Research shows TCO gap between EVs and ICE models closing

Electric vehicles are closing the cost gap with internal combustion engined vehicles (ICEs) across Europe, with Norway and the Netherlands leading the way and the UK and Denmark not far behind, according to the latest research.

The findings come from the latest LeasePlan annual Car Cost Index, which shows there has been a sharp decline in the price differences between electric cars and petrol/diesel vehicles across European markets, with EVs fully cost competitive compared to vehicles with internal combustion engines (ICEs) in Norway and the Netherlands.

In almost all other countries analysed, the price gap between driving an EV and a diesel or petrol car has narrowed. If this trend continues, EVs will also reach cost competitiveness in countries such as the UK and Denmark in the near future.

In the case of the UK, the country is now the second cheapest place to run an EV. According to the Car Cost Index, the average monthly total cost of ownership for electric vehicles in the UK is €676 (£615), with only Greece offering a lower total cost of ownership of €656 (£597)

Across all vehicle types, the UK sits under the average total cost of ownership €617 (£561) with a figure of €602 (£548), with Eastern European countries including Romania, Slovakia, and Czech Republic ranking cheaper.

The research also finds that wealthier countries tend to have higher costs of EV ownership although in the Netherlands and Italy, the affordability is relatively low with the average total cost of ownership being relatively high compared to the GDP. For Greece and the UK, the average total cost of ownership is relatively low compared to GDP, indicating that driving a vehicle in these countries is relatively cheap.

Tex Gunning, CEO of LeasePlan, said: “Our Car Cost Index shows electric vehicles are becoming more affordable than ever, especially in Northern Europe, where government incentives are having a positive impact. While it’s good to see the cost gap closing in other countries, there is still a lot of work that needs to be done to ensure everyone can drive electric.

“We are also seeing a worrying tendency from policymakers to remove EV incentives, which will significantly slow down the fight against climate change and poor air quality in our towns and cities. Governments across Europe need to step up and commit to long-term green incentives and charging infrastructure projects that will make EVs the common sense choice for all drivers.”

Thibault Alleyn, head of the FleetVision consultancy, added: ”With many of our customers, we notice that the electrification topic accelerates the pace in reviewed car lists, TCO calculation methods and related operational updates.

“While this is not yet the case across the whole of Europe, the desire of our clients is to prepare the fundamentals through Europe-wide guidelines, which we are continuing to develop. Together with WLTP-related car policy changes, this is clearly an area where international fleet decision-makers are reaching out for our expertise."

Further key findings from the 2019 survey are: 

• The average cost of driving a car varies hugely across Europe, from €440 (£400) a month in Greece to €830 (£755) a month in Norway. The European average is €617 (£561) a month.
• For ICE cars, depreciation (36%) is responsible for the majority of total costs, followed by taxes (20%), fuel (18%), insurance (13%), maintenance (9%) and interest (5%).
• For electric drivers, depreciation makes up a larger share (52%), however costs are saved through using electricity for fuel. EVs also benefit from consistently lower taxes and maintenance costs across Europe.
• Driving an EV is cost competitive compared to driving an ICE vehicle (defined as the average between diesel and petrol) in Norway (same price) and the Netherlands (1% more expensive). In the UK and Denmark, cost competitiveness for EVs is in reach.
• The Netherlands is the most expensive place to drive a diesel car at €937 (£852) a month. In the Netherlands, the registration tax (BPM) for diesel cars can add as much as 35% to a diesel vehicle’s net investment value. Conversely, Romania is the cheapest place to drive a diesel car - €407 (£370) a month.
• Norway is the most expensive place to drive a petrol car at €851 (£774) a month. This is significantly higher than the European average of €594 (£540) per month. Greece is the cheapest place to drive a petrol car - €445 (£405) per month.
• Weighted for GDP, drivers in the Netherlands and Italy have the highest total cost of ownership for all powertrain types, while drivers in Greece and the UK have the lowest.

Please contact Thibault Alleyn at FleetVision at talleyn@fleetvision.biz for more details.