Energy costs for charging an electric vehicle may be rising but they are still cheaper than the alternative, writes Tom Rowlands
There has been much in the mainstream press talking about the soaring cost of electric vehicle (EV) charging—causing some concern to those who use an EV, either at work or in their personal lives. This may also be a concern for those looking to make the switch to EVs ahead of the 2030 ban of new internal combusion engine (ICE) vehicles in the UK and could lead to an unfortunate effect of dissuading people from switching to EVs at a time when we need all hands-on deck to make the move away from ICE vehicles.
However, there are two key things to bear in mind here.
Will the soaring cost of charging threaten EV uptake?
Firstly, electricity costs have soared globally because the cost of fossil fuels has skyrocketed in response to the war in Ukraine as countries around the world compete for gas shipments. Therefore, more fossil fuels are simply not the answer. Currently, around 38% of the world’s electricity comes from gas, and in the UK alone this figure sits at 50%. The significant increase in price is entirely from a rise in demand in this sector as the world moves away from dependence on Russian oil and gas and the struggling production from shale in the US. However, if all electricity came from nuclear, biomass and renewable sources then there would have been virtually no increase in prices.
There will be an increase in the cost of EV charging in the foreseeable future, but that cost won’t be prohibitive and will still be significantly below the cost of fossil fuels
Secondly, rapid charging of an EV is still significantly cheaper than refuelling gasoline or diesel. Although the price may have risen by 20% since last September, the typical family-sized EV now costs £28.51 using a rapid charger—£64.25 cheaper than filling the same size car with fuel. This figure is representative globally, with the cost of charging an EV at home in the US costing on average no more than one-third of the price of filling up an ICE vehicle, depending on energy provider. Therefore, whether you are charging at a public charge point, at work or at home you will always make significant savings, even now that we are experiencing record breaking electricity prices. In the UK, you will also benefit from paying 5% VAT through charging at home or at a private business, versus the 20% operator margin for charging at public points.
In short, there will be an increase in the cost of EV charging in the foreseeable future, but that cost won’t be prohibitive and will still be significantly below the cost of fossil fuels. Whilst we will not see a drop in energy prices for the foreseeable future, we can expect the price of EV’s to drop as they become cheaper to make, due to advancements in batteries and car manufacturers making more mass-market cars.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Tom Rowlands is Managing Director, Global EV Solutions at FLEETCOR.
Keyword: Don’t blow EV charging prices out of proportion