What does it cost to keep an electric vehicle running in 2022?

More than two thirds of Australians think the federal government should be doing more to increase electric vehicle (EV) uptake in Australia, according to a 2022 Carmichael Centre report . With a clear message on environment concern, nearly three-quarters of the country believes a reduction in CO2 emissions from internal combustion engine vehicles (ICE) would be effective in the fight against climate change. 

It also seems consumer sentiment in favour of EVs is growing. A 2019 Australia Institute study found half their survey group supported shifting all sales of new vehicles to EVs by 2025. And when you look at EV sales, it seems many consumers are walking the talk. 

In January, the Electric Vehicle Council (EVC) released 2021 sales figures suggesting Australia is at the precipice of an EV boom . The group recorded sales of plug-in electric vehicles tripling from 6,900 in 2020 to 20,665 in 2021, with the EVs now accounting for 2% of new car sales. 

However, the cost of purchasing and running an EV might be a barrier for many drivers. The Carmichael Centre’s report highlighted that the federal government’s comparatively weak $250 million EV strategy offers “no new tax incentives for EV uptake amongst consumers, no new emissions standards for ICEs, and only minimum funding support to expand charging stations.”

But how much does it really cost to own an electric car? Let’s explore your basic EV bills.

Electric vehicle costs and savings

Maintenance

According to the Electric Vehicle Council , EVs have fewer moving parts than ICE vehicles, requiring less maintenance. This brings the savings for EV maintenance and servicing to estimates of $300-400 per year compared to their petrol or diesel-powered car cousins.

Fuel vs Electricity

EVs run purely on battery power (as opposed to ICE and hybrid vehicles) have zero exhaust emissions, which is a massive step in the fight against climate change. Not only are EVs more ecologically friendly, but the savings on purchasing petrol and diesel are potentially huge. 

According to the EVC: “The average Australian drives 15,000km and spends around $2,160 on petrol per year ($0.14/km). An EV travelling 15,000km would cost around $600 per year ($0.04/km) in electricity costs.’ That’s an estimated saving of over $1,500 per year. 

Purchase costs

The up-front costs of buying an EV are generally more expensive than an ICE vehicle, due simply to economies of scale. This means The higher consumer demand for EVs, the lower the cost will become as Australia is perceived as a more attractive market for EV manufacturers to export their cars to. The EVC notes that up-front costs for EVs will be cheaper than conventional vehicles by 2025. 

Until then, those looking to make the leap into eco-friendly personal transport might need to consider a car loan to help bridge the gap. There are even green car loans, incentivising those financing environmentally-friendly alternatives.

Insurance

The necessity of car insurance isn’t limited to those vehicles with an internal combustion engine, so insuring your EV is an important consideration when weighing up the costs.

On average, insurance premiums for EVs are higher than those for ICE cars. In 2020, Mozo’s data team calculated that the average yearly premium of an EV would be $1,415, compared to the then average of $952 for petrol or diesel cars. 

This is due, in part, to both EVs ‘newness’ in the industry (causing uncertainty among insurance providers), and the stark technological differences at the core of EVs. However, considering the difference in maintenance and fuel costs can put the price difference of insurance premiums into perspective.

So, can I afford an electric car?

As always, this question comes down to your personal financial situation. So, take a gander at the EV costs and potential savings above before you make any decisions about buying new wheels. 

You’ll want to find out which EV models are available in Australia right now, then compare sales prices, car loans and car insurance before you make any moves. Start by considering the fees and features of a few insurance policies below.