In recent times, we have seen that there has been a drastic change in the types of fuel we put in our cars. There was a time when cars were either filled with petrol or diesel. Big engines that made a lot of noise and ever more pollution were commonplace.
Fast Forward to the 21st century, where the adverse effects of these choices are now being experienced. Many governments, car manufacturers, and the general public are now switching towards cleaner alternatives.
Electric cars, hybrid-electric cars, hydrogen-powered cars, and other types of non-fossil fuel cars are becoming more common.
This does not necessarily mean that petrol-powered cars are going obsolete. They are still the most sold anywhere in the world. Since petrol engines have been around for decades, the infrastructure has been built to support that.
Electric cars still have not been as widely accepted as they should be, which means there is still a long way to go.
This begs the question, what are the costs when comparing the two? What are the differences when you compare the use of fossil fuel to clean energy? When talking about the United Kingdom, close to 450,000 electric vehicles were on roads as of 2020.
When we compare this to the 32 million cars in the UK, you can see that there is still a long way to go before clean energy becomes the new normal.
Owning A Car – How Does It Work?
When choosing what car you want to buy, you consider several metrics. Things like specifications, design, features, mileage, and others are considered. One thing that people tend to overlook is the cost of running the vehicle in question.
We often struggle to see beyond things like the deal we are getting on the vehicle or our motivations to have a particular car. Owning a vehicle is a lot more than simply putting the key in and driving off.
Several costs come as part of owning a car. Some are short-term, such as fuel and oil changes, while others are long-term, like annual insurance payments.
In between are costs incurred when repairing your vehicle, getting any upgrades you want or need, or something like replacing a set of tires.
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What Are The Costs Of Owning A Car?
Several costs are a part of car ownership. Some of these are minuscule, while others are capable of denting your finances significantly.
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Let us look at some of the most common costs of owning your car.
The most common and repetitive cost when owning a car is the cost of fuel. Without it, your car is just an expensive collection of metal and parts. It runs the engine and makes it move.
Petrol-driven cars are still the most common type, so you must consider this when deciding on your favorite car.
In the UK, the average annual cost of petrol is around ￡1,041.81. This assumes you use around 183 gallons or 831 liters in a year.
The miles per gallon (mpg) varies from one car to the next, depending on engine displacement and how the car is driven. Things like how well-kept the engine is and how many people travel in the car all impact the car’s mpg.
A better-kept engine will run smoother. More people in the car means it needs to use more power to move, hence using more fuel.
Electric Vehicles (EV)
As an owner of an EV, you have the choice between charging your electric car at home using a wall box charger or regular outlet and using a charging station. Both of these are viable options, but naturally, there are differences in costs.
For example, if you own a Tesla in the UK and a pre-2017 model, you can use their supercharger network for free. However, if you bought a car after January 1st, 2017, the number of free-charge hours is limited.
Tesla will bill you 26p per kWh in some areas while billing your per minute of use in others. Their charging service is divided into tier 1 and tier 2. Tier 1 uses 60 kWh while tier 2 is 60 kWh and over.
If you have another brand’s EV, you may be billed differently depending on the charging company that you are using.
For the UK, there are several names, including GeniePoint, Polar, Shell Recharge, ChargeYourCar, and Ecotricity. Each of them has its membership programs, and you can decide which one suits you best.
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Not everyone buys their cars in cash. A vast majority of people tend to finance their cars from dealerships. They make a down payment as a percentage of the car’s value, then continue to make monthly, bi-annual, or annual payments over a designated period.
These payments can vary depending on the price of the car and your finance agreement’s terms and conditions. Petrol-driven cars and EVs usually have the same financing terms.
However, the UK government has announced that it would subsidize a certain amount of each EV being purchased. This is a step to help make it easier for consumers to get an electric vehicle as opposed to a petrol-driven one, and it’s working.
In 2020, the largest increase in the number of EVs was registered – a whopping 175,000 of them. The plans are working, but it’s still going to take its time. If you are a business buying an EV, you might even be eligible for a 100% tax relief.
These figures can vary from one manufacturer to the next. It varies from a petrol drive to an EV. You need to consider several variables when financing a car, most notably if you can make the payments on time.
This is a tale as old as time. You buy an asset for X amount of money, and before you know it, the price starts going down, or in other words, it starts to lose its value. It goes from being worth X to being worth X-1, then X-2, and so on.
Most car owners do not take this expense into account. However, it is a real cost that is a part of car ownership.
Simply put, depreciation on your electric car is the difference between how much your car was worth on the day that you bought it compared to how much it is worth if you were to sell it right now.
Unless you have bought an extremely valuable and limited edition luxury vehicle, the chances are your vehicle won’t appreciate it.
The figures surrounding a car’s depreciating value depend on how far along its life cycle a car is in. It is assumed that the car will generally depreciate between 15 and 35% in its first 12 months.
As time progresses, this value can rise to 40%-60% in year three and up to 80% in year 8 of ownership. What this means is that, by the end of the first decade of you owning your car, its value will have almost completely bottomed out.
A depreciation expense happens over time and isn’t felt immediately, but if you sell your car a few years after buying it, chances are you won’t get the money you paid for.
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Insuring Your Car
Accidents and mishaps are a part of life. No one wants them to happen, but then again, they still do. In this case, the best thing that we do is prepare ourselves for it. Getting your car insured is one of the ways you can do this.
In exchange for an annual premium, your car is insured if it gets lost, damaged, or destroyed.
If any of these were to happen, your insurance company would come in to assess the situation, see if it complied with their terms and conditions, and then proceed with either a payout of the vehicle’s price or help pay for the repairs.
Different insurance companies have different forms of insurance that they offer. Depending on what you get, your car is covered in different ways.
While this might be an expense, it is also a way of protecting your asset. For the annual premium, your car is protected if something happens to it.
In the UK, the average cost for twenty years of age, 65 years of age, and a woman in their twenties is ￡851, ￡491, and ￡1060, respectively. This shows that insurance premiums depend on a variety of different factors.
These include the price of the car, your age, the type, the amount, any limits, and any deductible that you might have opted for in your plan. A premium can vary based on anti-theft tech in your vehicle or the way you choose to drive it.
Insurance in the UK for a petrol-drive vehicle or an EV is largely the same. One of the factors that determine if an EV will cost less to insure is the availability of parts, along with if there is a specialized technician who can make any repairs.
Electric car insurance used to be very high back when they first entered the market for this exact reason. However, since more and more technicians have learned to work on them, these premiums have started to go down.
It will still cost more to insure an EV than a petrol-driven car, but the price is going down as EVs are becoming more common.
While all these other expenses are part of owning an electric car, the most common is the maintenance of an electric car. This can include tires, filters, car washes, detailing, and other occasional touch-ups if you ding a panel against something.
These sorts of expenses happen a lot more than we would like them to, but it needs to be taken care of for the vehicle to be in ideal condition.
You cannot just buy a car and then not take care of it. It is a machine, and machines need to be maintained. They will operate normally for a while, after which wear and tear will start to kick in.
If you don’t tend to this in time, this wear and tear can result in significant damage, which will dent your pockets a lot harder than you would like.
As a habit, make sure you get your check every 2 or 3 months to see if everything is working fine.
Most times, we can’t see or hear something not working right until we’re left in the middle of the road, unsure of what we need to do next.
For example, if you live near the ocean or somewhere with extreme weather, try to get your car checked in case the elements are silently damaging them.
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Owning a car is a lot more than simply walking into a dealership and driving out with your favorite car. Furthermore, electric cars and petrol-driven cars are the most obvious choices on the market right now.
A lot of the costs associated with them are the same. However, there are different things that you need to take into consideration when choosing one.
A lot of what you need to know has been covered, but there are still several things that differ regarding owning an EV and a petrol-driven vehicle. It comes down to the way they are built, the infrastructure that they use, and the demographics that choose to drive them.
The facts and figures are average and cannot be used as a universal amount. It gives you an idea about what owning one type is compared to the other.
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My name is Matthew, staying in Seattle, Washington. Electric Vehicles (Electric Cars & Electric bikes) caught my attention for the last few years and my love for electric cars and bikes is everlasting. I spend many of my weekends traveling to various places all over various cities with my electric vehicle (e-bike and electric car). Here I am sharing my expertise, experience, and invaluable information about electric cars and electric bikes. Check out more.