Budget analysis: fuel duty freeze leaves £700 ‘petrol premium’ over driving an EV

The chancellor has said that freezing fuel duty will save petrol car drivers £50 a year in fuel costs, but this compares to electric cars being as much as £1300 cheaper to run each year [1].

Colin Walker, Transport Analyst at the Energy and Climate Intelligence Unit, said: “Electric motoring is cheaper motoring and the fuel duty freeze hasn’t changed that. More households are getting access to EVs through the second hand market, fuelled in no small part by companies buying new EVs and selling them on three to four years later to the 80% of us who rely on the used market to buy our cars.

"If the Chancellor really wants to help the UK’s drivers save money, helping drivers make the move to EVs will make a much bigger difference. The policies to achieve this, and called for by UK motoring groups, include bringing VAT on public charging in line with VAT on private charging at home by reducing it from 20% to 5%, or temporarily halving VAT on sales of new EVs”.

While new EV sticker prices are more expensive than their petrol counterparts, over their lifetimes EVs are much cheaper to own and run. This is even more so for secondhand EVs, where price parity with their petrol equivalents has been reached.

The latest figures saw new sales of EVs increase in February, accounting for nearly 18% of all new cars purchased [2].

Some motoring groups, including AutoTrader and FairCharge, are calling for a cut in the VAT on public charging from 20% to 5% applied to private charging [3]. Others, such as the SMMT, are calling for a temporary halving of VAT on new EVs to help people with initially high upfront stickers prices.

Previous ECIU analysis has found that the switch to EVs will boost UK energy security more than new North Sea oil licences [4].

A recent report from the House of Lords committee report said the Government must do more to counter "misinformation" around EVs [5].