On Thursday, Chancellor Jeremy Hunt unveiled the Government’s Autumn Statement in which he announced that electric vehicles would start paying vehicle excise duty (VED) from 2025. Under the plans laid out today, electric cars registered from April 2025 will pay the lowest rate of £10 in the first year, then move to the standard rate which is currently £165.
The standard car tax rate will also apply to EVs first registered after April 2017.
Mr Hunt said this was being done to create a “fairer” system of motoring tax.
Industry experts criticised the move, saying it would dampen EV sales and cause motorists to think twice about choosing an electric vehicle.
The running costs have often been highlighted as one of the major selling points of an EV, with lower costs when charging compared to fuel prices.
Electric vehicle running costs set to rise with car tax changes, batteries and insurance.
The rising electricity prices have been forcing charging costs to increase.
Despite this, electric cars still tend to be more expensive to insure than their petrol and diesel counterparts.
This is generally a result of their higher purchase prices and because there is less available data on them than ICE cars.
Because of the higher purchase price of diesel cars and the increased cost of repairs, diesel cars tend to be around 10 percent more expensive to insure than petrol cars.
Hybrids were also as much as 20 percent more likely to be involved in pedestrian crashes with injuries than their conventional twins.
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As with electric cars, hybrids may be involved in more accidents as a result of them being near-silent when driving in electric mode, Lease Fletcher reported.
There are some factors which are slowly helping to bring the cost of insurance down including data which shows they may be less likely to be stolen, and more likely to be recovered.
In addition, EVs tend to have a lower centre of gravity due to batteries being incorporated below the passenger seats, which makes them less likely to roll in the event of a collision.
Another of the largest factors when it comes to running costs is the price of replacing the vehicle’s battery.
Most manufacturers will provide drivers with a warranty on their EV battery of up to eight years of 100,000 miles.
Based on varying prices, the average price of an electric car battery in the UK is £5,549.86, according to BookMyGarage.
Naturally, this can vary based on the car, with larger batteries, like those in a BMW i7, costing £9,195.90 for a 105kWh battery.
In comparison, a smaller vehicle like a Fiat 500e has a 42kWh with a price of around £3,654.
UK new car registrations by type.
The cost of batteries fell about 80 percent between 2010 and 2016 from $1,000 (£840) to $227 (£190) per kWh. EDF Energy reported that some estimates show that battery prices are set to fall below $100 (£84.70) per kWh by 2030.
Given there are fewer electric vehicles than their petrol and diesel counterparts around the world, it may be more difficult to find replacement parts.
This is especially true on the manufacturing side, with global supply chain issues hampering vehicle production massively in recent years.
Because electric cars are often more technologically advanced, they require more components like semiconductors, which are in short supply.
Keyword: Electric vehicle running costs set to rise with car tax changes, batteries and insurance