Written by James Foxall
With governments around the world racing to reduce air pollution, petrol and diesel cars are to be phased out. It means many car buyers are facing the prospect of buying electric cars. But recent research shows that two in five drivers can’t afford to replace their diesel models with cleaner cars. And more than four out of every five drivers (83 per cent) believe green motors are overpriced. But is this the case? And if so, when will electric and hybrid cars become more affordable?
Are electric cars overpriced?
To put the price of current electric cars into context, take one of Britain’s best-selling cars, the Ford Focus. In mid-level Zetec trim a new Focus costs £17,185. The similarly equipped electric Focus is £27,180 when the government’s plug-in car grant is taken into account. Looking at smaller, supposedly more affordable cars, the electric Volkswagen E-Up! costs £20,780 including the plug-in car grant. In comparison, the most expensive petrol Up! is nearly half that at £12,030 new. And the cheapest Up! is less than half the price of its electric sibling. It’s clear prices needs to fall for electric cars to become affordable for most motorists.
Are we close to electric car prices falling?
Despite governments planning to ban new petrol and diesel cars, the reality is it’s not going to happen overnight. And although the British government wants all new cars to be electric by 2040, it’s aware that drivers need financial incentives for that to occur. However, Volkswagen is one car maker that’s showing alternatively fuelled vehicles don’t need to be overly expensive. The cheapest plug-in petrol-electric hybrid Golf is the GTE. This costs £28,135 after the government’s plug-in car grant is added. In like-for-like terms, the petrol Golf GTI is actually more expensive at £28,320. The diesel Golf GTD costs less at £27,225.
Why are battery cars so expensive?
The reason electric cars cost so much in comparison is primarily that the tech they’re fitted with is very expensive. For example, batteries contain naturally occurring elements that are relatively limited and therefore costly. Equally, car makers currently aren’t selling enough electric cars to achieve the economies of scale that see prices drop. But as more new models come to market, that’s likely to change over the next decade.
When will prices come down?
A report by the influential Bloomberg New Energy Finance (BNEF) predicts that combined battery car prices and running costs will fall below those of internal combustion engine models by 2022. The BNEF analysts state that the price of lithium ion batteries has already fallen by 65 per cent since 2010. However, the tipping point is also effected by the price of oil. This has been very cheap for the past few years. If it were to rise, electric cars would become more viable sooner.
What about used electric cars?
After years of second-hand electric car prices plummeting, the used electric market is beginning to behave like that for petrol and diesel models. You can buy a 2014 64-reg all-electric Nissan Leaf for £8000. That’s a car that would have cost £18,490 after the grant new, so it’s lost just more than half its value. Compared with the similarly-sized petrol or diesel Nissan Pulsar, the Leaf holds its value better.
Although the electric car market is still relatively tiny, representing just 4 per cent of new cars sold in the UK, its development is accelerating. Car makers are producing more new electric models than ever. And firms such as VW are showing that electric cars don’t have to be overly expensive. What’s more, used prices for electric cars are starting to behave more normally. This shows buying an electric car isn’t viewed as the risk it once was. And as people get more used to seeing electric cars and hearing how friends and family get on with them, they’re accepting them more. Some electric models might be overpriced currently but the change is happening rapidly.
Meet the CarTorque team
More popular articles you'll love
Tesla aims for range-spanning self-driving capabilities
What is a pre-registered or nearly-new car? Everything you need to know before buying one
Written by James FoxallRead more from James Foxall
James Foxall is an award-winning journalist and former motoring editor for the News of the World. He now writes a consumer column for Daily Telegraph Cars. His favourite car is the original VW Golf GTI.
Red light spells danger: guide to the most common red warning lights
A friend recently asked for car-buying advice. Her old car had died at the roadside. It turned out a red oil warning light had flashed up on the dashboard. Not knowing what it meant and with the car running fine, she’d ignored it. A handful of miles later, oil pump failure saw the engine shuddering to a halt, never to run again.
Money matters: should drivers take out a servicing plan for their car?
Few drivers look forward to the moment they have to take their car to the garage and have it serviced. Why? Because of the dreaded moment they are presented with the bill. Even a relatively straightforward servicing job, like having the engine oil changed, can cost more than £100. But if there’s an unexpected problem discovered during the service, drivers can find the bill rises faster than steam from an overheating engine.
Drivers pay £1.5bn on parking every year. Do you live in one of the big-earning areas?
It’s a fact of life that the cost of motoring never goes down. But in addition to fuel and car tax rises, there’s something else that will make drivers feel as if they’ve got a hole in their pocket: paying to park. A new report by the RAC Foundation has revealed that British drivers spend a whopping £1.5billion a year parking their car. The research of councils in the UK shows which are raking in the greatest amount of money from hard-pressed drivers. Read on to see whether your local authority is one of Britain’s biggest earners.
|Best available rate|
|Total cost of credit|
|Best available rate|
|Total cost of credit|
Best available rate
Total cost of credit
We compare products from 18 of the UK's top lenders to get you the best deal.
Borrowing £7,500 over 48 months with a representative APR of 16.8%, an annual interest rate of 16.8% and a deposit of £0.00, the amount payable would be: £211.25 a month, with a total cost of credit of £2,640 and a total amount payable of £10,140.
CarFinance 247 is a broker and not a lender