Do current fuel prices mean this is the best time to buy an EV?

Tuesday, 15 February 2022

The range of new EVs available in New Zealand is increasing all the time - here is everything as of January 2022.

Fuel prices are surging as a result of increased overseas demand, Covid-19 restrictions, international oil prices, and geopolitical issues, and it’s rough going for Kiwi drivers. The average cost for petrol is about $2.70 per litre, according to fuel price app Gaspy and website Global Petrol Prices, with 95 and 98 octane regularly breaking the $3 barrier in some places.

Without much of a remedy in sight – in January, AA principal policy adviser Terry Collins said that there will be a “a slow and steady climb towards $3 a litre over the next few years as the norm” – could now be a good a time to jump on the electric train?

A recent survey by Compare the Market found that at the start of 2022, people were spending an average of $127.43 filling their fuel tanks every month. Bear in mind, this was when fuel was sitting at an average of $2.63.

Petrol has broken through the $3-per-litre mark, and it doesn’t look like it will drop back any time soon.

They also compared the costs of running a Hyundai Kona in combustion and fully electric form, and found that the EV was a lot cheaper to keep on the road, in terms of refuelling/recharging.

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Opting for the larger battery in the Hyunda Kona Electric doesn’t translate into a much bigger power bill.

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Hyundai claims fuel consumption rates of 6.2L/100km for the 2.0-litre combustion Kona, and Compare the Market found that, at a cost of $2.70 per litre, it would cost $1674 to drive 10,000km. This assumes a full tank has a range of 806km, which would equate to 12.4 full tanks to hit 10,000km.

Meanwhile, the Kona Electric with the 39.2kWh battery pack has a claimed range of 305km per charge, requiring 32.79 full charges for 10,000km of total range. But, at $12.66 per charge, it only cost a total of $415.12 to drive the full 10,000km.

The analysis also found that jumping to the larger 64kWh doesn’t bring as much of a jump in recharge costs. By the same metrics, the added range of 484km per charge meant it only require 20.66 full charges to hit the 10,000km mark. That ends up costing $427.25, a bump of around $12.

Those numbers were reached using the average electricity price of 0.35 cents per kilowatt-hour from May 2021 according to figure.nz.

Interestingly, it seems electricity then was more expensive than January 2022, according to wholesale electricity price figures from the Ministry of Business, Innovation and Employment (MBIE). In May 2021, wholesale prices were at 30.2 c/kWh, versus 16.4 c/kWh in January 2022.

The MBIE data shows that electricity prices have largely plateaued over the past seven years, with residential nominal costs sitting between 28c/kWh and 29c/kWh. Of course, that’s not to suggest prices will stay at that point, but you could reasonably assume it will remain far cheaper to run an EV than a petrol-powered equivalent, even when eventual Road User Charges are figured into the equation

There is the added issue of actually buying an EV, as current prices are far from parity. Even the gap-bridging hybrids command a premium – Toyota asks a minimum of two thousand extra for the electrified Yaris variants, and more for other models. Same with Lexus, the two biggest names in the hybrid game at the moment.

Mention hybrids, Compare the Market also ran the numbers on the South Korea-spec Kona Hybrid (not yet a model on offer in New Zealand). It found that, going by Hyundai’s official claims, the Kona Hybrid can eke out 1211.7km per tank, meaning it needs 8.3 tanks to get to 10,000km. That translates to a total cost of $851.58 for 10,000km of driving, less than half of what the full-combustion Kona asks.

So while it is true that running an EV is a lot more wallet-friendly in terms of the day-to-day, you’ve still got to stump up the cash to buy one in the first place.

It is expected that price parity will arrive by the middle of the decade, which should be when solid state batteries start turning up in showrooms. After all, the biggest factor in getting the price difference between petrol and electric down is the cost per kilowatt-hour (kWh) of the batteries, and solid state batteries should bring that way down.