Rising Energy Prices and the Impact on EV Drivers
The cost of living is at an all-time high. From increases in TV bills, council tax and water, to record-breaking energy prices – across the country we’re all feeling the pinch.
In summary, although it’s expected that the cost of EV charging will continue to rise, it will still be significantly lower than the cost of fossil fuels to fill up an ICE vehicle. While the price has risen by 20% since last September, the typical family-sized EV now costs £28.51 using a rapid charger – £64.25 cheaper than filling the same size car with fuel.¹
Read on for more information on why energy prices are on the rise, for advice from the experts and what this means for EV drivers.
The Impact of Rising Energy Prices on EV Drivers
Year-on-year we’ve seen a gradual rise, but from April 1st 2022, the price cap on energy bills in the UK increased by a staggering 54%. That means millions of Brits could see their energy bills increase by up to £700 a year.
Price caps are in place to ensure that homeowners do not feel price increases too quickly – these are reviewed twice a year by Ofgem. Caps vary around the country, and they depend on how you pay your bills (direct debit vs pre-pay meter).
Why are energy prices increasing?
Rises in energy prices are due to several factors:
- Increases in wholesale energy prices in Europe – basically, what our providers pay for gas and electricity. These costs are passed on to consumers.
- Russia tightening gas supplies
What’s the best advice from the experts?
Naturally, we might be tempted to look elsewhere or switch to another tariff – this is the advice that’s always been drummed into us. However, according to experts this might not be the best approach.
The energy price cap set by the government only applies to standard variable rates or default tariffs. Therefore, switching providers or committing to a new tariff may mean that the cap is no longer valid.²
Ashley Tate, CEO at Mina a payment solution for EV charging is advising householders to ‘do nothing’.
‘Allow yourselves to fall onto the default tariff, it’s the cheapest way to pay for energy at home’
Martin Lewis, Founder of Money Saving Expert says:
‘You’re better off to stay on the April price cap, and then if nothing changes before that, go on to the new October price cap… it is a bit of crystal ball gazing. But if you haven’t got a cheap fix so far, I would stick where you are, cross your fingers that wholesale prices come down, which means cheaper fixes will be available in the future, and if not, stick with the price cap.
‘In other words, you do nothing, you stay exactly where you are and you just ride it out for the moment. I know it sounds bizarre when we’re going up 54% to say ‘do nothing’, but that’s the best possible price right now.’
And what does this mean for EV drivers?
These increases in energy costs of course have a financial impact on EV drivers too. It’s estimated that EV owners may see their home EV charging costs rise by £200 a year.³
Many energy companies offer tariffs aimed specifically at EV drivers – named EV tariffs. Generally, they provide cheaper energy overnight, so EV drivers can charge their vehicles at the cheapest rates – sounds great right?
Usually, yes. However, because of the energy crisis, many providers have pulled these deals, or they’ve had to increase the prices, making them less cost-effective.⁴
But don’t let these issues put you off switching to an EV, it could still be cheaper than the alternatives. Electricity is not the only ‘fuel’ impacted by the energy crisis. Petrol and diesel prices at the pump are also at an all-time high.
When you consider the total savings, plus the environmental price – it can still be a better decision for your pocket and the planet!
- EVs are generally cheaper to run than ICE (internal combustion engine) cars. This varies from car-to-car but with high petrol and diesel costs right now, running an EV can still be more cost effective. For example, it costs on average 3.5p per mile to run the Hyundai Kona Electric vs 14.8p per mile to run its petrol alternative.⁵
- EVs have fewer moving parts, with lower maintenance costs when compared to petrol or diesel.
- EVs have several exemptions like road tax, congestion zone, ULEZ and parking in some areas.
Why an EV subscription could be right for you
The bottom line is energy prices are at an all-time high, which can be worrying for EV drivers. However, when you consider all the associated costs, EVs are still very much a viable option and remain cost effective in the long term.
With an electric car subscription, you can be sure of the exact amount that will leave your account each month. Plus, the added flexibility of a subscription means that if your circumstances change, you can easily hand the car back with 30 days’ notice after your first month. It also means you won’t be tied into a 2-3 year leasing deal.
More on EVs
We know that driving an EV can come with lots of questions, so to help you out we’ve put together some useful guides from the benefits of electric cars to how to charge an electric car. To find out more about the current status of the public EV charging network, check out our latest blog post here.