Electric Car Journeys to Cost More Than Diesel by January

I just checked the average price per kilowatt hour (kWh) of electricity on Martin Lewis’s site MoneySavingExpert. Figure 1 shows that on October 1st 2022 it’s going up to about 51.89p per kWh.

Martin Lewis’s site also includes a section looking at forecast future changes in the energy price cap. Using Cornwall Insight’s prediction, it’s suggesting a rise of a further 52% from Jan 1st 2023, taking the kWh price to 78.87p. A further increase of 23% is expected from April 1st 2023, taking the cost to 97.01p per kWh. 

Clearly, this has huge implications for the cost of living and people’s quality of life as it directly impacts on the cost of heating and hot water. But perhaps a less considered consequence is the impact it will have on electric vehicle drivers or people considering buying an EV. Many people who bought an EV in recent years did so to avoid the costs of diesel. But how long will it be before a journey using electricity to power the car costs more than the same journey in a diesel car?

Let’s take an EV that achieves four miles per kWh. How do these price increases impact on the cost per mile driven?

Now let’s look at the cost per mile of a diesel car.

From October 1st, for an EV doing four miles per kWh, it will cost just under 13p per mile compared to a small diesel car achieving 60 miles per gallon which would cost just over 14p per mile. However, by January 1st that same EV will be costing almost 20p per mile, a higher cost per mile than a car doing 50 miles per gallon. By April 2023, the EV will be costing over 24p per mile, so not only more expensive than a diesel car achieving 50 miles per gallon but also more expensive than a diesel doing 40 miles per gallon and costing just under 22p per mile.

Of course, these electricity prices are based on home prices. If you recharge your car out and about the cost per kWh is about two or three times as expensive as your electricity at home. Currently, if 25% of the electricity you buy for your EV comes from commercial suppliers and 75% from your home supply you’ll already be spending about the same as a diesel car driver. This means even if the current rise in electricity prices is temporary, there are still questions to be asked.

Clearly, there are other cost considerations for the EV buyer. If the EV is a company car there’s still a very significant benefit in kind impact. There are also road tax, congestion and depreciation impacts. But just looking at the fuel cost illustrates that the premise on which many EVs were purchased is proving to be a false one.