There are a number of factors that are in play when deciding whether to get an electric car, with cost arguably the most significant. After all, even the greenest intentions cannot rectify the problem if an electric car is out of your price range, but it is a common misconception that electric vehicles are way more expensive than petrol or diesel cars and you might be pleasantly surprised at the total cost.
Initial cost makes up only a small part of the overall cost of an electric car, which is why we’ve broken all of the costs associated with buying, leasing and running an electric car down into clear categories to give you full transparency when it comes to the financial reality of getting an electric car.
Initial Cost
Initial or upfront costs are what most drivers get caught up in when purchasing a new vehicle. This cost is typically the largest you will face when going green, but the amount does depend significantly on the way in which you intend to pay for the vehicle.
Buying Outright
Initial costs will be at their highest if you opt to purchase an electric car outright. While this option does mean that you will have total ownership of your new vehicle, you will have to pay the full purchase price upfront. Prices range significantly depending on the brand and your purchase location, with an average purchase price of £55,000.
Leasing
Alternatively, you can take out a lease deal in order to access an electric car. While this may leave you liable to charges at the end of the deal depending on mileage and whether you’d like to own the vehicle when the lease expires, upfront costs are much less compared to buying outright. Here at Intelligent Vehicle Finance, we have a range of electric car lease deals available with upfront costs ranging from one to nine months’ worth of monthly payments.
Monthly Payments
If you choose to go for a lease deal to get an electric car, or take out a loan to purchase your vehicle, you will pay over a series of fixed monthly payments. These can vary based on several factors, including the make, model and value of the vehicle as well as the length and type of lease.
Monthly payments for an electric car lease are typically less than loan payments but do not always guarantee ownership of the vehicle at the end of the term.
Charging Costs
With the cost to purchase aside, running costs will be the next most significant expense involved in getting an electric car. Of all of these, charging costs are what most drivers are concerned about as the concept of using electricity rather than fuel to power your vehicle is still pretty new to us all!
When considering the charging costs of an electric car, make sure to bear in mind both the day-to-day electricity costs as well as any investment that you may need to make in charging infrastructure. Electricity costs will depend on your rates and the efficiency of your chosen vehicle but are estimated at an average of £17 per full charge. Equally, the cost of installing a charging point at your home can vary but there are a number of government grants available that cover some or all installation costs in the UK.
Maintenance
One of the most appealing features of electric vehicles is their low maintenance costs. With fewer moving parts than a typical car, electric cars experience less wear and tear which reduces the need for regular maintenance. For example, oil changes are not required and regenerative breaking technology extends the longevity of brake pads. If you take out an electric car lease deal with Intelligent Vehicle, you can also add a tyres and servicing package to your contract which gives you greater clarity over anticipated maintenance costs.
Tax
When it comes to the taxation of electric vehicles, there are two important parts to consider:
Road Tax
Your vehicle must have appropriate road tax to be able to drive on roads in the UK. Electric cars are not exempt from taxation rules, though the cost to tax an electric vehicle is currently nothing. This will change in 2025 when drivers of electric vehicles will be required to pay road tax.
Company Car Tax
If an electric vehicle is accessed through a business lease, it’s important to also be aware of possible company car tax costs. However, leasing an electric car through a business actually offers significant tax advantages to both businesses and employees as the rates charged are much lower than those charged on petrol, diesel and hybrid cars.
Company cars are classed as a benefit in kind (BIK) by HMRC and are therefore subject to tax based on a percentage of the car’s value. This percentage has been fixed at just 2% until the end of the 2024/2025 financial year and, following this, will rise by only 1% a year until 2028.
Other Costs To Consider
Beyond the basic expenses we have mentioned, it’s worth bearing in mind a couple of other costs. You will need to take out a suitable insurance policy and may also wish to invest in GAP insurance should you opt for an electric car lease deal. Know also that electric vehicles are exempt from having to pay charges to enter clean air zones and the London ULEZ which can be valuable if you find yourself travelling frequently in applicable areas.
Find Your Perfect Electric Car Lease Today
Once you’ve got a full understanding of the costs associated with electric cars, it’s time to decide which type of purchase or deal is right for you. If leasing seems like the way forward, Intelligent Vehicle Finance can provide you with a huge range of the very best electric car lease deals. We have access to a huge range of models from all manufacturers, so don’t hesitate to get in touch today if you are ready to find your new vehicle or wish to ask our expert team any questions about the cost of leasing an electric car.