Is it worth switching to an e-car?

Jul 16, 2021

The sales figures show that e-cars are becoming increasingly popular. But what is the cost of buying one? Here are the key things to consider when making a purchase.

Petrol, diesel, hybrid or electric? More and more people are asking themselves this question when buying a car. And the number of e-cars being registered worldwide is growing constantly, as the current IAA E-Mobility Ranking shows. Worldwide, there are now around 10 million e-cars, mostly in China (4.2 million). In terms of new registrations, however, the picture is somewhat different: Last year, Europe headed the list, with around 1.37 million e-cars, followed by China with around 1.2 million. The USA currently ranks third, with something over 300,000 newly-registered e-vehicles.

In Europe, the German market in electric vehicles accounts for the biggest share, with around 395,000 units. Despite this, when considering an e-car purchase, there are a number of unanswered questions: How big are the price differences? What’s the situation regarding state subsidies and tax benefits? And how much money will you get for your e-car if you want to sell it a few years later? Here’s an overview.

Purchase price

When getting a new car, usually the first thing people look at is the price. Here, as a general rule, new cars in the electric segment are still more expensive than comparable diesel or petrol cars – in most cases, the difference is several thousand euros. One reason for this is the comparatively low numbers of vehicles in electric production, resulting in more modest scale effects. Another reason is the batteries. They are, in effect, the heart of the electric car, and due to their elaborate production process they account for a significant portion of the purchase price. But battery development has been making major progress recently, and as a result battery manufacturing costs have come down. Whereas in 2010 the price was around EUR 600 per kilowatt hour (kWh) of energy, in 2020 that had reduced to around EUR 100. In some price classes, e-cars can therefore already compete with their combustion-powered siblings.

When buying a new vehicle, the first thing people usually look at is the price - and that also applies to e-cars. © Annie Spratt on Unsplash

Luxury class or compact?

The more expensive the car, the smaller the price difference between an electric powertrain and a combustion engine. The reason for this is that, with more expensive cars such as sports cars, sedans or large SUVs, the cost of the battery is not so significant comparatively. Instead, the electric option can even prove to be cheaper in the long term, once subsidies and lower running costs are factored in (see the ADAC comparison test below). So if your next car purchase is going to be a major investment, you should take a close look at the offers available.

Subsidies and tax benefits

Many countries offer a financial subsidy for buying e-cars. In China, for example, the state was offering around EUR 2,000 until the end of 2020, although that has now dropped to around EUR 1,600. In Norway, too, e-car buyers enjoy major tax benefits; For instance, the tax is almost completely waived on the purchase price, with further significant tax benefits as an additional incentive. In the USA, a total of USD 100 billion is set to flow into car purchase subsidies in future, and individual Federal states have already been promoting e-cars for some time. In Germany, there is the “Umweltprämie” (“Environmental premium”). Under it, purchasers can receive up to EUR 9,000 when buying a new e-car qualifying for the subsidy. The costs of this are met by the manufacturer and the state, with some manufacturers even rounding up the environmental bonus, so that savings of over EUR 9,000 are possible. The environmental bonus applies until 2025, and it is not the only discount available on e-cars: E-cars are also significantly cheaper when it comes to taxing them. In Germany, they are exempt from any motor vehicle tax at all for the first ten years. After that, only 50 percent of the full tax is payable. 

According to the ADAC test, the Opel Mokka-e is cheaper in the long term than its combustion engine siblings. © Opel

Car insurance

Just as with combustion-engined cars, in Germany car insurance costs for e-cars are similarly calculated on the basis of the insurer’s accident risk. The key factors here are, above all, the respective vehicle type, regional circumstances and the individual accident risk of the insured driver. In terms of the vehicle risk, so far e-cars have benefited from a low classification, since the statistical base of empirical values relating to e-cars on the road is still small. If the statistical accident figures for e-cars remain low in the future, this could even give rise to further cost benefits. Modern technology and high-performance assistance systems could be beneficial here.

Running costs

In terms of day-to-day running costs, e-cars can come out ahead, with clear cost advantages. With regards to fuel, however, the potential savings are heavily dependent on the respective driving style and charging options. If you charge the car using a wall-box at home, that should usually be significantly cheaper than the costs of regular fuel. Prices are also low when charging using public charging points outside shopping centers or hotels, and similarly at many employer premises. However, it can sometimes become more expensive when using rapid charging points, or public charging points offered by third-party providers. The average price per kWh used by ADAC is 36 (Euro) cents.

When it comes to servicing and upkeep, it’s no contest. E-cars have significantly fewer components and are therefore lower-maintenance and cheaper: No oil changes, no exhaust gas testing, no wearing parts such as transmissions, fan belts or spark plugs. In addition, because e-cars have the capacity for recuperation (recovering energy via the engine), they need to brake less frequently – hence less wear on the brakes. Overall, the e-car needs to spend less time in the workshop, so there’s a saving to be had.

According to the ADAC test, Volkswagen's ID.3 can score points with cost advantages over the Golf (1.5 eTSI 2.0 TDI) in the long term. © Volkswagen

Resale value

Even e-cars lose value as they get used. How much is hard to put a figure on, so far. In this area the data is lacking, since the used-car market for e-cars is as yet very small. However, many experts take the view that the prices for used cars are likely to be relatively low. The reason for this, in their estimation, is the high level of subsidies granted on new cars, which will therefore depress demand for used cars. That effect is likely to persist for some time yet. The current subsidies in Germany, for instance, are only due to run out in 2025.

Long-term cost advantages?

Purchase price, environmental bonus, car tax, running costs and resale value – if you tot up all these costs together, e-cars can certainly be competitive against their combustion-engined siblings. That much is also demonstrated in a recent ADAC survey, comparing the costs of selected models and various manufacturers. Its finding was that e-cars (and plug-in hybrids) are often surprisingly cheap to run – and thanks to the environmental bonus, sometimes even cheaper than a combustion-engined model. 

The assumption taken as the basis for the ADAC cost comparison was an average ownership period of 5 years, with annual mileage of 15,000 kilometers. The costs are shown in (Euro) cents per kilometer. There are a number of e-car winners in the manufacturer-specific cost rankings, such as the VW ID.3 Pro (43.7 cents per km), which comes out clearly ahead of its two combustion-engined rivals, the Golf 1.5 eTSI (51.7 cents per km) and the Golf 2.0 TDI (55.6 cents per km). At Renault, the fully-electric Zoe (39.4 cents per km) similarly wins out over the combustion-engined Clio (41.3 cents per km). For Vauxhall-Opel, too, the Mokka e-edition (44.7 cents per km) was slightly cheaper than the petrol or diesel options (46.4 or 44.8 cents per km). It’s a different situation at Kia, where the e-Niro (46.5 cents per km) is slightly more expensive than the combustion-engined version (45.4 cents per km). The full results of the comparison are available here.

The IAA MOBILITY is transforming itself from a pure car show to an international mobility platform with four pillars: the Summit, the Conference, the “Blue Lane” and the downtown Munich Open Space. Under the slogan of “What will move us next”, it stands for the digital and climate-neutral mobility of the future. From 7 to 12 September 2021, the car, bike and tech industries come together at IAA MOBILITY in Munich.