What’s the impact of electric cars on my energy bill?

The revolution may not come not with a bang, but with a whisper. Specifically, the whisper of tyres on tarmac and maybe the sound of an acoustic vehicle alert. In a decade or two, there’s every chance that electric cars will outnumber petrol cars on roads in the UK and around the world. Government mandates and manufacturer commitments to electric vehicle production over traditional fuel models are designed to be more environmentally friendly to combat climate change.

Five or ten years ago, you’d be hard-pushed to have seen an electric car driving around, but now they’re a common sight. Elon Musk’s Tesla company alone has sold over a million Model 3 electric cars as of the end of 2022, and with companies including Nissan, BMW, Jaguar and Volkswagen committed to electric vehicle production, those numbers will only grow.

Will electric cars be embraced by consumers? They may not have a choice. In the UK, the government intends to outlaw the sale of petrol and diesel vehicles by 2030 (with sales of those kinds of vehicles declining year on year as it is), while CO2 emissions are being cracked down on throughout Europe and in other parts of the world. While it’s very unlikely that petrol and diesel vehicles will be illegal to drive from 2035, this is the way the wind is blowing.

Electric vehicles (or EVs) have grown in popularity in the last few years as range, choice and practicality improves. Approximately 265,000 battery-electric cars were registered in 2022, which constitutes a 40% improvement on vehicles registered in 2021.

With a £300 million investment in the UK's public charging infrastructure underway, the future is bright for those who want to make their next car an electric model.

So what do you need to know about electric cars now? What’s it like to own an electric car in 2024 and what are the cost considerations?

History of electric cars

Let’s start at the beginning.

Electric cars have already taken the world by storm once, but it was over a century ago. Between the advent of electricity and the development of petrol and diesel cars, non-horse drawn carriages were powered by rechargeable batteries. An electrical engineer called Gustave Trouvé presented an electric car in Paris in 1881, while Andreas Flocken, a German inventor, produced the Flocken Elektrowagen in 1888. It wasn’t until 1897, though, that electric vehicles came into their own as taxis in London and New York. Their dominance lasted until the 1910s when the internal combustion engine was perfected which resulted in a dramatic reduction in the cost of vehicle production.

Then the rest of the twentieth century happened, during which electric cars were largely irrelevant but various scientific achievements made their modern incarnations possible, like the invention of the lithium-ion battery. 

There was an aborted attempt at bringing electric cars to the mass market in the early 1990s in response to a push by the California Air Resources Board to reduce emissions throughout the state. Many models were developed by companies including Honda, General Motors, Chrysler and Nissan, but all were eventually taken off the market. In 2004, Tesla began developing the all-electric Roadster, which eventually went on sale in 2008. It wasn’t until 2009, though, when a road-legal model in the Mitsubishi i-MiEV went on sale.

In recent years, hybrid and all-electric cars have been produced by all manner of manufacturers, winning awards and enjoying an ever-growing acceptance among drivers throughout the world. Among the aims for manufacturers in the next few years will be ensuring a greater range of travel and driving production (and therefore retail) costs down. 

What types of electric car are there?

Before deciding whether you’re ready to make the switch to electric, it’s important to understand the different types of electric cars that are currently available. The most common types of plug-in electric vehicles are:

• Battery electric vehicles (BEVs). These have a 100% battery-powered motor and are also known as battery-only electric vehicles, fully electric vehicles or all-electric vehicles. With a battery-only vehicle you can expect about 100-200 miles of driving from a single charge. Popular BEV models include the Nissan Leaf, Renault Zoe and Kia e-Niro

• Plug-in hybrid electric vehicles (PHEVs). These cars run on a combination of battery-powered motor with an additional petrol or diesel-powered engine. The battery fuels the car for up to 70 miles, with the internal combustion engine providing back-up power for further range and higher speeds. Popular PHEVs include the Mitsubishi Outlander, Volvo XC90 and Volvo XC60

• Hybrid electric vehicles (HEVs) are another popular option for alternatively fuelled transport. So-called ‘self-charging’ hybrids power the battery from the car’s own braking system (using a combination of fuel and electricity), so don’t need plugging in but still require filling up with fuel. In the UK, drivers of hybrid vehicles pay the lowest amount of car tax and are exempt from the London congestion charge. The best-known hybrid vehicle is probably the Toyota Prius, with over 15 million units sold globally. 

Our guide to the best electric cars could help you find the right model for your needs. And check out our run-down of the most popular electric cars across the world.

How green are electric cars?

If you’re comparing electric cars to petrol cars, then electric cars are immediately and obviously the greener option because they don’t use fossil fuels that pollute the environment to run. In the context of the wider drive for green energy, though, are electric cars a good option?

Ultimately, it depends on how the power you use to charge them is generated. Energy tariffs can offer electricity generated by coal-fired power plants or by more green methods like solar, wind or tidal plants, so even though the vehicle’s emissions will be lower whatever the source of the energy, it can’t be called “green” unless it comes from one of those more environmentally-friendly sources. The pollution may not be coming from the car itself, but it will have come from the plant that produced the electricity it runs on, so the point of driving the car is moot. 

With this in mind, remember that it’s not enough to simply buy an electric car and think your green contribution is complete - the greenest drivers are those who combine the right kind of vehicle and tariff. 

What are the best electric cars?

The best electric car is the one that meets your needs at a price you can afford - the answer will be different for everyone.

The best-known electric cars are made by Tesla - Autoexpress and Whatcar both suggest that the Model 3 is the best electric car on the market. The basic model can do 267 miles on a single charge with a top speed of 140 miles per hour. Models like the Porsche Taycan, which skews towards the sports car side of the market and is even faster than the Tesla, and the more family-oriented Renault Zoe are also highly thought of. 

Things to consider when choosing an electric car include:

• The average length of your journeys - will a certain car’s distance per charge be enough for you?

• Price and charging costs - you’d need to think about price regardless of the type of car you buy, but you’ll need to factor in the cost of installing a charging point and how much extra the charging is likely to cost you in energy bills

• Maintenance - it can be expensive to fix an electric car, especially if the battery needs replacing (which can come to thousands). Think about whether you’ll be able to cover this sort of cost unexpectedly

• The type of electric car you opt for - do you need a fully electric car or would a hybrid be a better choice for now so you can ease into the idea of an electric car without being fully committed to it? 

Ultimately, there’s no substitute for research in the same way that you’d (hopefully) thoroughly research a petrol car before you buy it. Think about how an electric option would fit into your lifestyle and budget, and remember that hybrids are available so you can see what an electric car is like without sacrificing petrol power (yet).

Should I buy an electric car?

While most people associate electric vehicles with environmental benefits, the cost benefits are impressive too.

Running costs for electric cars can be much lower than petrol and diesel vehicles. For fully electric vehicles you don’t have to fill up on fuel at all, and plug-in hybrids will use much less fuel than a standard car.

Fully electric cars worth under £40,000 are also exempt from vehicle excise duty (commonly known as road tax), though this will change from 1 April 2025.

Electric vehicles are also exempt from the London Congestion Charge and Ultra Low Emission Zone (ULEZ), meaning a saving of up to £12.50 per day for drivers in the capital.

What incentives are there for electric car purchases?

As we’ve already noted, the upfront cost of an electric car is usually greater than that of a petrol or diesel car, though the ongoing running costs will even things out. With that in mind, purchasers may be interested in the incentives that are available to help reduce the initial cost of an EV.

Workplace Charging Scheme

The Workplace Charging Scheme is designed to help businesses encourage their employees to choose lower-emission vehicles by applying for vouchers worth up to £350 per socket to help with the cost of buying and installing charging points at their premises.

How much does it cost to charge an electric car at home?

While electric car owners will save on fuel and tax, it’s important to consider the cost of charging. Electric Nation Smart Charging Trial data in 2018 found that 87% of electric car charging is done at home using a home charging point.

Just as the cost of filling up with petrol varies depending on the car and the cost at the forecourt, electric vehicles will also vary in how much they cost to charge. The cost of charging your electric car at home will depend on two factors:

• The size of your car’s battery

• How much you pay per unit of electricity.

Pod Point calculates the most popular all-electric car, the Tesla Model 3, would cost up to £21.81 to fully charge at home, based on an electricity rate of 28p/kWh. Electric vehicles with smaller batteries, such as the Nissan LEAF, could cost around less per charge.

Home energy costs are often higher for EV drivers - although this extra expense is usually significantly outweighed by the running cost savings and environmental benefits.

The cost of charging your electric car at home will be included in your normal electricity bill, so you should carefully consider your energy costs and choose the right energy deal for you so you don’t overpay.

What energy tariffs are there for electric cars?

It’s worth considering your usage, charging hours and any additional extras offered by the supplier when deciding which is the best tariff for you.

Many energy suppliers have introduced specific EV tariffs to help drivers maximise their savings, thanks to increased awareness and demand from customers. This is also because it’s much easier to reliably offer green electricity than green gas (which involves various complicated carbon offsetting measures).

These often work similarly to domestic Economy 7 tariffs where electricity is charged at a lower unit rate for seven hours during the night, allowing drivers to charge their vehicles during the night so it will cost them less and they’ll have a fully charged car in the morning. While not all suppliers offer specialist EV tariffs at the moment, they’re likely to become more commonplace as electric cars grow in popularity.

All EV tariffs currently available offer 100% renewable electricity, with many offering discounts on home charge points plus other benefits.

The general requirements for all EV tariffs are:

• Your bill must be collected by monthly direct debit (EV tariffs are not available for those on prepayment meters)

• You must have a smart meter or be willing to have one installed

• You must own or lease an EV vehicle.

It’s important to choose your energy tariff carefully if you’re getting an electric vehicle, because you’ll be doing most of your vehicle charging at home as opposed to at one of the charging points located across the country.

Look out for EV energy tariffs from the likes of EDF Energy, OVO Energy, British Gas and Octopus. The number of tariffs on offer will only increase as the use of EVs becomes more widespread.

How much does it cost to charge an electric car on the go?

An overnight charge at home will provide enough range for most journeys, road trips beyond your car’s range will mean the car needs topping up on the way.

Thankfully the UK’s charging infrastructure is improving all the time, with the number of public charge points increasing from around 1,500 in 2011 to nearly 54,000 at the end of December 2023. Ofgem is investing millions to install 1,800 ultra-rapid charge points at motorway service areas and key trunk roads and a further 1,750 charge points across towns and cities.

You’ll find charging points at motorway service stations, some petrol stations, shopping centres and car parks. Pod Point estimates they cost around £26 for a full charge. Some public charge points work on a subscription basis and some offer free charging.

While it’s worth knowing the cost of charging on the go if you need to, the vast majority of charging will be done at home between trips. Here’s where there is a significant opportunity to save by ensuring you’re on the best energy plan for your needs.

How to save money on electric vehicles

In addition to taking advantage of government incentives and comparing prices to find the best EV tariff, here are a few handy tips for cheaper charging:

• Find free charging points - some car parks, supermarkets and shopping centres offer free charging points to customers. Try planning your journeys to take advantage of these, making you less reliant on your home charger. More places of business are installing free access points in corporate car parks as an incentive to employees

• Use a companion app - monitor your battery’s life and condition with a smart charging app designed to keep track of your usage. Because the best EV energy tariffs also require a smart meter within the home, you can also download the corresponding app to gain greater insight into your household energy use

• Don’t run your battery down - it takes more energy to recharge the battery once it’s been run down to the lower limits. A good rule of thumb is to avoid letting it get to the 20% mark, or you’ll end up spending more on energy. 

• Avoid overheating your battery - lithium-ion batteries can be damaged if they get too hot, so to save money on repair and maintenance it’s important to protect your car from direct sunlight. Look for charging points in the shade and store your EV in a garage when possible. 

By doing a bit of research into your EV electricity tariff and charging options, you could potentially save a bundle over time.

Are electric cars worth the cost?

If you’re in the market for a new car, you’ll probably notice that electric cars tend to have a higher price tag than petrol or diesel-powered models. You’ll pay higher up-front costs for an EV, but it’s important to consider the big picture when you’re weighing up whether or not it’s worth it. There are savings in fuel costs, as well as tax exemptions and EV energy tariffs. Some energy suppliers allow you to sell excess car battery charge back to the National Grid, which adds up to even more money in your pocket over time. 

Maintenance costs for BEVs are far lower because electric cars involve fewer moving parts and don’t require oil changes. Their gearboxes are simpler, requiring less money spent on wear and tear. As the technology continues to improve, we’ll see even greater savings in the future. 

However, there are other areas where it costs more to run an electric vehicle. One example is car insurance, which is more expensive than it is for conventional vehicles. Premiums tend to be higher because EVs are heavier than traditional cars, which can cause additional damage during impact. And although maintenance is cheaper, when something does go wrong repairs can be costly.

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