energy, but cheaper energy. And that trend shows no sign of reversing: the price of electricity has remained relatively low, while that of fossil fuels and the taxes on them, which across Europe account for more than half of fuel price, is on the rise. With the increase in the share of renewable energy sources, like solar and wind in the energy mix, electricity will also be more and more carbon-free. There are also ways to optimise the cost of charging by triggering it at the times that electricity is cheapest.
The maintenance costs of an electric vehicle are lower. With no oil, filters, gearbox, clutch, exhaust or timing belt, the electric car has fewer parts that need to be replaced or maintained.
Not to mention that drivers often adopt a smoother driving style, which helps preserve the mechanical integrity of a vehicle. The above are all assets in a world where spending on maintenance and repairs tends to go up, due in particular to the technological complexity of automotive vehicles.
There is no significant gap in the price of insurance based on a vehicle’s type of propulsion. However, depending on the country, some insurers may offer guarantees specific to electric vehicles, having to do with the battery: 0 km power failure assistance, battery changes, towing to a charging station and even assistance in the event of damage to a private electricity system caused by charging. Some act in favour of vehicles with a lower carbon footprint, to reward eco-conscious behaviour.
Finally, electric vehicle users often enjoy specific advantages, particularly in urban areas. Exempted from annual circulation taxes in Bulgaria, Hungary, Romania and Slovakia, they can take advantage of public car parks in numerous cities, like in London, but also locally in China, Germany, Japan and Norway, a country where tolls and ferry services are also free of charge. That means fewer everyday expenses!
Consuming less energy and costing less to maintain, electric vehicles undoubtedly enjoy the benefits of a very attractive running cost. The more you drive one, the more obvious it becomes!