With fuel subsidy ending, do electric vehicles mean long-term savings?

This week will see the end of the federal government’s temporary fuel excise reduction on 28 September, 2022. Projections see fuel prices rising up to 25.3c per litre, which will see a 60L tank of petrol increase by roughly $15.18. 

The reductions were a six month measure put in place to ease consumer stress as fuel prices surged amidst political unrest in Ukraine, an upcoming federal election, and Covid-19 supply chain issues. Despite pressure to extend these measures with the cost-of-living crisis, the reinstatement of the full fuel excise has many Aussies feeling as though they will not be able to afford to fill up their tanks.

While the ACCC is prepared to monitor abnormal increases in the immediate aftermath of the 28th, the increasing cost of fuel prompts the question: are electric vehicles (EVs) cheaper in the long run?

Do you stand to save with an electric vehicle?

The limited range of EV models in Australia - and higher ticket price - means that upfront costs can be much higher than equivalent petrol-powered vehicles. This can be a major deterrent for consumers, along with limited infrastructure to support EV charging and the high cost of energy.

That said, EVs - especially battery electric vehicles, or BEVs - have been shown to be considerably cheaper to run than comparable combustion engine cars (especially if charged off peak or paired with renewable energy to charge). The Electric Vehicle Council estimates the average running cost of a fuel car at $14/km, while the average EV works out to roughly $4/km. Research by Evenergi estimated a $5,000 gap in ownership costs between comparative EV and petrol vehicles over 5 years.

These savings aren’t just at the pump, but also at the mechanic. With EVs having far less moving parts than a conventional engine, you can save up to 40% on maintenance fees. Of course, it’s hard to get a hold of any new car at the moment, let alone an EV - but it is being increasingly incentivised. 

How do I buy an electric vehicle?

If you are looking into making the switch to an EV, you might want to consider car loans designed specifically for electric and hybrid electric vehicles. With lofty goals to phase out new petrol vehicles in favour of green cars, many lenders offer some of their best interest rates on loans for electric vehicles or cars that meet sustainability standards.

In the meantime, if petrol is your pick, try to keep a cap on costs. Certain brands offer membership discounts that can end up being worthwhile when added up. You can also keep an eye on a petrol price cycle tracker, as well as individual apps for different states (NSW, SA, WA, Tas, QLD, NT - not currently offered by Vic or ACT) to avoid getting overcharged.

Did this story get your engines revved? Check out our picks for Mozo’s best car loans to find some top performers. Stop by our green finance hub to find more ways saving can be sustainable.