Seems like I have started a series of posts that looks at individual topics and then applies them to the FIRE lifestyle. If you haven’t already, see last weeks post on Automatic Enrolment pensions and FIRE.
Table of Contents
Cars are expensive
Even cheap cars, are not really cheap cars. Let’s get that out of the way now- they are not going to save you money (well, they could make you money if you use it for work/job), but they definitely do not save you any money. I’ve written before about how running a car could make you retire 5 years later. However, for many people- running a car is a requirement of either their work or lifestyle. Without one, it is certainly more difficult (though not impossible) to fully integrate and enjoy society.
It’s not even just the purchase price of a car, it’s all the other things that just add on top that make it, per mile, a really expensive form of transport.
Purchase price/depreciation- whichever cost you look at, both are high- especially by divided by miles driven
Insurance- and that’s before you have an incident which may cost you you excess and then your years no claims on top- meaning insurance in future years is even more expensive.
MOT- every year, £30~ and then any work on top
Maintenance items, tyres, wipers, bulbs, and other more expensive items.
Tax, now some petrol cars are £0 rated, but some are now £400+ a year.
Congestion/Toll charges, there aren’t many of these- unless you
Electric cars are even more expensive!
Well, yes, kinda. If you look at the direct purchase price of a new petrol/diesel car, and the electric (only) comparison vehicle, then the electric version is currently much more expensive. This is, of course, because of the (huge) battery pack that the electric car will have. Battery prices are continuing to come down in price, it’s reducing at approx 15% year on year (though, this will decline as prices plateau out)
Ongoing costs are tiny
Electric cars are just cool- in many ways, but running costs are definitely lower- almost zero in fact. As regular readers will know, I have solar panels installed, so charging is literally free during the summer months. The rest of the time, using a tariff from Octopus Energy called “Octopus Go“, charging is just 5p per kWh, which gets you about 4 miles of driving. Cost per mile for fuel then is just over a penny.
Maintenance is also much reduced as well- no more oil changes, or anything else related to an internal combustion engine is no longer there. Just an electric motor which needs zero maintenance. Sure, you will still need to replace the tyres like you would a normal car, but everything else just doesn’t need anything replaced. Even the brake pads are barely used due to the regenerative braking. This occurs when you take your foot off the acceleration pedal the motor automatically takes the spare energy back into the battery whilst slowing you down. This both increases the range of the car, and doesn’t use any of the brakes either- a saving in both areas!.
A Worked Example
What would this blog be without an example of costings between 2 options? So here we go. I picked a relatively average car- MG ZS (and EV for the electric version). They do this car in both the ICE 1.0l petrol version and 49.5kWh battery version. On exactly the same body shape, so it makes it rather easy to compare (well, easier anyway).
MG ZS (1l petrol)
MG EV ZS (electric)
£13,000 (assuming almost new, prereg)
£18,000 (assuming almost new, prereg)
Servicing Cost (5 years, dealer)
VED / Road Tax
£750 (+ higher first year if you go for 1.5l)
Fuel Costs (10,000 miles a year)
(Assuming 40mpg), £1250 a year, £6250
(Assuming 3.5miles per kWh, at 5p) £143 a year, £715
Total (ish) cost:
Table showing costs of MG EV petrol and electric
So in this example, you can see over 5 years that actually the electric version comes almost £2k (or £400 a year) cheaper overall. That’s before you even consider any congestion charges or any free charging that you might get either at home with solar or out and about with supermarkets etc.
They are the future
You might moan that they are more expensive, or don’t have the same “feel” or noise as an internal combustion engine, but guess what? It doesn’t matter- they are the future for all of us, just a matter of time before you have one, your neighbour has one- and within 15~ years we will all be driving them.