Cheaper than petrol cars: A new report claims all EVs will be less expensive than models with internal combustion engines by 2027
A new report has claimed that by 2027 electric cars will be cheaper to produce than models with petrol and diesel engines.
It says manufacturing costs will be lower for electric family cars and SUVs by 2026, with battery superminis and city cars being less expensive to make by a year later.
The study claims that lower costs will drive a surge in EV demand, predicting that more affordable prices will result in 100 per cent of passenger car sales across Europe being battery electric by 2035.
The report has been published by BloombergNEF, a strategic research business that specialises in electric vehicle analysis.
It said that with the right measures, such as boosting the charging infrastructure for EVs and tougher carbon emission limits for models with internal combustion engines, every new car sold across Europe could be battery electric in just over a decade.
This will likely already be the case in the UK, with Boris Johnson last year outlining his plan to ban the sale of new petrol and diesel cars from 2030.
Plug-in hybrid models that can be driven a ‘significant distance’ in electric-only mode will be allowed to remain in showrooms until 2035 before also being outlawed. The Government is yet to outline what it determines as a ‘significant distance’, though experts believe it will be a minimum of 50 miles.
Plans to only allow the sale of electrified cars in Britain by the end of the decade has raised serious concern among industry insiders and motorists – especially regarding the premium cost of battery-powered vehicles.
A recent poll of more than 15,000 drivers by the AA found that 81 per cent believe electric cars are currently too expensive for them to consider purchasing one today.
And you can see why, looking at current prices across the market.
For instance, the cheapest petrol Volkswagen Golf costs £23,360. The most affordable Volkswagen ID.3, which is also identical in size, is priced from £28,370, inclusive of a recently-slashed government scheme offering up to £2,500 off the retail price of EVs – a £5,000 premium for a family hatchback.
Transport & Environment, which commissioned the new report, said it will take slightly longer for smaller EVs to be less expensive than compact petrol cars compared to the crossover in affordability for larger vehicles
Left: The most affordable electric Volkswagen ID.3 is priced from £28,370. Right: The entry-level petrol Volkswagen Golf Life costs from £23,360 – some £5,000 less than the electric equivalent
The Mini Electric is priced from £26,000 in the UK, inclusive of the £2,500 plug-in vehicle grant. That compares to £16,605 for the cheapest petrol Mini hatchback
This is the new Vauxhall Corsa-e – the electric version of the popular supermini. It costs from £27,140 in the UK (inclusive of grants), while the basic Corsa with a petrol engine is priced from just £16,815. That’s an EV premium of £10,325
There are more significant gulfs in price for smaller models, with the Mini Electric commanding close to £10,000 more than the entry-spec petrol Mini and the battery Vauxhall Corsa-e, priced from £27,140 with the government subsidy, being £10,325 pricier than the lowest-cost Corsa with a petrol engine (£16,815).
Despite today’s significant gap in affordability, this latest report, commissioned by green campaign group Transport & Environment, claims there will be price parity between electric and petrol vehicles within just six years.
The claims are based on the falling cost of the batteries, which are estimated to be 58 per cent less expensive in 2030 compared to 2020.
Unique electric vehicle architectures – such as Volkswagen’s new ‘ID’ range of cars – and dedicated production lines for electric vehicles will also make them cheaper to manufacturer and buy, even before taking into account grants, subsidies and other incentives offered by governments and manufacturers to boost the uptake of greener motors.
The report says the driving factor behind EVs becoming cheaper than petrol cars is the lower cost of batteries, estimated to be 58% lower in 2030 than they are currently
Green campaigners say rule makers across Europe have no reason to not ban new petrol and diesel car sales by 2035 at the latest – some 5 years after they will be outlawed in Britain
The knock-on effect will mean electric vehicles will become more affordable to more people, the report finds.
These claims come just weeks after UK ministers announced cuts to grants that are exclusively available to electric car buyers, which will see the price of EVs increase.
The plug-in vehicle grant amount has been reduced from £3,000 to £2,500 since March, while eligibility for the scheme is only for cars prices below £35,000, having previous been available for all models up to £50,000 (you can find out which cars qualify for the grant further down the page).
The move has been lambasted by trade bodies, manufacturers and drivers, who criticised the government for scaling down the incentive at a time when it wants more people to switch to greener cars.
The BloombergNEF study also suggests this move could be detrimental to the UK’s ambitions to encourage motorists to make the transition to cars with plugs.
It said an early build-up of EV production and sales ‘will be crucial to drive down costs and generate consumer buy-in for further adoption in the future’.
The latest registration figures for April showed that battery electric vehicle (BEV) sales dropped below plug-in hybrids for the first time since January 2020, with the Society of Motor Manufacturers blaming the decline on the grant cuts.
The study claims that EV prices will be lower even without incentives and government grants. It comes just weeks after UK ministers announced that subsidies for EVs in the UK will be cut
Commenting on the findings of the new study, Julia Poliscanova from T&E said: ‘EVs will be a reality for all new buyers within six years. They will be cheaper than combustion engines for everyone, from the man with a van in Berlin to the family living in the Romanian countryside.
‘Electric vehicles are not only better for the climate and Europe’s industrial leadership, but for the economy too.’
The report also claimed that light electric vans will be cheaper than diesel vans from 2025, and heavy electric vans from 2026.
BloombergNEF and Transport & Environment claim that electric SUVs will be cheaper than petrol version by 2026
Unique electric vehicle architectures and dedicated production lines will make them cheaper to buy, the study suggests
Currently, just 2 per cent of European van sales are electric, with T&E calling on EU lawmakers to set van-makers challenging CO2 targets to increase the number of electric models on the market.
‘With the right policies, battery electric cars and vans can reach 100 per cent of sales by 2035 in western, southern and even eastern Europe,’ Poliscanova added.
‘The EU can set an end date in 2035 in the certainty that the market is ready. New polluting vehicles shouldn’t be sold for any longer than necessary.’
The EU Commission is expected to set an end date for fossil-fuel car sales in June, when it will propose tightening the bloc’s car CO2 targets.
Last month, 27 major European companies called on EU lawmakers to set 2035 as the end date for selling new combustion engine cars and vans – some five years later than the UK’s deadline.
Which EVs are eligible for the plug-in car grant?
Below is a list of the 25 models that qualify for the recently slashed scheme, which now offers just £2,500 off the price of a new EV.
We’ve listed the cars that are eligible and those that have since had their prices trimmed by manufacturers so they sit below the £35,000 threshold.
Here’s a run-down of the grant-entitled EVs, running from the cheapest to the most expensive.
All models listed below are shown with their prices with the £2,500 grant included.
Smart EQ Fortwo
Price: From £19,200 to £22,770
Range: 70 miles
The cheapest new electric car you can buy is the Smart EQ Fortwo – though don’t expect to go on any long-distance journeys in this compact city car
The Smart EQ Fortwo is the cheapest electric car in Britain right now, with prices starting from £19,200 including the £2,500 PiCG subsidy.
Both a cabrio and coupe version are available, with the latter being the cheaper of the two choices.
The Daimler-owned brand offers a plush interior, though – with just two seats and a tiny boot – not much space.
The range is just as limited as the luggage capacity, with a 70-mile driving distance on a full charge. It means the Fortwo is designed specifically for urban use rather than motorway schleps and is therefore only suitable for certain motorists.
Smart EQ Forfour
Price: From £19,795 to £20,945
Range: 70 miles
Like the smaller EQ Fortwo, the four-seat Forfour has a range of just 70 miles, rendering it useful only for urban driving
If the Fortwo doesn’t offer enough interior space for you, the four-seat Forfour (as the name suggests) means you can carry passengers and fit items – such as a small suitcase – in the boot.
It shares the same interior and mechanical underpinnings as the Fortwo, meaning quirky design and plenty of quality.
However, the two also share the same electric drivetrain and battery, which means the same 70-mile range. For many drivers, this won’t be enough – especially when you’re spending almost £20,000 on a supermini.
Seat Mii Electric
Range: 160 miles
Seat’s compact Mii is available as a pure-electric model, with prices starting at just over £20,000
If you want a small city run-around with a longer range than the Smart offering, the Seat Mii Electric is a good option.
It can go for 160 miles between full charges – claims Seat – and offers a versatile package with plenty of room, five doors and a suitably big boot for such a dinky vehicle.
It’s good to drive too, and – with it being a VW Group product – should be well built. However, there’s not much choice on specifications, with just one version in the range (though with optional extra available).
Price: From £20,495 to £30,495
Range: 199 miles
Fiat has made a bold statement by selling only electric versions of the new 500 – the iconic compact car the brand is best known for
Fiat has made a bold statement with its all-new 500 city car; it will be available only with an electric powertrain, while the older model will be retained for the coming years to fulfil orders of those wanting a petrol engine.
The new 500, which will be in UK showrooms this year, has a 199 mile range and comes in the choice of hatchback or the rag-top cabrio, with a fabric roof that folds down towards the boot lid.
The highest-spec ‘La Prima’ versions are on sale first, with the hatch costing just under £27,500.
Range: 159 miles
If you want a small electric city car with lots of badge kudos, the VW e-Up! is one of the models that easily qualifies for the Plug-in Car Grant
Volkswagen’s sister car to the Seat Mii is the e-Up, which is mechanically the same model built in the same factory. A Skoda CitiGo-e was also on sale but has already sold out.
The e-Up costs almost £1,000 more than the Seat version. That essentially buys you the badge kudos of driving around in a VW.
The interior is slightly more up market and the exterior design is different, so it will ultimately come down to personal preference versus the Mii.
Price: From £24,495 to £26,995
Range: 214 miles
The first large model to feature in our list is from MG Motor, which is operated by Chinese firm SAIC. The 5 EV is a family-size estate car with a claimed range in excess of 200 miles
MG Motor, which has relaunched under Chinese ownership (the parent company is Shanghai Automotive Industry Corporation), has two electric models in its fleet, including the 5 EV.
It’s a family-friendly estate car with a 214-mile range, which will be ample for many drivers.
Priced from under £25,000 when factoring in the plug-in car grant, its proof that not all large electric models are ultra expensive. There have recently been issues with the roof rails of the 5 EV, which This is Money has covered recently.
MG ZS EV
Price: From £25,495 to £27,995
Range: 163 miles
MG Motor also sells an SUV with an electric powertrain. The ZS EV might be a more appealing package than the 5 EV estate, but it does have a shorter battery range
If an estate car isn’t your thing, MG also sells a ZS EV SUV. It’s marginally more expensive than the 5 EV and has a shorter range too.
That said, it’s one of the best low-cost electric family models currently on the market, offering lots of space and a five-star Euro NCAP crash test rating.
The top of the range Exclusive model offers extra safety technology and – at a £2,500 premium on the standard version – is worth the extra outlay.
Nissan Leaf (and Leaf+)
Price: From £25,995 to £32,445
Range: 168-239 miles
Nissan’s Sunderland-built Leaf is one of the longest-running EVs on the market. All variants qualify for the PiCG, even after the maximum price threshold was lowered this week
Nissan’s Leaf is the second British-built EV in our list, with the car produced at the Sunderland plant in the North East.
The current model is available as a 168-mile range standard Leaf, or the extended range Leaf+ with up to 239 miles of claimed range on a full battery.
When the cut was announced, the range-topping ‘e+ Tekna’ didn’t qualify for the PiCG as it was priced fractionally over the £35,000 threshold. Nissan has since trimmed it back to £34,995, meaning it costs £32,445 with the subsidy included.
Price: From £26,000 to £32,000
Range: 140 miles
The Oxford-built Mini Electric is one of the most fun zero-emission models on the market. All but the range-topping trim level qualify for the £2,500 subsidy
This is the first model in this list that’s built in the UK, with the electric version of the Mini produced at the brand’s Plant Oxford factory.
The urban-centric Mini has just 140 miles of range, but it part of an enjoyable package with responsive handling and a sporty feel that will put a smile on the most devout of petrol-head’s face.
The range-topping variant – the Mini Electric Collection – costs from £37,000 so isn’t eligible for the £2,500 grant at all.
Price: From £26,045 to £30,345
Range: 124 miles
Mazda’s MX-30 is the Japanese firm’s first ever EV. While it might have interesting looks and plenty of practicality inside, a range of just 124 miles won’t be enough for all drivers
The MX-30 is Mazda’s first attempt at an electric car. The funky crossover has pillarless clamshell doors, lots of interior space and impressive handling.
Every model in the range – even the top ‘GT Sport Tech’ trim level – are eligible for the grant, offering up to £2,500 off the price.
However, there is one issue – the range. Mazda’s offering of just 124 miles will be too short for many drivers, especially when you consider real-world figures are somewhat short of the official numbers quoted.
Price: From £27,140 to £31,395
Range: 209 miles
Vauxhall looks set to be onto a winner with the Corsa-e, especially as its closest rival – the Ford Fiesta – is yet to launch a plug-in model
Vauxhall’s Corsa is currently the second best-selling car in Britain, and the popularity of the Corsa-e has something to do with it.
While Ford is yet to sell an electric Fiesta, the next best zero-emission option for the masses is the Corsa-e, which shares its underpinning with the Peugeot e-208 (next on our list).
While it’s closer to the affordable end of the EV market, it’s a stark reminder of how pricey battery-powered cars are at the moment. Even with the £2,500 government grant, it is £10,600 more expensive than the entry Corsa with a petrol engine – a 64 per cent premium.
Price: From £27,225 to £31,475
Range: 217 miles
The Corsa-e shares its underpinnings with the Peugeot e-208. The latter – in our opinion – is the better looking of the two electric superminis
If you’re looking for a stylish electric supermini priced this side of £30,000, the e-208 from Peugeot is a good option.
It not only looks incredibly handsome from the outside but has an ample range of 217 miles. Every version of the electric Peugeot is eligible for the PiCG, right up to the GT Premium trim.
Compared to the Mini Electric, the e-208 looks like an attractive proposal.
Price: From £27,495 to £30,995
Range: 238-245 miles
Like the Leaf, the Renault Zoe has been kicking around for some time. It’s a popular small plug-in model, but more recent supermini rivals have its number
The Zoe has been on the market longer than most EVs in this list and, previously, was among the cheapest pure-electric cars you could buy in the UK.
That’s no longer the case, with a new pricing structure pushing prices higher than some rivals. However, this reflects a boost in performance and charging capability, with the driving range on a full charge being between 238 and 245 miles.
More expensive variants are rapid charge compliant, boosting the battery capacity to provide over 150 miles of range in 56 minutes when using a compatible device.
Price: From £27,660 to £30,710
Range: 131-137 miles
The Honda-e has a relatively short range but makes up for that with charming looks and a swanky interior. It’s one of the most interesting offerings eligible for the £2,500 grant
Honda’s first EV is an exciting one. Of all the models in this list, the ‘e’ is by far the best looking, with a quirky compact design that replicates the style of seventies and eighties boxy hot hatches.
A funky interior, dashboard-spanning screen and the omission of wing mirrors (cameras on stalks that beam an image to screens in the cabin instead) make it stand out in terms of appeal. It’s arguably the most charming EV on sale right now.
However, when you’re paying over £27,000 for an electric car, you might want more than 130 miles of range.
Price: From £28,370 to £33,435
Range: 217-263 miles
Volkswagen’s ID.3 is arguably the most important – and will be the most bought – model in this list. The entry version of the Golf-size electric hatchback are eligible for the PiCG
The ID.3 is arguably the most important model in this list – it’s the first from-the-ground-up EV designed by the German giant and the original model in its dedicated ID range. Following the emissions cheating scandal in 2015, this is among the first cars to repair the brand’s damaged reputation.
It’s a medium-size hatchback sharing similar dimensions to the company’s hugely popular Golf, and is just £6,000 (a relatively small difference compared to other models in this list) more expensive than the cheapest Golf with a petrol engine under the bonnet.
VW has recently launched a ‘City’ trim level, with a 45kWh battery that returns 217 miles of range. It starts at £28,370 after the PiGC. The longer-range (263 miles) ID.3 in the entry ‘Life Pro’ and ‘Pro Performance’ specs are also eligible, while another eight trim options in the range sit above the grant’s £35,000 threshold.
Nissan e-NV200 Combi
Price: From £30,255 to £30,975
Range: 124 miles
For those with big families and needing seven seats, the Nissan e-NV200 Combi is the only people carrier with an electric powertrain that qualifies for the grant today
If you’re looking for an electric people carrier, only Nissan’s e-NV200 Combi qualifies for the grant.
The entry-spec versions – called ‘Visia’ – of both the five- and seven-seat e-NV200 qualify for the scheme, with on-the-road prices below the £35,000 subsidy ceiling.
With just 124 miles of range, it’s not one designed for ultra-long trips. However, if you have a big family, it would make the ideal school-run wagon and ultra-green commuter.
Kia e-Niro 2
Price: From £30,345 to £34,945
Range: 180-282 miles
Only the Kia e-Niro with the smaller 39kWh battery qualifies for the slashed PiCG today. If you want one with a more capable 64kWh battery, the price difference is now a whopping £7k
Like the Hyundai Kona sister car (below), the Kia e-Niro comes with the choice of a 39kWh or 64kWh battery. The former provides up to 180 miles of range, while the latter promises up to 282 miles.
All variants of the 39kWh version – called the e-Niro ‘2’ – cost less than £35,000 and therefore qualify for the recently slashed PiCG.
The moving of the grant’s goalposts did mean that the bigger battery capacity comes at an almost £7,000 premium over this version that does qualify for the tax-payer-funded scheme. However, since the announcement, a ‘Long Range 2’ 64kWh version of the e-Niro has been made available with a price tag of £34,945 that’s now eligible for the scheme.
Hyundai Kona Electric
Price: From £30,395 to £32,495
Range: 155-245 miles
The Hyundai Kona is the sister car to the e-Niro mentioned above. Again, only the smaller battery capacity is eligible for the Government’s subsidy
Hyundai’s electric Kona SUV is available with two battery sizes: a smaller 39kWh battery offering a fully-charged driving range of 155 miles, or the bigger 64kWh with a longer 245-mile range.
All 49kWh versions already qualified for the grant but prices of the 64kWh models had previously exceeded the £35,000 eligibility threshold set by the Department for Transport. However, the Korean maker has now lowered the price of the cheapest 64kWh model to £34,995 (£32,495 with the subisdy) to meet the eligibility.
The Kona gets rave reviews for its completeness and practical layout.
Hyundai Ioniq Electric
Price: From £30,495 to £32,495
Range: 194 miles
Hyundai’s Ioniq feels long in the tooth compared to the latest models listed here. Dealers are likely to offer discounts on this particular car
In electric car terms, the Ioniq is getting a little long in the tooth. Hyundai remedied this with a battery update for 2021, meaning there’s an extra 26 miles of range to make it more competitive against rivals.
Since the PiGC cuts, prices across the entire range have been slashed by around £1,100. It means drivers can now get the Premium (£32,995) and Premium SE (£32,995) trims with the addition of the grant.
It doesn’t feel quite as futuristic or competent to drive as rivals, but if you can negotiate a discount with a dealership it is a capable family-size EV.
Price: From £30,730 to £32,380
Range: 206 miles
Peugeot’s e-2008 is available for the grant if you’re happy to have models lower down the trim level. This means you might have to tap into the expensive options list to get features you want
Peugeot has reacted to the PiCG cuts to reduce the list prices across the entire e-2008 range to ensure customers can continue to benefit for the scheme. A reduction of £450 on all versions mean Active Premium, Allure and Allure Premium models remain eligible for the grant. Prices after the Plug-in Car Grant for the Active Premium now start from £30,730, while Allure models start from £31,930 and Allure Premium variants from £32,380.
Like the smaller 208-e, it’s a great looking car with a very modern interior that targeted specifically at European customers looking for plush materials and lots of tech.
A 206-mile range and fast charging times means it should be a capable family car for all types of journeys.
Price: From £30,895 to £32,495
Range: 217 miles
Citroen was the first to react to ministers’ decision to cut the PiCG this week. The French firm has trimmed the price of its new e-C4 range so all are eligible for the scheme
One of the latest newcomers to the market is Citroen’s quirky e-C4. The French firm has been the first to react to the Government’s slashed PiCG and lowered its prices so all trim levels still qualify for the scheme, including knocking £535 off the range-topping ‘Shine Plus’ so that it sits at the £35,000 magic price point.
The brand has switched to a crossover look for the latest C4 and the interior is suitably plush with a large 10-inch touchscreen dominating the cabin.
A 217-mile claimed range will be suitable for most, and the Citroen also has an 11kW charger, which can complete a charge in around five hours on a 32-amp home wallbox.
DS 3 Crossback E-Tense
Price: From £31,500 to £32,400
Range: 191-206 miles
DS Automobiles is launching cars with comfort and style in mind. The DS3 Crossback E-Tense fulfils that quota
The DS3 Crossback E-Tense is the French luxury marque’s answer to a compact electric family SUV.
While it shares many of its mechanical parts with the Peugeot e-2008 and (soon to follow) Vauxhall Mokka-e, the suspension is tuned to be more cosseting on bumpy roads, and the interior and exterior have flashes of fashion-inspired design.
The ‘Performance Line’ model currently doesn’t qualify for the PiCG, but prices could be trimmed to make it eligible.
Skoda Enyaq iV
Price: From £31,585 to £31,200
Range: 256 miles
With a driving range of 256 miles and plenty of interior space, Skoda’s Enyaq looks to have a winning formula that could tempt motorists out of their petrol and diesel SUVs
The only Skoda to make it into our list is the all-new Enyaq iV. It’s a compact SUV model, sharing most of its underpinnings with the more expensive VW ID.4 – a car that currently doesn’t at all qualify for the PiCG.
The two lowest trims for the new Skoda are eligible for the Government’s £2,500 saving. They both boast an impressive 256-mile claimed driving range on a fully charge, and plug them into a DC rapid charger and the batteries replenish to 80 per cent capacity in just 35 minutes.
In terms of a competent electric family car, the Enyaq iV is proof that the latest models to hit the market are always moving the goalposts further and making EV ownership more feasible to a growing percentage of motorists.
Price: From £31,990 to £34,995
Range: 201 miles
The Mokka-e is the latest model showing Vauxhall daring new direction under French ownership. The funky looks and 201 mile range could be tempting, especially when some versions qualify for the £2,500 government subsidy
The second new electric Vauxhall on our list is the unique Mokka-e.
Under the – relatively bold and bright – skin, it shares its underpinnings with the Peugeot e-2008, which is becoming a common theme now that the French parent firm Groupe PSA also owns Vauxhall (and Opel in mainland Europe).
It has a claimed range of 201 miles, which is actually a few miles shy of e-2008’s 206-mile claim. However, in the real world, the difference should be negligible and the Mokka-e’s boxy and flamboyant looks might sway your decision. Since the Government’s announcement, Vauxhall has confirmed Mokka-e prices will be revised across the entire trim range to ensure all derivatives remain eligible for the grant. Prices for the Mokka-e SE Premium now start from £33,040 OTR, while the range-topping Mokka-e Launch Edition starts from £34,995 OTR.
BMW i3 and i3s
Price: From £33,805 to £34,805
Range: 173-190 miles
The i3 and more potent i3s have received a ‘pricing realignment’ from BMW UK so both can continue to benefit from the reduced PiCG
No BMW was eligible for the reduced PiCG when it was cut in March, but the UK arm of the German brand has responded and cut prices so both the i3 and i3s now qualify.
A pricing realignment ensures that customers can continue to benefit from the scheme, with the on the road pricing – before grant – for the BMW i3 120Ah now starting from £33,805 and £34,805 for the sporty BMW i3s 120Ah.
There have been no changes to the high levels of standard specification offered on either model as a result of the adjustment. That means the less potent i3 offers a range of 182 to 190 miles on a single charge, while the more powerful i3s has 173 to 175 miles on a full battery capacity.
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