Prices cut, but are EVs more economical than petrol cars?

Insurance for EVs is more expensive than for ICE cars, although this gap is narrowing.
Insurance for EVs is more expensive than for ICE cars, although this gap is narrowing.


  • With the price cuts, the time taken to recover the extra upfront cost of an EV has reduced.

Tata Motors recently slashed the price of its electric cars Tiago and Nexon by 70,000 and 1.2 lakh, respectively. Tiago EV now starts at 7.99 lakh (ex-showroom), whereas the starting price of Nexon is 14.49 lakh.

Following the price cuts, Tiago has become the second cheapest electric car in India, just behind the compact MG Comet, which starts at 6.99 lakh.

These price cuts have made electric cars more affordable for Indian consumers, especially since the high upfront cost on electric vehicles (EVs) can be a deterrent for those looking to switch to the greener option.

Moreover, with the price cuts, the time taken to recover the extra upfront cost of an electric car will reduce when compared to regular internal combustion engine (ICE) vehicles that run on fossil fuels.

However, when comparing EVs with ICE cars, it’s essential to consider their long-term savings on fuel and maintenance.

Earlier, Mint did a cost analysis of the overall ownership of Tata Nexon (XZA plus) petrol variant and the Nexon EV Prime. At the time of analysis, the difference in the on-road purchase price of the two models was 4.4 lakh.

However, Nexon EV Prime showed compelling long-term savings despite higher initial costs. The analysis showed that car owners who drive about 30km daily will recover the higher upfront cost in about six-and-a-half years.

This story compares Tata Tiago XTA with Tata Tiago EV XT. The former is priced at 6.95 lakh, while the Tiago EV XT Medium Range (250 km range) costs 8.99 lakh. The EV model also incurs higher insurance costs, but allows for lower registration charges.

To be sure, the running costs—the charges incurred on fuel and other expenses—for an EV have reduced over a period of time. This can be understood by looking at the running costs in terms of distance or time. A comparison over 100,000km or 6 years present a contrasting picture.

The XTA incurs higher insurance premium, service and fuel costs, totalling 3.73 lakh for covering 50,000km, compared to the EV’s 1.06 lakh. This indicates that EVs offer considerable savings in running costs over time, making it a potentially more cost-effective choice in the long run despite the higher upfront cost.

In comparison with our previous story the time taken to offset the extra upfront cost of an EV has improved significantly. To understand this better, let’s consider different average annual distances covered by the Tata Tiago EV XT and the Tata Nexon Prime (XZ Plus) EV.

For the Nexon EV, it took 4.2 years to break even with a daily commute of 40km, while for the Tiago EV, it takes only 3.42 years for the same distance. Similarly, for a daily commute of 30km, the breakeven time decreased from 6.5 years for the Nexon EV to 4.57 years for the Tiago EV, and for 15km daily, it decreased from 13 years to 6.85 years. (See graphic)

This improvement can be attributed to several factors. First, the Tiago EV has a lower upfront cost compared to the Nexon EV, making the initial investment more manageable. Second, the Tiago EV’s lower running costs, including cheaper battery replacement costs—after 8 years or 160,000km, contribute to the quicker breakeven.

Additionally, advancements in EV technology and infrastructure may have played a key role in reducing time to offset the upfront cost and a lower overall cost of ownership over the years.


(Graphic: Mint)
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(Graphic: Mint)
(Graphic: Mint)
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(Graphic: Mint)




“Insurance costs for EVs compared to ICE cars vary due to factors like the high cost of EV batteries and specialized repair needs. Repairing EVs, with their advanced technology, is generally more expensive, including battery and electrical component replacements.

Despite this, EV insurance premiums are competitive. The process for filing insurance claims for both EVs and ICE cars is similar, with options for digital self-inspection or traditional surveyor assessments." says Mayur Kacholiya, head–motor product, Digit General Insurance.

Insurance for EVs is more expensive than for ICE cars, although this gap is narrowing. Factors like limited historical data on EV claims, limited expertise and the high cost of repairing components such as battery packs and electric motors contribute to the initial higher premiums for EVs.

The Insurance Regulatory and Development Authority of India (Irdai) introduced a 15% discount on premiums for EVs in 2022-23, further bridging the cost disparity. As more EVs hit the road and repair costs decrease, the cost difference between insuring an EV and an ICE car is expected to diminish.

Charging and infrastructure

Charging an EV in India varies in cost and convenience. Public stations charge 5-15 per kWh, with fast chargers being more expensive. Home charging, on the other hand, costs 2-9 per kWh if the infrastructure is available for this at your residential complex. Home charging is cheaper because domestic power tariffs are lower compared to a commercial setup though it takes more time to charge your EV.

Additional fees may apply, like subscriptions and parking, at public charging stations. The number of such stations are increasingly coming up across the country, offering various charging speeds at different price points. Yet, if you can install a charging station at your residence, home charging remains the most cost-effective option.

Limited charging stations outside major cities makes it more challenging to use EVs for long trips. Slow charging speeds further hinders convenience. Lack of awareness and expertise in servicing EV batteries, limited EV service centres in comparison to those for ICE cars, residential complexes without charging facilities adds to the challenges.

However things have improved over a period of time with technological advancements and concepts like battery swapping centres. Also, government initiatives like the FAME II scheme are making EV ownership more cost effective and convenient.

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