Is 2025 finally the year to buy an electric car?

Electric cars may finally be affordable for most families, as the average price of used vehicles has dipped below £27,000 in recent months.

The debate around whether Britain is ready to abandon polluting internal combustion energy (ICE) vehicles in favour of electric vehicles (EVs) reached fever pitch in 2024. But like it or not, buying a new petrol car will be impossible in Britain by the end of the decade.

Much of the debate has been around the Government’s zero-emission vehicle (ZEV) mandate, which forces car manufacturers’ sales to comprise a growing proportion of electric cars until 2030 when the sale of new petrol cars will be completely phased out.

The Conservatives had extended this deadline to 2035 amid pressure from the motor industry. But Labour has since brought it forward, much to the chagrin of Lisa Brankin, Ford UK managing director, who said last year that the mandate “just doesn’t work”.

Nevertheless, used EV prices are falling and climate think-tanks claim motorists could save up to £1,600 a year by switching to an electric car – based on the running costs of best-selling second-hand models.

However electric cars remain more expensive than their petrol counterparts on the forecourts, charging in public is still incredibly expensive, and a number of tax breaks and grants aimed at boosting uptake are reaching their end.

So when exactly will electric cars become affordable for the average driver? And what needs to happen in order to make them cheaper? Telegraph Money asked the experts.

State of the second-hand EV market

As of November last year, the average price of a used electric car was £27,305, according to the marketplace Auto Trader, while the price of a petrol equivalent was roughly half that – at £14,701.

Electric cars now sell four days faster than their petrol counterparts, and 15 days faster than they did two years ago.

The price gap between EVs and conventional vehicles is narrowing rapidly. A three-year-old Renault Zoe would have been £7,000 more expensive than a Renault Cleo, but as of November, that gap is just £1,800.

Similarly, the price difference between a three-year-old Tesla Model 3 and a second-hand BMW 3 Series has fallen from £20,000 in 2022 to almost nothing, Auto Trader said.

Erin Baker, of Auto Trader, said: “This year has seen smaller drops in used electric car prices compared to 2023. We are still seeing some very attractive savings for electric buyers, with many models at parity with their fossil-fuelled counterparts in certain pockets of the pre-loved electric market.

“Manufacturers and retailers are also heavily discounting new electric cars in order to meet government-mandated targets, with electric discount peaking at 12.4pc in October compared to petrol at 8.7pc.”

Interest from drivers also continues to rise, with a 60pc increase in advert views for electric cars, new and used, from January to November last year.

Though EVs undoubtedly remain more expensive than their petrol equivalents, the most in-demand cars now command more reasonable prices. Auto Trader said three of the most popular cars had an average second-hand price of less than £10,000.

Defenders of electric cars argue this is the result of the Government’s ZEV mandate working as intended. Suppliers have been forced to flood the market – and now those cars are reaching households second-hand.

This year 28pc of all new car sales must be of EVs, up from 22pc last year, and manufacturers will be fined £15,000 for every car they fail to sell beneath the target. A similar target is in effect for heat pumps, prompting boiler manufacturers to impose a levy on gas boilers to meet the cost of fines.

Car manufacturers are unlikely to pull a similar trick, however, as competition in the sector is stronger, even as some manufacturers complain about the targets.

Stuart Masson, of adviser The Car Expert, said most manufacturers were already ahead of the targets – even before they were briefly relaxed by Rishi Sunak.

He said: “Ford was held up getting the Explorer to market, so they missed out on a year’s worth of sales. Its EVs have also arguably not been as good as rival brands, compared to the success of the Fiesta or the Focus.”

Now that the ZEV mandate is in full swing, manufacturers are under pressure to shift stock and cut prices to edge out their competitors, Mr Masson said.

He added: “In overall terms, the private new car market is in decline – it’s the worst it’s been in a quarter of a century – so we’re seeing a lot of discounting in the EV market as a result of more competition and more models within each brand.”

Tariffs that could save you hundreds

The oft-touted reason for electric car ownership – other than their reduced carbon footprint – is the savings drivers can enjoy on fuel.

Households with access to off-street parking can charge their EVs overnight and benefit from cheap energy rates at low usage times. Experts argue that over time these savings will be more cost-effective than running a petrol car.

The Energy and Climate Intelligence Unit think tank estimates the best-selling second-hand EVs are £1,600 a year cheaper to run than their petrol equivalents. The non-profit’s analysis looked at the total cost of ownership of the six best-selling second-hand EVs on Auto Trader in 2024 and compared them to their petrol equivalents.

It included the vehicle’s upfront purchase cost as well as its fuel, maintenance, tax and insurance costs.

The cheapest model, according to the ECIU, was the Audi e-tron, which would save its owner £26,000 over the car’s remaining 10-year lifespan, compared to the petrol Audi Q5.

EVs synergise with other net zero initiatives, such as solar panels and heat pumps. But even those without access to heat pumps and solar panels can make use of their EV as a home battery of sorts.

Surplus energy from an EV battery can be used to meet a home’s electricity needs a process known as “vehicle to home”, or V2H. Or spare energy can be sold back to the network to slash money off monthly bills – “vehicle to grid”.

The number of EV-specific tariffs, which charge motorists lower rates at times of low demand (typically overnight) has grown in recent months. Comparison site USwitch lists, at the time of writing, five suppliers who offer these deals.

These include Octopus Go, which works the same way as an Economy 7 home energy deal, and is only available to existing Octopus customers.

Charging is cheaper between 12.30am and 4.30am each night, and costs 7.5p per kWh, which the supplier claims equates to 2p per mile – a tenth of the price of filling up a petrol car.

EDF’s GoElectric, meanwhile, charges just 4.5p per kWh between 12am and 5am, but ups the cost to 34p during peak hours (compared to the 24p rate of the energy price cap).

Therein lies the rub. Flexible tariffs like these penalise households for using power at peak times with higher rates than normal – including the electricity you use at home.

Other tariffs are less restrictive. Ovo’s Drive EV tariff offers a fixed flat per unit rate for the duration of the deal and, unlike other EV tariffs, does not require a smart meter.

Public electric car charging sites

For homes without driveways for off-street charging, and those who need to make long journeys that cannot be covered by a single charge, a robust charging network will be a necessity.

As of the end of November, there were 72,594 charge points installed in Britain, according to Zapmap, a data company. The pace of installations is also increasing, with 18,729 installed in the 11 months to that date, compared to 16,602 in 2023.

Melanie Shufflebotham, from Zapmap, said growth had been particularly strong in the 150kW+ or “ultra-rapid” segment, which are the fastest charge points to support EV drivers on longer journeys. There have been 2,854 new charge points added in 2024, resulting in 75pc more than at the end of 2023.

She added: “With the current and expected growth of EV drivers onto UK roads, the pace of installation and the focus on the consumer experience, for both en-route, destination and on-street chargers, needs to continue at pace over the coming months and years, and the charging industry is set to do just this.”

But progress until now has been slow. The Department for Transport hopes there will be 300,000 charging points in Britain by the end of the decade, and industry experts predict 40,000 will need to be installed each year to meet that goal.

To put these figures in perspective, in January 2023, there were just 37,000 charge points in the country, and that rose by just 16,600 over the following year.

Public charge points are typically more expensive than charging at home and they are less common in rural areas.

Until recently, there was no guarantee that if you found a charge point you would even be able to use it. It took until October for the Government to ban providers from forcing drivers to use specific apps or subscriptions to top up.

Surging electricity rates also make exclusively using public charge points less economical than using petrol, according to the AA.

So-called “range anxiety” and concerns over the availability of public charge points remain a barrier. Indeed, one of the intentions beyond the EV mandate is to encourage electric charge point providers to accelerate the installation of charging stations in Britain.

There are some signs this is working. In January last year, the RAC said the Government had failed to meet its target of having six or more so-called “ultra-rapid” chargers at every motorway service area in England by the end of 2023.

Since then, the number of installations on motorways surged by 51pc in just eight months with the addition of another 200 150kW chargers.

Now, almost half of all motorway services in England have six or more of these chargers, with some providing speeds of up to 350kW. Service stations that did not have chargers told the RAC they were still waiting for high-powered connections to the grid.

Whether any of this matters to you will depend on whether you have access to home charging, and how far you expect to drive between charges. Only 16pc of EV owners exclusively rely on public charging, according to a survey by Zapmap – and drivers of petrol cars will not be strangers to paying inflated prices at motorway service stations.

Looming tax and insurance costs

The above figures may suggest that those who invested in an electric car early, paying steep prices for new models or inflated prices on used vehicles, have lost out. But those investing in the near future will be hit by additional costs not faced by the early adopters.

From April 2025, drivers of EVs will pay vehicle excise duty – more commonly known as road tax – for the first time in Britain. This is an annual tax calculated on emissions levels, and those with higher levels pay more each year.

New EVs registered after April 2025 will pay an inconsequential £10 a year in the first year they are registered, but after that, they will move onto the standard rate of £180 a year. EVs registered between 2017 and 2025 will also pay the standard rate.

Introducing the change in his Autumn 2022 budget, then-Chancellor Jeremy Hunt said this would make the motoring tax system fairer. Mr Hunt similarly ended the “expensive car supplement” for electric cars, which means cars with a list price of £40,000 or more pay a surcharge currently set at £355 a year for the first five years after they are first registered.

At the time, RAC head of policy Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the Government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025.”

However, experts claim this will have a disproportionate effect on EV drivers. The £40,000 threshold for the expensive car surcharge has not changed since it was introduced in 2017, and data from Auto Trader shows that 67pc of electric cars will be hit with the tax, compared to 43pc of petrol cars.

“We shouldn’t be charging Volkswagens and Fords with a luxury car tax, that wasn’t what it was intended for,” said Stuart Masson, of the Car Expert.

Electric cars are also typically more expensive to insure than ICE vehicles, owing to expensive-to-repair components like batteries. In some cases, EVs are twice as expensive to insure than petrol cars.

This article was first published on April 15 2023, and has since been updated.