Inside the industry: How the cost of living crisis affects EVs

Regardless of your political stance, it’s hard to argue that Boris Johnson was anything other than front-footed – in principle, at least, if perhaps not in thorough planning – when it came to forcing the pace on electric car adoption.

The former prime minister’s plans for rapidly raising mandates on brands’ sales mixes (starting at 22% of all sales being EVs from 2024) and a ban on sales of new combustion-engined cars from 2030 put the UK among the frontrunners of change. 

Yet he has barely been gone a week and there are already suggestions that the current anti-green agenda, which has been triggered by the cost of living crisis, could spill over to a reappraisal of those plans. Today, the rhetoric covers a return to fracking but opposing solar panels on third-rate agricultural land; tomorrow, as the crisis deepens, who knows?

If economics are the driver, the maths is worth a moment of reflection. Today, a gallon of petrol costs an average of £7.71 and a gallon of diesel £8.35, which we can generously say will get you an average of 50 miles (or, more specifically, between 30 and 75 miles). For petrol that’s 15.4p per mile on average, or 10.3p at best and 25.7p at worst.

For diesel, it’s 16.7p per mile on average, or 11.1p at best and 27.8p at worst.

A kWh of electricity from home, in contrast, costs around 30p on average (but can be substantially less). That will power a car on average three miles (but can be anything from 2.5 to five miles). That’s 10p per mile on average, or 6p at best or 12p at worst (although those prices could be far less again if you have a low overnight tariff, some of which are less than 10p per kWh).

Unless you’re dead set on comparing the best-case scenario with the worst-case one, the scope for savings with an electric car today remains evident.

But, of course, electricity prices are rising, to an expected average 51p per kWh by the end of 2022. That places the average cost of an electric car at 17p per mile, or a best of 10.2p and a worst of 20.4p. Still cheaper than petrol or diesel, but tight, and it’s possible by that point that oil prices may have slumped further, too, edging electric towards, maybe beyond, the unwelcome point of parity (although you still have to factor in the potential benefits of variable tariffs). That’s tight long before you layer in any extra costs of public charging.

Forget the environmental crisis unfolding: place that maths in the context of paying your heating bills or feeding your family and the momentum behind electric car sales could quickly falter, bringing the car industry’s health down with it. At that point, the government may have to double down and incentivise the transition – or, tragically, cast aside the longer-term global crisis to answer a more immediate financial one.