The 46% increase in fuel prices at petrol pumps, is ramping the demand for Electric Vehicles (EVs) much faster than they can be supplied, causing relatively long order times. Add to this the rollout of highly tax-efficient “Salary Sacrifice Schemes” that allow employers to provide EVs as a company perk at a 42% discount compared to personal leases and you can see why industry experts believe that EV adoption is to happen faster than anybody expected.
The economics of moving to an EV is compelling with operating costs 66% cheaper than their I.C.E (Internal Combustion Engine) equivalents and this gap is set to increase as electricity “price inflation” is 50% lower than petrol pump, simply because only half of the electricity generation is based on fossil fuels. The rest is delivered from Nuclear or sustainable power sources, that are not experiencing rapid inflation.
This is great news for the environment as unplugging the petrol pump and replacing it with an electric cable reduces an average person’s Carbon footprint by 29%. However, EVs in the future could also help power home heating which accounts for 41% of Co2 emissions.
The key problem around replacing Gas Central heating is the cost economics don’t work. Gas costs 5p per KWH, but houses on a flat rate electricity tariff pay 20p per KWH, making the cost of heating the home via electric power, 4 times more expensive. Given the UK’s rapid inflation rate, even the greenest minded consumers are going to hesitate before taking on this extra burden.
When the energy cap is updated from 1st April, consumers will start switching between tariffs and EV owners will soon learn to switch to “dual tariffs” that offer 5p off-peak night-time rates reducing their “Fuel” costs by 75% at a time their neighbours are seeing the cost of running their ICE cars increase by 46%.
One of the biggest benefits of EVs is still to come, as EVs are the biggest battery you’ve ever attached to your house.
Already the Nissan Leaf and Audi’s moving forward support “Bi-directional” charging, allowing your car to power your house and other manufacturers are set to follow. During the night most EVs can be fully charged ready for the commute the next day and will still have 75% of battery charge left when they are attached back to the house at 6 pm.
This charge can be used to power the house during the peak electricity usage period between 6-10 pm when households are charged 20p per KWH by the national grip, giving a 75% arbitrage saving as the car was charged overnight at 5p. This same process will then repeat as the car is charged too full overnight.
This 5p electricity compares much more favourably to the 5p per KWH gas cost and may allow households to switch their home heating to electricity as it reduces the average daily cost markedly. Switching to electric heating could reduce carbon emissions by up to a further 41%, creating a combined emissions reduction of 60%, which would be a massive step toward the UK’s carbon reduction targets.
There is a degree of chicken and egg to achieving this saving, as households firstly need to move to EVs, which are currently in short supply. Research shows that by 2025 50% of all new cars manufactured will be EVs and the Government has set in UK law that all new cars sold must be EVs by 2030. The price of EVs is currently held artificially high because of the excess of demand oversupply, but it’s estimated that price parity will be reached as soon as 2026. This makes buying an EV a no brainer of a decision, particularly as by then EV ranges are predicted to increase substantially and a much more extensive charging infrastructure will be in place.
In the meantime, at eco Electric Car Organisation, we strongly recommend that consumers lease EVs via their employers to make the most of the Government's 42% tax breaks whilst they are here. Leasing your first EV for a 3–4-year period, also makes it much easier to upgrade to the latest and greatest EVs as the rapid evolution in battery range occurs. Most consumers know what each car manufacturer delivers in terms of quality versus price in the I.C.E world, however the move to EV throughs much of this out of the window as EVs may look the same as their petrol cousins but are radically different beasts. The skills required to create the best electric engines, batteries, and software to run EVs have little if no foundation in the old petrol manufacturing world, so don’t give brand credit for their history alone.
We are entering a brave new world that will hopefully be much better for our planet.