🚩 What do the rising energy prices mean for electric vehicles?

What is the energy price cap?

The energy price cap was introduced by Ofgem, the body that regulates energy in Great Britain, in January 2019. It followed concerns that many people were paying too much for their energy.

The price cap limits the maximum amount energy suppliers can charge you for each unit of energy you use if you live in England, Scotland and Wales.

The cap was due to rise again by 80% from 1 October for 24 million people. But, the UK Government has now frozen typical energy bills at £2,500 from October for the next two years. This is almost £1,000 less than typical bills would have risen to under the cap.

Find out more from Energy Savings Trust.

Why have EV running costs increased recently?

In the last few months, petrol and diesel prices have fallen, while at the same time it became clear that electricity prices were set to rocket.

The extraordinary increase in electricity prices means that charging electric cars has also become more expensive. It must be noted that despite this unprecedented price hike, EVs are still cheaper to run that their fuel powered counterparts.

What does the governments intervention mean now?

The Ofgem price cap announced toward the end of August would have seen EVs become as expensive, if not more, to run than a petrol or diesel car for all motorists bar those who charged at home via an EV energy tariff.

This would have been punishing for motorists that already own an electric car and damaging for the UK’s transition more broadly.

However, the Prime Minister’s recent move to scrap the Ofgem price cap and replace it with a new cap - which limits electricity costs to an amount representing around 34p per kilowatt hour - means electric cars still offer households significant savings on running costs if they charge at home on a standard variable tariff.

Are electricity tariffs still important for EV drivers?

The value offered by electric vehicle energy tariffs is significant – and even more so at a time such as this. These tariffs are aimed specifically at EV drivers that charge at home and offer access to cheap off-peak electricity. When comparing the running costs of different fuel types these tariffs mean EVs will always have the edge, as there is simply no equivalent means for motorists to access similarly discounted prices for petrol or diesel.

Unfortunately, whilst the vast majority of drivers can simply plan ahead, charge at home, and still save money, not every electric car owner has access to home charging. It seems unlikely that the government’s price cap will cover public EV charging, and it will be those who can’t charge at home that suffer the most from higher electricity prices.

What is our advice to drivers looking to switch?

We believe that drivers who are able to charge at home, especially those with a variable tariff, would still be able to save substantial sums of money on running costs of their new EV. Despite the latest government intervention guaranteeing cheaper rates for only two years - it is likely that additional measures will be taken, and that the existing price shock will stabilise in due course.

We are urging the Transport Secretary to work out a good deal for drivers, and to regulate the energy markets whilst improving their transparency. We believe that EVs will continue to provide a good deal for drivers - but at the same time we urge you to double check your potential savings using our savings calculator - as our energy prices are constantly updating.