Finance and Cost of Owning an Electric Vehicle (EV)

Overview of EV Ownership Costs

Upfront Costs of EVs

Purchase prices for popular EV models

One of the first things you’ll want to look at once you’ve decided to make the switch to electric is the up-front cost of purchasing an EV. This is often a sticking point for people who have been driving petrol or diesel cars for a long time, as electric cars can have higher up-front costs than comparable internal combustion engine models.

To give you an idea of the upfront costs of new EVs, here are the starting prices of some popular electric models currently available at Dick Lovett:

• New MINI Cooper Electric: £30,120
• New BMW i4: £51,270
• New Porsche Taycan: £88,200

Factors influencing the cost of EVs

Just like any car, there are various factors that can affect the up-front cost of purchasing your EV, including additional variables you don’t need to think about when looking for conventional petrol or diesel cars.

Some of the key things to bear in mind when you’re looking for the best deal when purchasing EVs include:

• The vehicle’s battery technology and charging capacity
• The vehicle’s performance in terms of power consumption, acceleration, handling, and other factors that will affect your performance on the road
• Additional features and comforts that distinguish the specific model
• If considering purchasing a used EV, the vehicle’s age and mileage

Charging costs at home vs public chargers

One of the main factors affecting the total cost of EV ownership is the cost of charging. Generally, using a home EV charger as your primary charging method will be considerably cheaper than relying solely on public charging points. 

According to data from EV charging provider Pod Point, the average cost of charging an electric car at home is 24.5p per kWh, compared to 48p per kWh for public charging. This equates to around £13 to fully charge an EV with a 60 kWh battery and a 200 mile range at home, or approximately £26 to fully charge the same EV using public charging infrastructure. If you can charge at home and have a dedicated EV tariff, that cost could be as low as £4.50 for a full charge. 

Maintenance savings with EVs

EV maintenance costs are also generally lower when compared to vehicles with a petrol or diesel engine, specifically BEVs. One EV running costs comparison study from supply chain management consultant Fleet Assist reported their average annual BEV maintenance costs per vehicle were £171, compared to £243 for all other vehicle types.

While EVs still require maintenance for components like their tyres, brakes, and battery, there are less moving parts involved in an electric vehicle’s drivetrain, meaning there are fewer things that can go wrong.

If you’re interested in learning about the benefits and potential savings of the different types of electric vehicles, you can read more on each one in our in-depth guides:

Battery Electric Vehicles (BEVs)

Mild Hybrid Electric Vehicles (MHEVs)

Plug In Hybrid Electric Vehicles (PHEVs)

Self Charging Hybrid Electric Vehicles (HEVs)

Leasing vs Buying an EV

Pros and cons of leasing EVs

When first exploring the EV market and looking to make the switch from a conventional vehicle, many drivers consider leasing an EV as an alternative to buying the car outright.

Here’s a brief look at some of the pros and cons when it comes to leasing’s impact on EV ownership costs: 

Pros

• Lower up-front costs, with the option to deduct your lease payments if you’re using your EV for business purposes
• More accessibility to the latest EV models, allowing you to test out and explore new features before actually purchasing the car
• Greater flexibility and reduced obligations in terms of maintenance and tax

Cons

• You may be charged for excess mileage, which happens when you go over the agreed-upon limit in your lease deal
• You may be held responsible for any usual wear and tear incurred while you’re leasing the car
• You may experience increased range anxiety, as you’ll have less time to get accustomed to the vehicle’s charging and driving

When buying an EV might be better

While the reduced up-front costs and increased flexibility of leasing can be appealing for many drivers making the switch to electric driving, the expenses tied to vehicle leasing can quickly add up over time, and make it the more expensive option in the long term.

If you’re planning to use your electric car for five years or more, buying a vehicle tends to be more cost-effective than leasing it. This will help you avoid having to return the car or purchase it at a higher price after a 2-3 year lease period, and means you won’t have to worry about restrictions like mileage limits or rules against modifying the car.

Hire Purchase and PCP

How Hire Purchase works for EVs

Hire purchase agreements allow you to pay for an EV in installments, where you will become the car’s legal owner at the end of the term.

Hire purchase for EVs works in the same way as any other car. You’ll pay an initial deposit on the vehicle, followed by a predetermined monthly amount over a fixed period, usually two to three years.

Once the amount is paid off, you’ll be the legal owner of the car, although some hire purchase deals will require you to pay a small fee, known as an “option to purchase fee”, for full transfer of ownership.

Advantages of PCP for electric vehicles

Personal contract plan (PCP) electric car finance options combine elements of leasing and buying, letting you enjoy lower monthly payments as well as the option to purchase the vehicle outright at the end of the agreement.

Some of the key advantages of PCP for electric vehicles include:

• Lower monthly payments compared to other electric car finance options
• The flexibility to access newer car models and try out a broader range of features
• More flexibility at the conclusion of the agreement, with options to return the vehicle, pay a balloon payment to keep the car, or put any positive equity towards a new EV

Financing with Dick Lovett

Customised finance solutions for premium EVs

At Dick Lovett, we’ve always strived to combine quality and value in our finance deals to make your next vehicle purchase as smooth as possible.

We offer Personal Contract Purchase (PCP), Hire Purchase (HP), Personal Contract Hire (PCH), and salary sacrifice plans on premium EVs from quality brands, including BMW, MINI, Jaguar, Land Rover, BMW Motorrad and Porsche.

With each vehicle financing solution, our friendly and knowledgeable staff will take the time to understand your needs and explain the details of different finance options, ensuring that you get a fully customised finance solution tailored to your needs.

Tax benefits for EVs

Aside from the considerable savings when it comes to running costs and maintenance, EV drivers may also be able to enjoy long-term savings through government initiatives like tax benefits and grants.

While EVs were previously exempt from vehicle excise duty (road tax), this tax relief will unfortunately not be available as of 1 April 2025. However, EV drivers can still benefit from only having to pay the lowest first-year rate of road tax at £10 on a new EV, before having to pay the standard rate from the second year of registration onwards.

Other long-term savings and tax benefits for EVs that some drivers can benefit from include:

• Exemption from congestion charges in clean air zones (CAZs) in cities like London, Bristol, and Birmingham
• The ability to claim 100% capital allowance on the cost of an EV for business owners for the first year of purchase
• Greatly reduced benefit-in-kind (BIK) charges for EV company cars

Government Grants

OZEV Grant overview

The Office for Zero Emission Vehicles (OZEV) Grant is a government grant that qualifying drivers can use to offset the cost of installing a home EV charger. 

This grant provides up to £350 off the cost of installing a home charging point, with the caveat that you can only claim one chargepoint per vehicle and per household. 

If you live in rented property, your landlord may also be eligible for an OZEV grant when installing a charge point on dedicated off-street parking. In the case of residential parking areas, the grant can go up to £500 per parking bay for EV charging bays.

Business Benefits

Lower Benefit in Kind (BIK) tax for company EVs

If you use EVs as company cars for your business, you’ll also enjoy lower Benefit in Kind (BIK) tax due to the vehicles emitting zero tailpipe carbon emissions.

This tax is calculated as a percentage of the value of non-cash benefits like vehicles, and is also affected by the emissions produced by those vehicles. From April 2025 to the following financial year, this rate will be 3% for pure electric vehicles, which is the cheapest rate possible due to the vehicles’ zero tailpipe emissions.

EVs as fleet vehicles

Investing in EVs can also help to minimise the running costs of your business’s fleet thanks to various features distinguishing them from petrol and diesel vans, including:

• The cost of recharging being considerably lower than the cost of refueling conventional vehicles
• Reduced maintenance costs
• Tax breaks like minimal benefit in kind, and government incentives that can contribute towards setting up workplace charging infrastructure