The latest energy price cap came into effect on January 1^st 2025 and will impact upon 26 million homes in England, Scotland and Wales. This dictates the maximum price that energy companies can charge householders for their gas and electric consumption, and is changed by Ofgem every three months. The UK is set for an average 1.2 % increase in electricity costs as a result of the new price cap, so what is the impact on electric vehicle (EV) drivers? And are the benefits of driving an EV through a salary sacrifice car scheme still valid?

From January 1^st householders will be paying an average of £24.86 per kWh for their electricity, and this will result in the average cost of recharging a 60 kWh EV battery rising from £14.70 currently to £14.91. Over a year this is a significant rise, however it is important to note that electricity costs can go down again, and EV driving still represents a more cost-efficient way of driving. And if you can, charging from home can ensure you continue to enjoy the best possible charging rates.

Driving an EV still offers considerable cost benefits compared to other vehicle types

The unit costs of petrol and diesel can rise and fall, just like electricity costs. However, this study in the Times, based on the unit costs as of September 2024, shows that the cost per mile of home charging an EV (6p per mile) compared favourably to both petrol and diesel costs per mile (16p and 17p respectively). This differential is barely affected by the recent price cap change and that is always likely to be the case.

Furthermore, EVs are far more energy efficient than fossil fuel vehicles in terms of the energy used to get from A to B. In an EV almost 100% of the energy in the battery is used to move the vehicle, while in a petrol or diesel vehicle a lot of chemical energy is lost in the mechanical process, before the car even moves. Nevertheless, the relative costs of electricity, petrol and diesel continue to show the advantages of driving an EV, and these advantages are greater if you can commit to as much home charging as possible.

How to save money when charging your EV

The average unit price of public charge points is 56p per kWh, which is almost double what the energy price cap is with the latest changes effective from January 1^st 2025 to March 31st. So even with this increase related to the energy price cap, it is much cheaper for EV drivers to charge at home, and this can be improved further by:

• Charging overnight on cheaper tariffs
• Installing a smart charger which tracks charge requirements and unit costs and schedules charging to maximise cost savings
• Monitoring driver behaviour to reduce energy usage, such as reducing harsh braking and rapid acceleration.

Experts anticipate that the energy price cap from April 2025 onwards will fall again, and will therefore benefit EV drivers, but in the meantime it is recommended that EV drivers on a salary sacrifice car scheme maximise their domestic charging, rather than paying for public charging, i.e. on-street, in supermarkets, service stations and retail/leisure centres. This still represents a major saving compared to the unit costs of running a petrol or diesel vehicle and of course, the other environmental and cost benefits still exist for the employee also. Furthermore, when the alternative is buying a vehicle, the benefits of leasing a vehicle through a salary sacrifice car scheme still make complete financial sense.

If you have any additional concerns about the financial implications of the energy price cap that are not addressed here, then you can contact your scheme manager who can explain how the energy price cap works, and what it means for you.