If you’re thinking of buying an electric car you should probably do it soon. Prices look like they’re about to shoot up.
At the moment, electric vehicles (EVs) are, on average, slightly cheaper to buy and much cheaper to run than their petrol and diesel equivalents. The soaring cost of oil means it’s now up to nine times cheaper to drive an EV than a petrol or diesel car.
Petrol and diesel pump prices have both jumped by around a third in the UK since the start of the Iran war in February – with diesel prices passing £2 a litre for the first time last Wednesday.
These increases mean it now costs an estimated 21p a mile to drive a diesel car and 20.1p a mile for a petrol motor, according to an analysis of the latest government figures by the Carbon Brief website.
By contrast, it costs just 2.3p a mile to drive an EV – as long as it’s charged at home and using an off-peak tariff. This means you could save around £85 by charging at home, compared to filling up a 55-litre petrol car at the pump; the latter costs around £95 at current prices, compared to around £10 for the electricity needed to drive the same distance.
Meanwhile, charging your car with electricity bought at the domestic price cap – the maximum amount a supplier can charge – costs around 7p a mile, according to Carbon Brief. That’s still three times cheaper than the price for petrol or diesel cars. Public charging points, however, remain significantly more expensive than home charging.
The purchase price of EVs has also fallen sharply in the past few years. In April, the average price of a new electric car fell below a comparable petrol model for the first time, retailing for £42,620 compared to £43,405, making it £785 cheaper. The cost of a second hand EV had already fallen below a petrol car in the summer of 2024.
The price drops are partly because they have become cheaper to make, with battery costs in particular falling sharply. But the bigger reason comes from legally binding government sales targets for EVs which fine manufacturers £12,000 for every missed sale (reduced from £15,000 last year).
The prospect of these fines led manufacturers to discount the average EV they sold by 11.7 per cent in April – reducing the cost of the average electric car by more than £4,000.
But those discounts may be about to end, or at least become substantially smaller. In August, the Government announced a consultation to weaken them that is due to close later this month. Needless to say, car manufacturers are generally in favour of weakening the targets and are lobbying the Government pretty hard.
Under the current policy, known as the Zero Emission Vehicle mandate, the percentage of new car sales that need to be EVs increases each year, from 33 per cent this year until it reaches 80 per cent by 2030. It started at 22 per cent at the beginning of 2024.
The Government has now said it is considering cutting that figure to as low as 50 per cent of all sales by the end of the decade. The car makers claim they are missing the sales target, arguing that they are unrealistic and should therefore be watered down.
But there are “flexibilities” that have been built into the rules which allow for some “hybrid” petrol-electric cars and other lower-emissions vehicles to be included in the sales figures.
Admittedly a bit of a fudge, these flexibilities effectively mean that the sales target for EV sales this year is actually 25 per cent, according to New Automotive clean transport research group – a level which the car industry is able to hit. In August, EVs accounted for 29.8 per cent of all car sales, almost double the 16.5 per cent share they had in 2023, before the ZEV mandate was introduced.
It’s understandable that car makers would instinctively oppose any sales target that may force them to make discounts. But price reductions are not limited to EVs.
In fact, in June, the average petrol car was discounted by almost 12 per cent, overtaking electric cars for the first time, amid intense competition among petrol model manufacturers.
And if it’s OK to give significant discounts on polluting fossil fuel cars then it’s definitely OK to give them on EVs – which offer our best hope of significantly cutting UK carbon emissions over the next decade, given that cars account for 13 per cent of them.
The Energy and Climate Intelligence Unit think-tank calculated that cutting the EV sales target to 50 per cent would mean 2.6 million fewer electric cars on the roads by 2035.
Weakening the mandate now would send exactly the wrong signal on the government’s commitment to EVs, reducing the supply of these green and cost-effective vehicles at a crucial time for our climate and our pockets.
The Government should keep the sales targets as they are – although I fear it will cave into pressure from the car industry. So if you’re minded to buy an EV, it’s probably best to get one sooner rather than later.