in association with
Peter McDonald
Small actions can make a big difference – one example being the recent advisory fuel rate for electric cars
What can you buy for a penny these days? Let’s face it – not much. A single bronze-coloured coin that would buy a small penny chew in my childhood (and probably wouldn’t stretch to even that today), you hardly have to be a lottery winner to mourn the loss of one down the back of the sofa.
Except that there was one place recently where the loss of a penny was rather more keenly felt. That was on 1 June with HMRC’s reduction of the advisory fuel rate for electric cars down to 8 pence per mile. This followed two other drops in March this year (from 9ppm) and also in December 2023 when it was 10ppm.
To be fair, the figure has risen since summer 2022 when it was 5ppm, but the fluctuation underlines the difficult position that it finds itself in for the low running costs of an EV versus the huge fluctuation of ‘fuel’ costs with a traditional ICE vehicle.
Do the maths
Let’s take that new 8ppm rate as an example. If you took an average efficiency for an EV at three miles per kWh, then that 8ppm equates to 24p for every kWh – only just covering the new standard electricity tariff from 1 July of 22.4p/kWh.
With an ICE vehicle, the extreme differences of prices of unleaded might be around £1.40 per litre at a supermarket filling station (the cheapest location to fill up) up to £1.70 at a motorway services (probably the most expensive). On a typical hatchback with a 50-litre fuel tank that equates to putting either a £50- or £85-sized dent in your bank balance. From £50 to £85 is a 70% rise, which nobody would deny is no small change for what is exactly the same amount of fuel.
So let’s do the equivalent maths for an equivalent EV hatchback with a 77kWh battery. A full charge on the new standard electricity tariff equates to a cost of £18.48, but if you’re on a smart EV tariff such as Intelligent Octopus Go, that price drops to just £5.78.
For an EV however, the equivalent of those motorway services is an ultra-rapid CCS charger where the costs could be as high as 85p/kWh. While you’re highly unlikely to fully charge at a CCS, filling that same 77kWh battery would be £65.45. If you thought that the 70% uplift was high on the unleaded costs, the equivalent between charging on a smart EV tariff at home and public charging is 1132%!
And with that vast difference in pricing between different charging options, it makes it very difficult for HMRC to find a suitable universal solution that is one-size-fits-all in the same way that we have for ICE vehicles.
While a fleet manager obviously can’t influence their driver’s choice of home energy tariff, if their driver does choose a smart EV tariff, then the fleet manager would benefit from those lower running costs too
EV call home
Of course, it’s also another demonstration of the importance and the advantages of home charging to fleet managers. While there’s an obvious up-front cost of providing EV drivers on your fleet with home chargers, the cost savings – even on the standard variable tariff of electricity – are significant. That’s further exacerbated if a driver has solar, where the cost of a charge may even be zero, underlining again just how different the price might be from one driver to another.
While a fleet manager obviously can’t influence their driver’s choice of home energy tariff, if their driver does choose a smart EV tariff, then the fleet manager would benefit from those lower running costs too. Either way, the savings are substantial enough that the cost of fitting a charger would be covered in fairly short order and easily within a typical three-year lease period.
Interestingly too, this is a largely UK-focused issue too. The reason is that the UK energy market is quite advanced, in terms of dynamic tariffs compared to its European counterparts.
While energy firms in other countries in Europe do provide off-peak tariffs in various differing forms for those driving EVs, they often don’t represent the same large difference in savings compared to the standard tariff, in the same way as Intelligent Octopus Go does.
To be fair to those other countries, however, that is changing – and from 2025 all energy companies in Germany will be required to offer a dynamic tariff of some description in their respective portfolios.
In the meantime however, for UK drivers, two messages remains relatively simple. Switching to an EV is still the best and easiest option for fleets to make savings on running costs – and home charging will always be the most affordable place for any EV driver to charge.
Peter McDonald is mobility director at Ohme. Prior to his current role, he spent two decades working for automotive manufacturers including Nissan, SEAT and the wider Volkswagen Group.
