OFGEM’s increase in the energy price cap due to start on 1 October 2022 will see electric car fleet drivers and business paying substantially more per mile.
Those drivers on a standard capped tariff charging at home are currently paying 28p per kWh. On 1 October this will rise to 52p per kWh, according to energy regulator Ofgem.
As a result the cost per mile for electric car and van drivers who charge at home will increase by more than 85%.
For example an electric car achieving 3.0 miles per kWh will see their per mile electricity cost rise from 9.3p to 17.3p, and even someone achieving 4.0 miles per kWh will see their costs rise from 7p a mile to 13p a mile.
These figures assume the driver is on a capped standard variable tariff and doesn’t have a variable contract that allows for lower cost off-peak or overnight electricity.
While the benefit-in-kind tax advantages of running an electric car are still likely to outweigh the rising cost of electricity, it is worth noting that a petrol car achieving around 50mpg will have a fuel-only cost of around 15p a mile (based on £1.70 per litre). Those drivers still in diesels and achieving 60mpg will have a fuel-only cost of nearly 14p a mile (based on £1.80 per litre).
Businesses will also be aware the energy cap only applies to domestic energy supplies and that at-work charging could become more expensive than home charging.
The Ofgem announcement has come in the same week that HMRC updated its Advisory Fuel Rates which includes a 5p a mile figure for electric cars. While this figure is far below the real-world cost of running an plug-in car fleets can claim the actual cost.
Businesses can help their drivers who home charge by recommending tariffs with a low overnight rate. However, these rates often result in a higher daytime energy cost. Those opting for these tariffs will need to analyse their use to see if they will be better off on such a rate.
“EV drivers should switch to an off-peak tariff for their home charging to ensure that they’re reducing some of the impact of this latest rise in electricity prices,” according to David Watson, CEO of smart charger provider Ohme. He advised fleet drivers should “speak to your existing electricity supplier and find out if they offer an off-peak tariff, if they don’t then switch to a provider that does to get the full savings of running an electric vehicle”.
Ohme also claims that with the average UK driver covering 6,800 miles a year, charging on an off-peak tariff in a typical EV would cost just £127.50 with Octopus Intelligent at 7.5p/kWh. At the current Standard Variable Tariff of 28p/kWh, that same annual mileage would cost £476, while the forthcoming new price cap of 52p/kWh will cost £884 more than with an off-peak tariff.
How to measure electric car efficiency
The easiest way to calculate your electric car’s efficiency – which you can then use to calculate your cost per mile – is to simply use the car’s trip computer. It’s worth monitoring this figure, in miles per kWh, on different types of journey and in different temperatures.
However, if you’re after a more exact measurement, then a smart electricity meter should show you how much electricity your car has been supplied. It’s then a case of keeping a record of your mileage and doing some maths. As the measurement suggests, take the number of miles you’ve driven and divide by the kWh figure you’ve used.
As a rule of thumb, we’d say anything below 3.0 is bad and anything above 4.0 is very good for modern EVs.
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