The Effect of Rising Energy Prices on Drivers
Once again, energy price caps are rising exponentially this October, with 66% of British adults saying that their cost of living increased in the past month, rising energy prices are a growing problem for many households. Of this figure, a further 79% blame higher gas and electricity bills as a cause. However, until this monumental issue is resolved, life must go on.
So what can we expect to see and how will it affect drivers? This blog aims to answer your burning questions and give insight into the best course of action.
Why are electricity costs rising?
Energy price caps are set by government regulator Ofgen to ensure fair pricing for gas and electricity. Liz Truss has announced that UK households will now pay up to an average £2,500 a year on their energy bill for the next two years. Since no provider is offering any cheaper deals, everyone is forced to pay the sum of the cap. It is evident that this will have a large impact on drivers up and down the country.
Is owning an EV still financially smarter?
There is no hiding the fact that EV charging costs will soon increase. However, charging your EV is still considerably cheaper than filling your car with fuel. Petrol and diesel prices are also at an eight-year price high. For example, unleaded petrol in August 2021 sat at £1.35.4. Whereas in 2022 it is averaged at £1.86 per litre, a 27.4% increase.
As an example of the differentiation, the Hyundai IONIQ EV has a range of 193 miles (310.6 km) and currently has a cost of circa £0.03 per mile to charge. For the sake of argument, let's add the October 80% energy price increase to this figure to get £0.054 per mile. A full charge could cost around *£10.42. Conversely, a similarly priced hatchback, the BMW 1 Series (petrol engine) gets 49.6 miles per gallon. If we wanted to fill this up enough from empty to achieve 193 miles at an average fuel cost of *£1.86 then it would cost around *£32.86. Even with this upcoming price hike, it is still considerably cheaper to recharge than refuel!
*The energy and fuel prices estimated at the time of writing, are subject to change.
EV drivers would also benefit from charging your EV at home or at a private business. This is due to users being charged 5% VAT, rather than the 20% operator margin that is in place for charging at public points.
For the foreseeable future, running an EV will continue to be the cheaper option. This is in addition to the many other real benefits of going electric. This is positive as the government will soon be ruling out the sale of new petrol or diesel vehicles, so the cheaper costs incentivise people to get ahead of the curve and make the switch now.
The Benefit of Leasing an EV
But what about the large upfront cost for an EV? Why not consider leasing? It is often the cheapest way into an exciting new electric car. With typically lower fixed monthly payments than other forms of finance such as PCP, leasing makes more unaffordable cars affordable! Leasing allows you to cycle through new vehicles as they appear on the market. Naturally, over time these cars will also be more economical with energy consumption, have larger batteries and even faster charging times!