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Electric car running costs the same as petrol after latest tax raid

electric car charging
electric car charging

Electric cars will cost as much to run as petrol vehicles once green motorists are hit by a fresh wave of Government tax rises.

Plans to force electric vehicle drivers to pay road tax from 2025 will make them as expensive to run as petrol cars, new figures have shown. Analysis by Compare The Market, the price comparison website, found that annual electric vehicle running costs are currently £528 cheaper than for petrol cars. Electric cars cost an average of £1,296 to run for 12 months compared to £1,824 for a petrol car, including petrol, tax and insurance and MOT.

But the gap between the two has narrowed compared with a year ago, when the difference was £601. Any savings will be effectively lost when electric car owners are forced to pay £165 a year in vehicle excise duty from April 2025, under plans set out by Jeremy Hunt in his Autumn Statement.

Compare The Market said many electric car drivers will also have to pay the “expensive car supplement”, which is applied to cars worth £40,000 or more and will cost an additional £355. Many electric car models will be subject to this supplements, including the Tesla Model 3 (list price £48,490), the Jaguar I-Pace (£66,350), the Kia e-Niro (£43,040), and the Volvo C40 Recharge (£48,355).

The comparison site said the combined £520 tax bill would “wipe out” the current difference in the running costs between electric and petrol cars.

Nick Zapolski of Choose My Car, a car finance firm, said the move to raise tax on electric cars contradicted the push towards “net zero”.

“It’s incredibly short-sighted and badly thought out by this government,” he said. "To impose extra tax, when electric vehicles ownership is still costly compared to fuel-powered cars, is totally ludicrous.

He added: "This new tax means that some people will now be paying more for their road tax than someone in an old banger, which is not in line with the Government’s green credentials."

Julie Daniels, of Compare The Market, said the “significant upfront cost” of buying an electric car and installing a home charge point would prevent many drivers from being able to afford the switch, before considering tax and increased running costs.

She added: “Higher taxes from 2025 may also make switching to an electric vehicle a less attractive option for many drivers.

“Both electric and petrol car owners could help to reduce the cost of running their car by shopping around for their car insurance when their policy ends.”

Ryan Fulthorpe, of Go Compare, another comparison site, said it would be an “own goal” if the Government taxed eco-friendly vehicles.

He said: “With a new electric vehicle tax arriving in 2025, the biggest concern is that there may be more increases to come.

“Traditionally, drivers of electric vehicles enjoy environmental benefits and lower running costs – but if the government’s longer-term plan on taxing electric vehicles wipes out these savings, it would be a real own goal.”

Compare The Market said the average electric car driver would pay £1,296 on insurance and fuel, while a petrol car driver would pay £1,824, including road tax.

Electric motors were generally more expensive to insure than petrol cars, costing around £10 more. However, fuel was found to be £372 more expensive for petrol cars, and £202 more expensive than last year.

Despite being cheaper to run, higher energy costs have pushed up the price of charging an electric vehicle by £205 compared with 2021, Compare The Market found. Batteries also have a shelf life of between 10 and 20 years.

October data from the Society of Motor Manufacturers and Traders, a trade body, showed sales of battery electric vehicles had increased 23.4pc year-on-year.

A HM Treasury spokesman said: “Electric vehicle registrations have increased 1730pc since 2016 and sales continue to reach record highs, which is why now is the right time to normalise their role on our roads even more by levelling the playing field on tax with petrol and diesel.

“We continue to support the electric vehicle revolution through over £2.5 billion in incentives, including less year one road tax, nil-rating the Van Benefit Charge and grants to bring down buying costs, and there is also a high bar for the expensive car supplement – around four in five new cars do not cost enough to meet it.”