This article on comparing the cost of electric car ownership to a traditional option is by The Dink from Team Monevator. Check back every Monday for more fresh perspectives on personal finance and investing from the Team.
With dual incomes and no kids (DINK), you can have more fun selecting a car. We’ve gone through convertible, Italian sports, and ricer cars. (Don’t judge us! We also save into passive funds, just like you do.)
Now on the cusp of our midlife crisis, we’ve gone for a sensible electric car.
To be honest I didn’t actually do my spreadsheet deep dive until after we’d already bought this Nissan Leaf.
I’m an early adopter at heart. And I really wanted an electric car to get a feel for the technology. The Nissan Leaf seemed a much more sensible way to scratch that itch than raiding my portfolio to buy a Tesla.
A dinky diversion
Before we calculate the cost of electric car ownership, a brief detour on the term DINK.
I had been referring to myself as a TWINK – Twin Incomes No Kids – assuming that was the correct term for our demographic.
My colleague pointed out to me that I am indeed a ‘twink’. But also that it means something quite different and not related to an economic group.
If you Google ‘DINK’, it takes you to Investopedia. TWINK takes you to the Urban Dictionary…
So DINK for ‘Dual Income No Kids’ is the right acronym for Monevator purposes. (Or DINKY (DINK Yet). That’s the word for those couples not yet brave enough to tell their parents they’re not getting any grandchildren.)
Back to the cars.
Before I owned an electric car
As I mentioned, we once had an Italian sports car. Unfortunately it lived up to its stereotypes. It needed a lot of maintenance and had an insane service schedule. It felt like constant cam belt replacements.
So one calm, rational Sunday I created a spreadsheet to work out how much that car cost me a month. Turned out that despite being relatively cheap to buy, it was costing hundreds of pounds a month to run.
The spreadsheet also revealed that, by comparison, a stereotypical German sedan – if bought at just the right point in its depreciation curve – was cheaper. Even on PCP!1
That was an eye-opener. The next week I went out and bought a BMW 3 Series. Over the next four years it actually ‘saved’ me money.
The point is I had some experience of running spreadsheets to justify my car purchases.
Even though in the case of our Nissan Leaf I didn’t do the spreadsheet until afterwards.
Settled with a spreadsheet
Having already bought the Nissan Leaf, it’s obviously rather academic for me to create the spreadsheet now.
Still, it’s an interesting exercise that shows the maturity of the electric car market in the UK. Also my article can be a template for anyone else wanting to quantify a car purchase of any kind.
Therefore I’ve performed the comparison of an EV (Electric Vehicle) with a traditional petrol compact car.
What to compare to electric car ownership?
I chose to compare the Nissan Leaf with the Ford Focus. The Focus is about the same size and with the 1.0T EcoBoost model it offers the equivalent 0-62mph performance (in 11 seconds).
Also, the Focus is the fourth most popular car in the UK. It’s easy to find examples with different mileages and ages to compare to electric car ownership.
For its part the Nissan Leaf was the bestselling plug-in electric car until 2020. (It was overtaken by the Tesla Model 3.) So we’re really comparing the top-selling EV and petrol vehicles in the ‘compact’ class.
Based on my experience, I find cars three to four years old have had their initial huge depreciation. But assuming an average 7,000 of mileage a year, they still have lots of miles left in them. Beyond that come big scary services and the psychological barrier around 100,000 miles. That affects their value.
We’ll therefore compare a 2017 Nissan Leaf with a 2017 Ford Focus 1.0T EcoBoost – both with 30,000 miles on the clock.
Comparing two cars from 2017
Remember, we’re not actually buying these cars. We’re purely looking at the market values to quantify any decisions we make. So please don’t get too hung-up on details or minor specs differences.
At the time of writing I found:
- A 2017 Nissan Leaf with 29,000 miles for £8,980.
- A 2017 Ford Focus 1.0T with 30,000 miles for £8,649.
The initial point goes to the Focus for being cheaper to buy.
|Nissan Leaf||Ford Focus|
Most cars aren’t assets. However they do retain some value. To account for this we need to work out depreciation. This gives us a guide as to how much we could get were we to sell the cars after, say, four years.
I looked for similar 2013 models with 60,000 miles on them. This I based on the average 7,000 miles per year that people in the UK drive and also that cars seem to hold a lot of their value until near the 100,000 miles mark, where it drops off a cliff.
My search turned up:
- A 2013 Nissan Leaf for £6,000.
- A 2013 Ford Focus for £4,700.
Both had 60,000 miles on the clock.
Based on this calculation, the Ford Focus will depreciate more over the four years:
|Nissan Leaf||Ford Focus|
|After 4 years 30K miles||£6,000||£4,700|
Depreciation is not everything. Next we need to consider servicing, road tax, and fuel.
Electric cars are a lot simpler from an engineering perspective. There are fewer moving parts. I’d assumed they would require less servicing.
For example, an electric car obviously doesn’t have have oil and spark plugs to change.
This is actually not the case. The Ford Focus has bigger service intervals. For instance it shocked me to see the cam belt on a Ford Focus is only required to be changed every 150,000 miles.
Over the four years I’ve assumed:
- The Ford Focus will have two major £150 and one minor £75 service.
- The Nissan Leaf will have two 18,000 mile services, each costing £159.
Now we move on to tax. This is a big winner for the Leaf, as it’s tax-free.
The Focus will cost you £155 a year. That’s £620 in total over four years.
|Nissan Leaf||Ford Focus|
To calculate how much fuel is likely to cost over the four years, I took the listed combined economy of 60MPG for the Ford Focus. Having never bought a gallon of petrol in my life, I then converted that to 13 miles per a litre.
With petrol currently at £1.27 per a litre2 and at 13 miles per a litre, our 30,000 miles over four years will cost £2,930 in fuel.
On the Nissan leaf, you get 80 mile range on 22kw of the usable battery. The typical rate we pay at our local fast charging points is 30p/kWh. We use these charging points about half of the time. However we prefer, of course, to charge at free points like my office. So we effectively pay on average 15p/kWh.
That’s roughly what we pay at home, so it could also apply to those charging domestically.
Each mile in the leaf uses 0.275kWh. So at our 15p/kWh, the same 30,000 miles over four years will cost £1,237 to charge.
It’s interesting to see the cost per mile of petrol against electricity. The Nissan Leaf costs 4p a mile. The Ford Focus costs just under 10p a mile.
|Nissan Leaf||Ford Focus|
|Energy costs per 30,000 miles||£1,237||£2,930|
Petrol versus electric car ownership
To recap, we started with a four-year old car and then assume we sell it after four years having put 30,000 miles on the clock.
On these numbers, a Nissan Leaf works out £3,333 cheaper to own than a Ford Focus.
I’m not saying you should go out and buy a Nissan Leaf. It will not be the cheapest car to run in every situation. What I am saying is to work out as best you can what the true cost of different models is likely to be. Include depreciation, too. This way you can quantify your decision to buy a particular model of car.
|Nissan Leaf||Ford Focus|
|Electricity/petrol 30,000 miles||£1,237||£2,930|
|Total over four years / per month||£4,535 / £95||£7,874 / £164|
Your mileage may vary
In the comments to this article, I expected people will say I have cherry-picked examples of each car. That they can get them cheaper. Or their mate Dave will service the car for £50. The listed fuel economy is wrong.
Maybe. Perhaps my numbers do not apply exactly to your situation.
Charging rates in particular will vary hugely depending on what you have available locally, and whether you can charge more cheaply at home.
However by following the process, you can put in values that you think are more accurate. You’ll then get a different but equally valid outcome.
Once you know the true cost, you do not even have to buy the cheapest car. You can make a meaningful decision if the extra money is worth what the car gives you.
I would happily pay an extra £200 a year for a BOSE Sound System and 360 parking cameras…
A few final caveats
Other important things I have omitted or glossed over are:
- Insurance. Ignored because it varies so widely. I believe electric cars tend to be slightly more expensive to insure.
- If you have free electricity to charge the car, solar panels or free charging at work, that is a real game-changer.
- Repair cost. If something major breaks I assume the Ford is going to be cheaper to repair. However either car of this age and mileage should be pretty reliable. And the electric car has fewer moving parts to break.
- I have heard rumours that electric cars go through tyres faster than ‘normal’ cars. However, this could be the same nonsense as electric cars not working when the temperature is below-zero.
- The electric charging market is very immature. Charging costs vary massively. It varies from free at one supermarket to 35p per kWh/h plus a £1.50 connection charge at some motorway services. As the market gets more competitive, I would expect charging to get cheaper.
- Over the next four years, it seems inevitable that the government will take measures to encourage electric car ownership. However that might not directly benefit existing EV owners. Imagine the authorities bought in a £2,000 car scrapping scheme. In that scenario the Ford Focus could suddenly be the cheaper car, if it met the criteria of the scheme.
In time you will be able to see all The Dink’s articles in his dedicated archive.
- Personal Contract Purchase – a form of debt financing.
- May 2021.