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The Evolving Economics of Owning an EV

Updated: Oct 7, 2022


When we first wrote this article back in Jul '22 an EV looked a considerably better economic proposition than their gas guzzling counterparts when it comes to the cost of refuelling. How things change! Certainly in the UK, the cost of rapid charging your EV has risen by 18.75p to an average of 63.29p / kWh since May. In properties where you just can't install your own home charge point, the difference in cost between a tank of fuel and a rapid charge to 80% battery capacity has narrowed considerably. While the cost of electricity in the UK maintains its current high level, it may yet prove to be a further barrier to people considering the switch from fossil fuel.


In other news, from July '22, all electric vehicle chargers sold for private use, whether in the workplace or home, must be pre-configured with “smart” behaviour. What does Smart behaviour mean in this context?


Primarily it means that new EV charge points will be set-up to automatically avoid charging during peak hours when demand for energy is higher - and more expensive.


Instead, drivers will be encouraged to set their charge point to switch on during off-peak times when there is more renewable energy available in the grid. These restrictions can still be over-ridden as they may not be practical for everyone.


The new rules are part of the Electric Vehicles (Smart Charge Points) Regulations 2021 putting the onus on manufacturers to achieve a specific set of objectives to maximise the benefit to the environment and encourage wide-spread adoption of EVs in general.


The objectives include:

  • Deferring costly grid upgrades, which would be needed to increase peak capacity

  • Helping drivers utilise cheaper overnight energy tariffs

  • Standardising the charge point functionality between different manufacturers

  • Good news for EV owners

  • It is theoretically possible to offset your electricity bill by selling your cheaply generated energy stored in your EV back to the grid during peak times. Wowza!


As previously discussed in another post on this very subject that we published recently, Vehicle to Grid (V2G) technology is now a reality and can save EV drivers considerable sums on their energy bills. After one of the world's largest trials, OVO Energy in partnership with their software partner, Kaluza, have successfully tested the concept of effectively turning driver's electric vehicles into mini mobile power stations. The scheme requires very little effort on the part of the vehicle owner - the Kaluza app does all the hard work calculating your typical car charging requirements and selling any excess back to the grid earning the driver V2G credits. In one case, widely reported, a relatively low mileage user was earning on average £71 more their surplus energy versus the cost of charging the car each month.


Charging by the mile

Another headwind on the horizon for widespread EV adoption, is the fact that when we're no longer using fossil fuels in our vehicles, there will be a huge gap in the public finances from all that lost fuel duty. It was only a matter of time before those in power cottoned on and a new report from the Climate Change Committee (CCC) has kick started the implementation.


Electric cars are currently exempt from vehicle excise duty (VED, which is often referred to as road tax), and they aren’t subject to fuel duty like petrol and diesel cars. This adds up to a potential loss of revenue of £35bn.


The CCC suggests that both fuel duty and VED should be replaced with a pay-per-mile road pricing, whilst ensuring that motorists pay the same or less than they do currently. It also states that any road pricing system that is introduced should consider the impact of per-per-mile charging on vulnerable groups and those who live in rural areas. There would also be measures to offer lower tariffs at less congested times and provide an easy means of directly comparing the cost of the equivalent journey by public transport. They urge that new taxes based on new technology take some time to introduce and should be fair, simple and consistent.


Ominously, the chair of the committee, Huw Merriman, summarised that "Net zero emissions should not mean zero tax revenue.”

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