What is bringing down the cost of an electric car in 2024?

Buying an electric vehicle (EV) is an environmentally sound choice, but even the most eco-friendly can falter over price. Consumers tend to have long memories, and the presumption that the cost of an EV is more than your average fossil-fuelled car has been around for years. 

Certainly, there was truth to this in earlier decades when electric vehicles were not produced at scale. 

However, the rapid expansion of the EV market in the last few years has helped to dramatically push down the price tags on electric cars. So much so that, according to personal finance researcher NimbleFins, a new EV can currently cost as low as £22,225, depending on make and model. 

But it’s not just the purchase price of a new EV that’s making electric cars more affordable. The used car market has also been growing, with over 7 million second-hand EV sales in 2023 alone. 

So does that mean the average driving Joe can switch their Internal Combustion Engine (ICE) vehicle for an EV without too much of a dent in their wallet? Yep. According to Bloomberg New Energy Finance (BNEF), pure battery electric vehicles (BEVs) will hit price parity with petrol equivalents by next year (2025) and be even cheaper by 2030. 

So let’s take a deep dive into exactly what is bringing down the cost of an electric car in 2024.

The Lowering Cost of an EV Battery

One of the main reasons that EVs have traditionally come with premium pricing has to do with the quality materials from which they’re made. 

For example, electric cars use lithium-ion batteries, the same kind of batteries used in your laptop or smartphone. The metals used to manufacture these batteries can be steep and subject to price fluctuations, which has made them much more expensive than diesel or petrol-pumped engine vehicles.

For many potential EV owners, this has posed two cost-related problems. The first is the overall price of buying a new lithium-ion battery-powered EV, and the second is the worry of the pounds and pennies they would need to stump up if the battery had to be replaced. 

But here’s the thing. While the idea that EV batteries degrade quickly is out there, it’s actually not true. According to the National Grid, most EV batteries last up to 200,000 miles (320,000 km) and typically travel 391 miles (630 kilometres) more per year than their petrol and diesel counterparts. Even if an EV battery does play up, most have a guarantee of eight years or 100,000 miles. 

Secondly, the cost of batteries has been plummeting in recent years. In January 2024, the world’s largest maker of EV batteries, China’s CATL, claimed it would slash the cost of its batteries by close to 50 per cent in this year alone.  

By passing this reduced cost on to the consumer, EVs are becoming even cheaper than many experts have predicted. 

The Influence of China and ZEV on the Cost of an EV

China’s influence is also visible in the number of new, more competitively priced Chinese cars taking on established EV brands in the UK market. 

According to a recent report from Auto Trader, the country, which is already the world’s biggest car exporter, looks set to snare a sixth of the UK’s EV market over the next half-decade, with lower-priced cars as the lure. 

If this happens, Volkswagen, Renault and other big European car brands will need to reconsider their EV prices to remain competitive in the marketplace. 

Another major influence on the cost of an EV is the British government’s  Zero Emission Vehicle (ZEV) Mandate, which came into effect on January 3, 2024. The ZEV mandate requires car manufacturers to increase the number of EV sales to stay above 22 per cent of their complete sales in 2024 or risk a rather hefty fine. The best way to ensure this? Find ways to snip EV costs. 

Second-Hand EV Market

Alongside cheaper new BEVs sliding off car production lines, one of the most welcomed reasons the cost of an EV is decreasing is down to the healthy growth of the second-hand EV market. 

Sales of used EVs rose by 5.1 per cent last year, with a record 351,915 more motorists opting to buy a second-hand EV than in 2022. 

Falling prices and the fact that more EVs are being manufactured have widened the choices for motorists and made room for more used cars in the marketplace. Many drivers are now opting for second-hand vehicles as a first dip into EV-driving territory. 

This makes financial sense on several levels. Alongside the price tag, EV owners aren’t obliged to pay Vehicle Excise Duty (VED) until 2025. Plus, if you settle on home EV charging too, powering up–especially at night when rates are at their lowest–will cost you hundreds of pounds less compared to charging at a public charge point. 

Additionally, while some folk might be wary of the lifetime costs of a second-hand car, EVs are more reliable and require less maintenance than their ICE counterparts thanks to their lack of moving parts. 

The growth of the used electric car market is essential in keeping EV costs down, and not just because second or third-hand EVs are always going to be cheaper than those hot off the production line. 

The fact is that a second-hand market switches more people onto the sweet life of EVs, which in turn fuels demand for newer models, encouraging more production that then helps bring down car prices and offers more entry points into EV ownership. 

EV Servicing and Fuel Costs

Cost-savings also continue once you make the leap to purchase an EV. 

For starters, servicing your electric car does not leave you with the same out-of-pocket expenses that a diesel or petrol vehicle typically does. 

There are fewer moving parts in an EV battery when compared to traditional internal combustion engines. That means, there’ll be no regular oil changes, spark plug replacements, or complex transmission repairs. Plus, alongside not having to worry about your car’s internal wear and tear, as noted above, most EV manufacturers offer extended warranties on EV batteries, offering you additional peace of mind.

Secondly, while charging your electric car is significantly cheaper than filling up with diesel or petrol, investing in a home EV charger can also save you more than if you consistently use the public charging network to power up. Recent figures show that the average cost for home charging is 32p per kWh and 48p per kWh for a public charging station.

Plus, once your home EV charger installation is set up, you’re paying the same price you would for any household electricity usage and can opt to charge at low-peak times such as overnight. This saves you even more and proves there’s nothing as convenient as being able to charge while you sleep!

Final Words

Electric cars aren’t going anywhere. With cheaper home EV charger options, ongoing government subsidies, tax breaks and less maintenance needed, they’ve always been a better financial option over the long run when compared to ICE vehicles. 

Now, with the cost of buying an electric car decreasing even more and the UK (and other) governments committed to breaking the carbon curse on our roads, we’ll be welcoming more affordable EVs into our lives over the next few years. 

If you’ve recently moved over to an electric car, why not continue keeping your costs down by investing in a home EV charger? You can find out more about installing a smart home EV charger from Powerverse. As one of the most competitive EV charging systems on the market, our price includes standard installation.