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The Real Costs of EV Ownership- What Do the Banks Have to Say?

Hello and welcome to your daily Charge Smart blog! Today we've got a big story for you. We will be pitting the costs of EV ownership against those of ICE cars to find out which really is the cheaper option

Bank of America and Merrill Lynch recently conducted a study on the cost of ownership of an EV versus that of an ICE car over a period of three years. The study was conducted in the UK. The aim of the report was to essentially prove to companies why their company cars should be electric rather than diesel for example especially because of the new legislation that is coming in to place next year. We will touch on this later. Let's get on with it!

The report compared costs from four different categories of cars. In the affordable SUV segment, they pitted the MG ZS EV against the Nissan Qashqai diesel. In the affordable hatch segment, the two cars were the Nissan Leaf and the Ford Focus (petrol). Here comes the interesting one. In the premium sedan category, they compared three cars which were the Tesla Model 3, BMW 3 Series (petrol) and the BMW 3 Series PHEV. Lastly, there was the luxury SUV category which included an Audi E-Tron and an Audi Q5 diesel.

Above: The Audi E-Tron was chosen for the luxury SUV comparison

The incentive behind the report was the impending tax changes that will come into effect next year in the UK. The new law will mean that EV company vehicles will become exempt from tax for employees. In short, this will make ICE cars up to 15-22 time more expensive to a business. The main driver behind this massive saving is a phenomenon called the BIK tax or ‘benefit in kind’ as it is otherwise known. This is a tax that employees pay on benefits that they enjoy because of their workplace, benefits that are not part of their salary. These can include private medical insurance, childcare vouchers and the one we are concerned about of course, the company car. Current BIK tax on the lower end ICE cars like the Ford Focus is approximately $336 NZD. A pretty sizable figure in anyone’s books. However, if the company car in question was an EV then the tax would be reduced drastically. How drastic you may ask? Well, the BIK tax for a Nissan Lead is around $20 which makes the Leaf about 15 times cheaper per month than the Ford Focus petrol. As the cars increase in price, so does the BIK tax which means that something like a Tesla Model 3 is a whopping 22 times cheaper than the equivalent ICE sedan which in this case was a petrol BMW 3 Series whose BIK tax is in the region of $500!

The Ford Focus costs 15 times more in tax compared to the above Nissan Leaf

Another UK specific incentive to choose EVs over the ICE options is the fact that every EV is eligible for tax rebate of 3,500 pounds, roughly about $7,000 Kiwi. That’s what makes EVs such an attractive option for corporate fleets but also for private buyers. Without this subsidy, the Tesla Model 3 is about $17,000 more than the petrol BMW 3 series, a number that will surely sway a person’s decision in the EV vs petrol debate but add the incentive and the Model 3 is only $10,000 more than the 3 series and a little cheaper than the 3 Series PHEV!

In conclusion, the survey gave us these facts. A Tesla Model 3 is cheaper to own over 3 years when compared to the BMW 3 Series petrol or PHEV variant with the subsidies in place. Remove those and the two are approximately the same price. The difference is a bit more stark as you lower the price of the car where both the Nissan Leaf and the MG ZS EV are both cheaper to own than their ICE counterparts which in this case were the Ford Focus petrol and the Nissan Qashqai diesel respectively.

Thanks for reading! Make sure to check back in tomorrow as we look at why new legislation needs EVs to make a noise.

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