In December, I published exclusive insight from a Bank of America Merrill Lynch (BAML) study showing that, thanks to policy changes arriving in the UK this year, consumers and businesses could save thousands or tens of thousands of pounds by switching to an electric car. As a result, it was not all that surprising to see electric vehicles hit 34% market share in the UK in April.
A new report from Alan James of Expert Alliance backs up the Bank of America Merrill Lynch study and presents the findings in a compelling way. James shows that, assuming 45,000 miles driven over 3 years, income over £50,000 for an employee receiving the car via a remuneration package (typical in the UK), a Tesla Model S Performance would save the employee £41,386 and the employer £14,278 over three years compared to a non-electric car with the same price tag. This comparison can be made for other models that are not so expensive, as Bank of America Merrill Lynch showed previously, but the Model S comparison does a great job of highlighting how much benefit there is to going electric in the UK today.
“Taken together, across employee and company taxes together, as shown in Tables 1, 2 and 3, the EV is taxed total £73,866 less than the ICE car,” James notes. “That equates to 77.1% of the sticker price of the Tesla. This is an extraordinarily generous incentive to Go Electric. But there’s more.” He adds these bullet points:
- If any EV is used for commuting into London for 5 days a week, for 46 weeks a year, over the three years of the comparison, a total of £30 administration charge is payable to enter the London Congestion Charge zone.
- If any ICE car is used in exactly the same way, a total of £7,245 Congestion Charge would be payable over the three years.
“The London Congestion Charge adds £7,215 further potential savings over the three years.”
James adds that several thousand more pounds can be saved due to the lower operational costs of an electric car compared to a gasoline or diesel car, perhaps even £10,000+.
James finds even more areas of potential savings. Based on all of his assumptions, he uncovers £96,394 in savings over 3 years from choosing a Tesla Model S Performance over a fossil-fueled car with the same price tag.
In addition to the Model S scenario, James ran a “mid-market comparison” — the Tesla Model 3 Standard Range Plus (SR+) versus a BMW 330i M Sport. Total savings taking into account personal taxes, business taxes, fuel savings, the London Congestion Charge, and 45,000 miles driven over 3 years: £46,847.
Doing the same for a Nissan LEAF versus a Ford Focus: £25,617.
Naturally, as always, I recommend you run calculations for your own scenario if you considering a purchase. You can copy and use my comparison sheet for this, adjusting assumptions as desired, but if you are in the UK, you’ll need to consider the various tax incentives on offer. Check out the Expert Alliance piece for more on that, and perhaps also take a look at that Bank of America Merrill Lynch study I highlighted in December.
See more EV total cost of ownership analyses.
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