The UK is in the middle of a slow but steady switch from petrol and diesel cars to electric. The headline question for most drivers is simple: which is actually cheaper to own over five years? The honest answer is that it depends — on your annual mileage, where you can charge, whether you buy or lease, and how long you plan to keep the car. This article runs through the real cost building blocks so you can compare like for like.
Sticker prices for new electric cars have come down sharply over the last three years, particularly in the small and compact crossover segments. Mid-spec EVs are now broadly competitive with their petrol equivalents, and used EV prices have softened considerably as ex-lease cars hit the market. That said, most EVs still carry a slight premium up front, often offset by lower running costs.
PCP and lease terms tend to favour EVs because of strong manufacturer subsidies and salary sacrifice schemes. If your employer offers an electric car salary sacrifice, the income tax and NIC savings combined with very low Benefit in Kind rates can make an EV cheaper per month than a much smaller petrol car.
The single biggest variable in EV running costs is where you charge. A typical UK home overnight EV tariff in 2026 is around 7 to 10p per kWh, which works out at roughly 2 to 3p per mile for an efficient EV. A 50mpg petrol car at £1.40 per litre runs at about 13p per mile. Public rapid charging at 60 to 79p per kWh closes that gap dramatically and can cost more per mile than petrol.
If you can charge at home or at work, the savings on fuel typically run to £700 to £1,500 a year for an average mileage driver. If you rely on rapid public charging, the savings shrink towards zero or even invert.
From April 2025, electric cars are no longer exempt from Vehicle Excise Duty. They pay the standard rate plus the expensive car supplement where the list price is above the threshold. EVs still benefit from much lower Benefit in Kind rates as a company car, currently in the low single digits compared to 25 to 37 percent for many petrol cars.
Insurance for newer EVs has historically been higher than for equivalent petrol cars due to repair complexity and the cost of replacement battery packs after collisions. The market is normalising as repair networks mature, but it remains worth getting comparable quotes before committing.
Servicing on EVs is simpler — no oil changes, fewer wear parts and regenerative braking that extends pad life. Tyre wear can be higher because EVs are heavier, especially with one-pedal driving styles.
Depreciation has been the most volatile area for EVs in the past two years. Falling new prices and oversupply of nearly-new lease returns have pushed used values down sharply. Established models from premium brands and small efficient EVs have generally held up better than larger SUVs.
If you plan to keep the car for 7 years or more, depreciation matters less than running costs and you are likely to be ahead with an EV. If you change cars every 3 years on PCP, the monthly figure is what matters and it is worth running real quotes side by side rather than relying on rules of thumb.
A home charger usually costs £800 to £1,200 fitted. The EV chargepoint grant is no longer universally available but still applies for renters, leaseholders, flat owners and certain landlord installations. Local authority and energy supplier promotions also pop up regularly.
Pair the charger with a smart EV tariff and the savings stack up quickly. If a home install is genuinely impossible — for example on-street parking with no cable management — the maths becomes much harder and a hybrid may be the more pragmatic choice for the next few years.
Premiums are normalising but EVs are still typically 5 to 15 percent more expensive to insure than equivalent petrol cars.
Yes. From April 2025 EVs pay standard rate VED and the expensive car supplement applies above the list price threshold.
For drivers without home charging and high motorway mileage, a self-charging or plug-in hybrid often gives the best blend of running costs and convenience.
Updated 2026 UK Vehicle Excise Duty bands explained: first-year rates, standard rates, the expensive car supplement and the new EV charges from April 2025.
Read guidePlain-English UK guide to EV home charging in 2026: 7kW vs 22kW, smart tariffs, OZEV chargepoint grant, installation costs and real-world running costs.
Read guidePlain-English UK guide to car running costs in 2026: fuel, insurance, tax, MOT, servicing and depreciation explained, with realistic annual totals by car type.
Read guide