Motorists saving the planet could also save on their insurance bills, as electric vehicles are now typically £45 cheaper than petrol and diesel cars to insure.
Average annual insurance costs for electric cars have declined by £75 in the first quarter (January to March) of 2021, according to research from comparison site Comparethemarket.
This, combined with a number of other potential long-term financial benefits, could mean that buying an electric car will help the planet and your wallet.
Here, Which? takes a closer look at the costs of insuring an electric car to help you decide if you’re ready to make the switch.
How much is electric car insurance?
Comparethemarket says the average annual electric car insurance premium for January to March (Q1) 2021 was £566. That’s a £75 drop compared to the last quarter (October to December) of 2020.
Petrol and diesel cars, on the other hand, cost £611 on average to insure in Q1 2021 – £45 more than insuring an electric vehicle.
If you’re able to get the cheapest premium available, your electric car insurance could fall even lower, to £478. However, it’s worth keeping in mind that your premium is based on more than simply the kind of car you have, so the quotes you get may not completely align with these average figures.
Full details of the averages over the past two quarters are in the table below.
|Average petrol and diesel car premium||Average electric car premium||Cheapest electric car premium|
|October to December 2020||£712||£641||£551|
|January to March 2021||£611||£566||£478|
Source: Comparethemarket, May 2021
The fall in car insurance prices can be partially explained by fewer cars on the road over lockdown, and therefore fewer accident claims. Some insurers gave out refunds to customers who were no longer driving as much, but many ended up overpaying for car insurance.
- Find out more: don’t let this car insurance rule change catch you out
How else can you save with electric cars?
It’s clear electric cars are the best choice for the environment, and they are growing in popularity ahead of the government’s 2030 target to phase out new petrol and diesel vehicles.
March data from the Society of Motor Manufacturers and Traders indicate that sales of new battery-powered electric cars have increased by 74.1% in the year to date. These electric vehicles represented 7.5% of all new car sales in this period, increasing from 3.8% in the previous year.
However, an electric set of wheels can still cost more than the diesel or petrol alternative at the outset.
Dan Hutson, Comparethemarket’s head of motor insurance, said: ‘The transition to electric vehicles will be vital in tackling climate change, but the higher upfront cost of these cars compared with traditional models has often been a deterrent for many motorists. Drivers making the switch to greener vehicles will be glad that our research shows electric cars could bring significant financial as well as environmental benefits over time.’
Along with the lower insurance premium, there are other areas that help electric cars cost less.
If you want to buy an electric car, but the initial price tag is putting you off, you may be able to get a government grant to help.
Currently, you can get a grant of up to £2,500 if you buy an electric car priced under £35,000. The government says more than half of models currently on the market fall into this category, meaning you should be able to get a grant for most electric cars.
- Find out more: best electric cars for 2021
Charging an electric car at home will almost always be cheaper than paying for petrol or diesel. You’ll even be able to charge your vehicle for free at some public charge points.
Our independent tests found you’d pay the following amounts to charge different sized models at home to cover 9,000 miles:
- £400 to £500 a year for small city cars and hatchbacks
- £450 to £600 a year for medium and large cars
- £560 to £700 a year for large SUVs
Different vehicle models will have different costs depending on their efficiency. Our electric car reviews tell you how much different vehicles cost to charge.
- Find out more: how much does it cost to charge an electric car?
Electric vehicles are exempt from car tax because they produce zero emissions. New petrol and diesel cars on the other hand will cost an annual £155 in car tax from the second year onwards, and a one-off first-year rate, which will vary depending on how much CO2 it produces.
First-year rates can cost up to £2,245 for the highest polluters, but as low as £10 for the lowest.
- Find out more: car tax explained
Electric cars have fewer moving parts than their petrol and diesel counterparts, so they’re less likely to need repairing.
You’ll also save because there aren’t as many parts that’ll wear out and need replacing, like oil filters or cambelts.
- Find out more: electric car battery life investigated
Other ways to save on car insurance
Whether you have an electric car or not, you may be able to save on your car insurance next time you renew.
Use our guide to how to find cheap car insurance for the best tips and tricks to shrink your premium.
One tip to consider is trying a pay-by-mile car insurance policy, which can be cheaper for drivers who don’t clock up as many miles as they once did.
- Find out more: could pay-by-mile insurance save you money?