As part of its Net Zero Strategy, the UK government announced in late 2020 that they are banning the sales of new petrol and diesel cars by the year 2030. According to the Society of Motor Manufacturers and Traders (SMMT), the uptake of electric cars appears to be growing rapidly, currently accounting for approximately one in five new registrations. However, plug-in vehicles still only represent around 1 in 50 cars currently on the road. There are in the region of 20.5 million petrol vehicles (58.6%) and 13 million diesel vehicle (37.1%) on the road. This shows the scale of the challenge ahead to convince drivers to make the change to more environmentally friendly methods of transport.

What are the benefits of electric vehicles?

One of the biggest concerns preventing drivers from switching to an electric vehicle is cost. As electric vehicles are viewed as being relatively new, there is an assumption that they are more expensive to buy and insure compared to the established petrol and diesel vehicles. The upfront purchase price of a new electric vehicle is often higher, but drivers of electric vehicles can benefit from a number of financial savings over time.

  1. Vehicle Tax & Congestion Charge Exemption

Because they produce zero emissions, electric vehicles are exempt from vehicle tax. In comparison, new petrol and diesel cars will cost £155 from the second year onwards plus a one-off first year rate, which will vary depending on the level of CO2 emissions that the vehicle produces. This can be as low as £10 for the lowest polluters and up to £2,355 for the highest polluters.

Electric vehicles are also exempt from congestion charges, but this will only apply until 25th December 2025.

  1. Lower Fuel Costs

The biggest saving that drivers make by switching to an electric car is from the actual charging of the vehicle, which costs significantly less than having to pay for a tank of petrol or diesel. You can even charge your vehicle for free at some public charging points.

According to a study by Which?, to charge different size vehicles at home to cover a range of 9,000 miles, would cost the following per year:

  • £710 – £800 for a small city cars and hatchbacks
  • £800 – £900 for medium and large cars
  • £950 – £1,150 for large SUVs
  1. Access to Government Grants

The UK government is currently offering up to £1,500 in financial assistance to buyers of electric cars worth under £32,000, under the Plug-in Car Grant (PiCG). More than half of all electric cars available on the market, including the Nissan Leaf, Peugeot e-208, Renault Zoe, and Volkswagen ID.3 Pro, are eligible for this discount.

Electric vehicle owners are also eligible for a range of government grant schemes for installing electric car charging points at their homes, for example, the Electric Vehicle Chargepoint Grant. This grant provides funding of up to 75% towards the cost of installing electric vehicle smart chargepoints at domestic properties across the UK.

  1. Reduced Servicing Costs

Electric vehicles generally work out cheaper to service and maintain than the equivalent petrol and diesel models, largely because they have fewer moving parts and fewer items prone to wearing out over time, for example, oil filters and cambelts.

Are electric vehicles cheaper to insure?

Tax, fuel and servicing costs may be cheaper for electric vehicles compared to petrol and diesel models, but when it comes to insurance, electric vehicles tend to be slightly more expensive to insure. This is partly due to their repair costs being higher. Electric vehicles have large batteries that are expensive to replace if the vehicle is involved in an accident. Electric vehicles are also more expensive to buy than petrol/diesel models, which typically makes them more expensive to insure.

How can you reduce your electric vehicle insurance premium?

  • Be accurate about your annual mileage: Generally, the fewer miles you do, the less risk you are to an insurer.
  • Increase vehicle security: A vehicle that is harder to steal will be deemed a lower risk, meaning devices such as immobilisers and alarms could save you money. Ask your insurance provider if fitting any security upgrades will lower your premium, so you can decide if it is a worthwhile investment.
  • Think about where you park the vehicle: If you have a garage or driveway, you should park your vehicle there, especially overnight, as it is much safer than parking on the road. Parking in a garage or on a driveway overnight could lower the chance of your car being damaged or stolen, meaning you should see a lower annual premium.
  • Shop around at renewal: You won’t be rewarded for loyalty to a particular insurance provider. In fact, those that stay with the same provider often see their premiums rise at renewal time. It pays to shop around for a better deal.
  • Use an electric vehicle specific insurer: Several insurance companies have specialist policies available for electric vehicle owners. There are also a small number of bespoke electric vehicle insurance providers.

Tony Buckingham, Managing Director of Buckingham Insurance says, “We expect the electric vehicle market to boom, especially with the 2030 ban on the sale of new diesel and petrol vehicles on the horizon. As electric vehicles increase in popularity, we expect to see a drop in the premium prices, making this type of vehicle cheaper to insure. For anybody who is thinking of getting an electric vehicle and is unsure about insurance, please don’t hesitate to contact us or telephone one of our friendly staff on 01246 575 625 (Clowne) or 01773 748 627 (Ripley).”