Electric car prices — how long it would take for fuel costs to make up the premium

It would likely take over a decade to make up the cost difference between an electric vehicle (EV) and its petrol-powered equivalent in South Africa.

Although some have argued in favour of EVs due to their lower cost per kilometre, the EV premium is still significant in South Africa.

Many are quick to blame high import costs for South Africa’s EV prices, but this is not the full story.

Although EVs imported from Europe have a higher import duty than regular internal combustion engine (ICE) models — 22% vs 15% — those imported from other countries like China do not.

The main reason EVs are still substantially more expensive in South Africa is the same as in other countries — high manufacturing and component costs.

EVs use expensive lithium-ion batteries and don’t have as well-established production lines as ICE cars.

MyBroadband found the average price difference between three pairs of comparable electric and petrol models from BMW and Volvo works out to 38%.

The table below compares the prices of three popular EVs and their petrol-powered equivalents.

Calculating how long it would take to make up the cost difference between an EV and a petrol car through fuel savings is complex.

Unlike constantly increasing electricity prices, fuel prices can fluctuate greatly and are not guaranteed to move upwards or downwards in the coming years.

A clear illustration of this was how the average fuel price in 2020 was cheaper than in 2019 due to much lower demand amid the Covid-19 pandemic.

In 2022 and 2023, the prices were again greatly influenced by the Ukraine-Russia war.

Fuel prices will also be impacted by the adoption of EVs, which will lead to lower petrol demand.

However, experts reckon that OPEC will keep oil prices high by constraining production so the prices won’t come crashing down.

In light of this uncertainty, we calculated potential fuel costs for each of our three petrol models using three different fuel expenditure scenarios — one in which the price remains the same as in October 2023, one in which the average price goes up to R30 per litre, and another in which it declines to R18.

According to Numbeo, the average South African motorist travels 44km per day, working out to about 16,060km per year.

The table below shows how much the annual petrol expenditure would be for the three chosen models based on each scenario.

Unlike fuel prices, electricity prices have only gone one way in South Africa for well over a decade — up.

Based on current electricity prices, the first year of energy expenditure will be less than a third of what motorists would have spent on the equivalent petrol-powered model.

The Volvo is the most energy-efficient of the three cars and has the biggest price-per-kilometre advantage over its petrol-powered equivalent.

When using Johannesburg’s Block 2 prepaid electricity tariff, the first year’s savings would be around R22,633 when using the Volvo XC40 Recharge Single Motor instead of the XC40 B4 Ultimate Dark.

That saving will likely decrease over the next few years due to electricity price hikes, however.

Even when assuming the price remains the same — which would be impossible given Eskom’s current predicament — the total saving over 10 years against the current fuel price would be R226,333.20.

To make up the cost difference with its petrol-powered equivalent would take roughly another three years.

If one were to assume the average price of petrol goes up to R30 per litre, the time to make up the cost difference would drop to between 10 and 11 years.

Several other factors could radically change our calculations and reduce the period to pay off the EV premium.

Firstly, if you charged your car with your own solar power, then the effective savings would be much greater.

Secondly, the maintenance costs of EVs are substantially cheaper than petrol or diesel cars.

BookMyGarage has estimated the cost of servicing an EV will be around 43% less than an equivalent petrol model.

Wear-and-tear items on EVs are generally limited to tires and brakes, while other components like parts of the suspension, hoses, headlamps, and taillights would only need replacing when damaged.

While a maintenance or service plan will help minimise the impact of this difference for a few years, the running costs of a petrol or diesel model will increase drastically after this period.

In addition, EV prices are expected to come down significantly as the industry begins benefiting from economies of scale.

The Volvo EX30, GWM Ora Cat, and BYD Atto 3 are three new models all priced below R800,000.

These care are priced much more closely to petrol and diesel vehicles with similar power and specifications.

---

Now read: Big questions about R225,000 made in South Africa electric car