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Is it time to go electric?

By Tony O'Kane, 27 Sep 2018 Car Advice

Is it time to go electric?

With petrol prices at a five-year high, moving to an electric car makes more sense than ever. We crunch the numbers on how much you could save by making the change.

This article originally published on 16/06/18, and has been updated September 27, 2018.

“Range anxiety” might be the dominant buzzword when it comes to explaining why the take-up of electric vehicles has been so glacial in Australia, but a quick glance at new car price guides provides a more convincing reason as to why battery-electrics are still so rare on our roads: they are expensive.


Renault Zoe pictured

Just 1124 electric cars were sold in Australia in 2017 according to official sales data (which doesn’t include sales by Tesla) – a fraction of the 1,189,116 cars that moved out of showrooms last year. Not especially surprising, given there’s still no such thing as an EV that could be considered “affordable”.

Read next: How Australia compares globally for EV sales

But EVs have the critical advantage of low running costs. Maintenance is simple and sourcing power from a household outlet isn’t just more convenient if you adopt a charge-overnight regimen – it’s substantially cheaper on a per-kilometre basis than petrol.

Does that compensate for the high showroom sticker price? What about depreciation? Does the second-hand value of an electric car plummet any faster than a comparable combustion-engined vehicle?

The cheapest battery-electric you can buy is the $47,490 Renault Zoe Life – which was originally only available to business customers but is now available for retail.

Conveniently, Renault offers a conventionally powered analogue to the Zoe in the form of the Clio Life automatic. Both are compact five-door hatches, both are intended for zipping around urban areas, and both wear the same badge on their snout. The similarities end there, but which one makes more sense in the long term, petrol, or electric? We’ve crunched the numbers in an attempt to settle the argument.


Renault Clio Life pictured

PURCHASE PRICE AND DEPRECIATION

The Renault Clio Life retails for a completely reasonable $18,990 in automatic form, placing it in the middle of the non-premium compact hatch segment. With a 88kW/190Nm 1.2-litre turbo petrol engine and a dual-clutch six speed auto, the entry-level Clio also boasts an above-average level of mechanical grunt for its price point, while its claimed average fuel use of 5.2L/100km is admittedly higher than the class leaders – though not by much.

Read next: 2018 Renault Clio RS220 Trophy: Hot Hatch Megatest 6th

Meanwhile, the Zoe Life requires deeper pockets to get into. At $47,490 before on-roads are factored in, you could hardly describe the tiny Zoe as being a value buy

However purchase price is just part of the story – the biggest cost associated with owning a car from new is often depreciation.

Purchase price is just part of the story – the biggest cost associated with owning a car from new is often depreciation.

In the case of the Clio, industry residuals experts Glass Data says the Clio Life will retain just 46 percent of its original value after the first 36 months of ownership. That equates to a loss of $10,255, leaving the Clio worth $8735 after just three years.


Renault Clio Zen pictured

Ouch, right? Wrong. The Zoe scores a little better on percentage terms, clinging to 52 percent of original value after 36 months, but that amounts to a loss of $22,795 over three years. That’s nearly four grand more than the total retail cost of the Clio, and while the Zoe is still worth more than the Clio at the three-year mark, it’s depreciated by an eye-watering amount.

It’s worth noting, however, that retained value projections sometimes have to be taken with a grain of salt. The Zoe has only been in the Australian market since late last year, so Glass Data has had to apply a complex algorithm to estimate its retained value performance over a longer period. It takes into account the brand’s historical performance, the early performance of the model after it hits the market, and how other vehicles of a similar type have fared.

Read next: 2017 Geneva Motor Show: Renault Zoe e-Sport debuts as mega-quick EV hot hatch concept

The Zoe’s actual performance over the next two and a half years may vary, while the Clio’s stats are more a known quantity.

RUNNING COSTS

The Clio’s 1.2-litre turbo is a frugal motor, sipping a claimed average of 5.2 litres of premium unleaded (95-octane at a minimum) per 100km. Assuming it travels the Australian Bureau of Statistics national average annual driving distance of 15,530km, the yearly burn comes to 807.56L. With 95-octane fuel costing roughly 175c/L on average in Sydney and Melbourne at the time of publishing, that amounts to $1413.23 per year in fuel costs alone, which, if there are no changes to the price of fuel or distance travelled in that time, becomes a total cost of $4239.69 over three years.


Renault Clio Zen pictured

The Zoe, meanwhile, shines somewhat brighter when it comes to running costs. Renault claims an average energy consumption of 133Wh per kilometre (or 13.3kWh per 100 kilometres), which, if the Zoe is driven the same 15,530km distance as the Clio, results in a total energy usage of 2065.5kWh a year.

Now here’s where things get a little tricky. Like petrol, the cost of household electricity can vary from state to state, the only difference being that the variance is much, much greater. If we look at the worst-case scenario of the owner residing in South Australia, the state with the highest average cost of electricity at 32.31 cents per kWh, the Zoe would require a spend of $667.35 a year to run. At $2002.10 over three years, that’s a hefty advantage over the Clio’s fuel costs.

Read next: 2018 Renault Zoe First Drive Review

However, if you only charge using dirt-cheap off-peak power or you happen to live in the state with the cheapest electricity – the ACT (average cost, 19.68c/kWh) – that cost can plummet further. For example, an ACT-based owner would see an average cost of just $406.50 a year, or just $1219.50 for three years. Many thousands less than running a combustion-engined equivalent.

But putting petrol or electrons in your car isn’t the only thing you need to do to stay on the road – there’s maintenance to factor in as well.

Renault is fairly transparent about the costs of servicing its cars, and under the company’s capped price servicing scheme the Clio costs $349 every 12 months or 30,000km. At the two-year mark an air filter and pollen filter need to be changed at a cost of $52 and $63 respectively, which brings the three-year servicing total to $1162 and takes the running cost tally for the Clio Life to $5401.69

Servicing the combustion-less Zoe is also cheaper, though not by as much as you’d expect. The base cost per 12-month/15,000km interval is $231, a fair whack cheaper than the Clio that requires regular engine oil changes. However, the Zoe puts more strain on its 12-volt ancillary battery, which must be replaced at the two-year mark (at a cost of $252) , while the cooling system for the electric motor’s battery system needs to be flushed and refilled right at the three-year mark – a $139 operation. All up, that’s $1084 to keep the Zoe in fighting form for three years, and a miniscule amount ahead of the Clio.

So what’s the Zoe’s final tally then, given the variance in energy costs? We’ll take the worst-case scenario here and go with a “South Australian-owner-who-refuses-to-charge-in-off-peak-periods-for-some-reason” model. Combined with servicing costs, the Zoe costs $3086.10 over three years in pure running costs.

INSURANCE

Insurance is an easily overlooked variable, but due to the unique nature of electric vehicles it’s one that shouldn’t be ignored. After all, with specialised parts and low import volumes (and thus limited supply of replacement parts), the cost of repairing crash damage on an electric car can be significantly more than for a regular vehicle.


Renault Clio Zen pictured

That’s reflected in the difference between insurance premiums on the Zoe Life and Clio Life. The all-electric Zoe’s quote for 12 months of full comprehensive insurance came to $1742 ($5226 for three years), while the Clio Life would cost just $1281 for the same period (or $3843 for three years).

CONCLUSION

For the first three years of ownership, the Clio Life automatic will cost at least $19,500 in depreciation, insurance, fuel and servicing. By comparison, the similarly-sized Zoe Life EV will cost $29,658 according to our most conservative energy cost model.

The outcome here is obvious, but comes with several caveats. The conventionally engined Clio is a far more rational buy from a purely economic point of view right now, and that largely comes down to the vast difference in the purchase price and the considerable whack that the Zoe receives when depreciation is factored in. If you’re the type of buyer who hops into a new car every three years or so, opting for an electric car of comparable size and purpose is going to cost you.

Read next: How many EVs are Australians really buying?

However, there are a few wildcards in play here, and they’re all clustered in the “running costs” category. The assumption, for one, that the price of petrol will remain static for a three-year period is not just optimistic, but somewhat naïve. Adding an extra 10 or 20 cents a litre to today’s price of fuel would see yearly costs swell by hundreds of dollars – and that’s a very real possibility if petrol retailers and oil-producing nations continue to squeeze the price of fuel steadily upwards.

On the flipside, savvy owners who set their EVs to charge overnight when electricity costs a fraction of what it does during peak hours will see even bigger financial advantages relative to a combustion-engined equivalent. If they’re fortunate enough to already have their own solar panels and energy storage, those costs could be trimmed down to virtually nothing.

But in order to reap those EV benefits, owners would need to hang onto their cars for longer than a mere three years. Even under the most pessimistic forecast, the running cost advantage held by an EV such as the Zoe can be several thousands of dollars less than a “normal” car, and with each passing year that advantage will chip away at the disparity in the purchase cost. However, that only applies to those who only turn over their cars roughly once a decade – which is around the time many EVs may require a new high-voltage battery pack.

The silver lining is this – as the cost of EVs come down, the economics of ownership tips further in their favour. Are we at the tipping point where EVs are more financially feasible than combustion-powered cars yet? No, but it’s likely not as far away as you’d think.