Electric vehicles (EVs) are becoming increasingly commonplace on our roads. A greater societal focus on limiting our environmental impact has prompted more people to switch to emission-free cars, while the UK government has pledged to ban the sale of new petrol and diesel models by 2030.
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As an incentive, the government currently offers up to £2,500 off the purchase price of a new EV, while special number plates with green markings have been issued as a way to identify those vehicles and enable drivers to receive benefits such as reduced congestion charges.
All of which begs the question: why isn’t everyone driving an electric car? One of the main deterring factors at present is the cost compared to a petrol or diesel equivalent. It seems that could soon be set to change, however…
How are sales of electric cars trending?
Data from the Society of Motor Manufacturers and Traders reveals that there were more than 13,000 new registrations of battery electric vehicles (BEVs) in May 2021. That’s an increase of 441% compared to the same month the previous year. In the first five months of 2021, over 54,000 BEVs were registered – a rise of 145% when compared to 2020.
What makes electric cars more expensive?
An EV typically includes more advanced technological features than a standard combustion engine, which makes them more expensive to produce. This is subsequently reflected in the sale price. An electric car’s battery is the most important component as it produces the power that drives the whole vehicle. This makes them more valuable and will mean you are likely to pay more than for a diesel or petrol model.
How can you protect that investment?
New cars can depreciate quickly – up to 60% after just three years of ownership. That can cause a problem if your vehicle is stolen or written off in an accident, because your motor insurer will only offer a settlement in line with its current worth, rather than what you paid for it in the first place. That difference could amount to thousands of pounds, but you can take out a gap insurance policy that will cover that disparity and ensure your full initial investment is protected.
When will electric cars reach parity with internal combustion engines?
According to BloombergNEF’s electric vehicle outlook, EVs will be cheaper to produce than petrol or diesel models by 2027. The cost of battery manufacturing continues to fall, while increased sales numbers across the world mean car makers are improving the efficiency of their production lines. All of which is good news for consumers, as cheaper manufacturing costs will be reflected in reduced sales prices.