The Economics of Electric Vehicles: Here’s What You Need to Know

by | Dec 15, 2020

Electric vehicles (EVs) are flooding the market. Everyone from Hyundai to Porsche has been debuting EVs in the last two years. As the rest of the motoring industry plays catch up, the focus has shifted to the economics of electric vehicles. 

When Tesla unveiled the first all-electric car to travel more than 320km per charge, the Tesla Roaster, the general public got their first peek into how the future of the motoring world could look. Their rapid ascent into the main-stream and their high-profile CEO, Elon Musk, have kept them in the headlines ever since.  

How should businesses adapt as EVs become commonplace?

How do the economics of electric vehicles impact business energy needs?

Here’s what you need to know. 

How many electric vehicles are on the road? 

There were only 3774 electric vehicles registered in the UK in 2013, but EV numbers are soaring. Infrastructure is growing to support increasing consumer demand. Over 410 000 plug-in vehicles are on the road in the UK as of 2020:

  • 225 000  Plug-In Electric Hybrids
  • 184 000 Battery Electric Vehicles

Over 72 000 EVs were registered in the last year, and that number will continue to grow as uptake surges.*  


How do you save with an all-electric vehicle? 

The sticker price on EVs is considerably higher than the equivalent internal combustion engine (ICE) vehicle, even taking into account grants that can reduce the purchase price of EVs by up to £3000.  

It is through vehicle tax savings and fuel savings that you recoup that initial expense. It is predicted that an EV is around £1000 cheaper to run per year. Over the course of ownership, it is possible to reduce your total costs and improve your carbon footprint. 

Let’s talk about charging 

There are over 30 000 public charging connectors in the UK alone, and over a million globally as of August 2020. As a result, support services for the EV industry have grown astronomically. EV fleets are a distinct possibility in the near future. As this technology continues to embed itself in our daily lives, businesses must now consider accessibility to charging stations for employees and visitors.

Are EVs really ‘cleaner’ than fossil fuel motors? 

During manufacturing, EVs are currently creating a higher carbon footprint than ICE vehicles. The reason for this is that mining of rare earth metals required to produce the batteries that power EVs create more greenhouse gases than the production of ICE vehicles. These emissions are expected to come down over time as the manufacturing process matures.  

The other big problem lies in recycling batteries at the end of their life-cycle, which is still a labour-intensive process. This is expected to improve over time. The recycling process is being refined and manufacturing processes adapted with recycling in mind.  

During their operation, EVs are undoubtedly cleaner than their ICE counterparts. As governments power their grid through greener energy practices, this will continue to improve the case for purchasing EVs in the future.  

How viable is the economics of electric vehicles?

While EVs cost more than comparable ICE vehicles, fleet operators to quickly recoup the additional up-front cost through:

  • superior efficiency
  • the price of electricity
  • the high utilisation of fleet vehicles 

It is predicted that the total cost of ownership for a fleet of EVs will be 15- 25% cheaper than the equivalent ICE vehicles by 2030.  

EVs are quickly becoming a viable alternative to ICE fleets. They will become the preferred choice for fleet solutions in the not-too-distant future. This is something that businesses should start considering before embarking on fleet replacement efforts. Government initiatives are already in place to incentivise the switch to EVs. 

How the Workplace Charging Scheme works 

Under the Workplace Charging Scheme, the British government offers business, organisations, charities and local authorities financial support to have charging points installed at their premises.  

This grant covers up to £350 per socket at 75% of the total cost of installation (up to 20 sockets) to be installed on dedicated off-street parking for staff, visitor or fleet use. But businesses will have to foot the bill for the electricity itself. For example, the Volkswagen e-up! would cost between £5.20 and £7.80 to charge its 32.3 kWh battery.  

What are the costs of workplace EV charge points? 

Based on a standard project, a fully installed Type 2 7kW double-header unit would typically cost around £1500 after the WCS Grant has been applied, while a 22kW double-headed post would cost between £2500 and £5000 after applying for the grant.  

So, how do I proceed? 

Start by considering your current energy supplier, and ensuring that your energy needs are being met. At Smarter Business, we can provide you with the information you need to make informed decisions about how your business approaches its commercial energy needs. 

Our team of experts will bridge the gap when it comes to corporate energy procurement and management, and help outline what commercial energy contracts mean for your business in real terms.  

We excel in helping our clients shape their environmental sustainability strategies, and are committed to green energy practices. We can provide the tools you need to adapt your fleet requirements to this changing environment, and the insight required to determine how to save money doing it.  

Get in touch to find out how we can help your business adapt to changing energy requirements. 



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