EV vs Combustion Car Running Costs: A Comprehensive Financial Breakdown
In the Autumn Budget of November, Chancellor Rachel Reeves introduced a new electric vehicle excise duty of up to 3p per mile. This measure aims to double road maintenance funding and allocate an additional £200 million for public charging points, yet it raises costs and concerns for electric car owners. While EVs are environmentally beneficial, their appeal often includes financial savings, such as avoiding petrol or diesel purchases and lower long-term maintenance due to fewer moving parts. Tax incentives for reduced carbon emissions further enhance savings, but costs like charging, servicing, insurance, and the new duty must be considered. This analysis breaks down the financial implications of switching to an EV compared to a combustion engine car.
Purchase Price Comparison
When buying a vehicle, EVs generally command higher prices, partly because combustion engine cars are more prevalent. Prices vary by model and condition. According to the RAC, the cheapest new EVs in the UK start at around £21,000 after government grants, while used models can be found from £4,500. High-end options include the Porsche Taycan at nearly £160,000 and the Tesla Model X at £99,000. In contrast, the average petrol car on AutoTrader costs £14,850, with the Dacia Sandero as the cheapest new model at £14,715.
Charging Costs for EVs
Charging expenses depend on battery size and location. As of January 2026, average pay-as-you-go rates on the UK public network are approximately 54p per kilowatt-hour (kWh) for standard chargers (about 16p per mile) and 76p per kWh for rapid chargers (about 23p per mile). Home charging is typically cheaper, especially with EV-specific tariffs offering lower nighttime rates. Using the average UK electricity price of 27p per kWh and an efficiency of 3.5 miles per kWh, EDF Energy estimates a cost of 7.7p per mile. Comparatively, unleaded petrol averages £1.36 per litre, costing 19p per mile for a car with 36 MPG, while diesel at £1.43 per litre costs 13p per mile for a car with 43 MPG.
Maintenance Expenses
EVs require less frequent servicing than petrol or diesel cars; for example, Renault recommends intervals of 18,000 miles for the Zoe versus 9,000 miles for its petrol models. Mechanic visits can be cheaper due to fewer parts, though battery failure out of warranty (typically eight years) could incur up to £15,000. EVs need an annual MOT after three years, priced similarly but potentially cheaper without emissions tests. Wear-and-tear items like filters, brake pads, and tyres still apply. A CAP HPI study found EV maintenance costs 23% less over three years and 60,000 miles, with smaller vehicles like the Renault Zoe costing £1,100 versus £1,497 for a Vauxhall Corsa, a 35.7% difference.
Taxation on Vehicles
EVs are no longer road tax-exempt in the UK. Tax rates depend on registration date: cars registered after April 1, 2025, pay £10 in the first year, then £195 annually; those registered between April 1, 2017, and March 31, 2025, pay £195; and those registered from March 1, 2001, to March 31, 2017, pay £20 yearly. Rachel Reeves's Budget adds an average £250 annually from 2028, with a charge of 3p per mile for EVs and 1.5p for plug-in hybrids. Combustion engine cars registered between April 1, 2017, and March 31, 2025, pay a standard £195 annually, but CO2 emissions can increase first-year tax up to £5,490 for high-emission models. Cars over £40,000 list price registered after April 1, 2025, incur a £425 supplement from years two to six. Older cars have tax bands based on CO2 emissions or engine size.
Insurance Costs
Insurance is one area where EVs can be more expensive. The average annual premium for an EV is £587, compared to £501 for petrol and £538 for diesel cars, according to MoneySuperMarket. Higher premiums stem from EVs' often higher purchase prices, costly battery replacements, and limited availability of parts and skilled technicians.
Congestion and ULEZ Charges
Driving in London is cheaper with an EV, as they are exempt from the Congestion Charge and Ultra Low Emission Zone (ULEZ) charge. Drivers must register with Transport for London at a £10 annual fee, saving £27.50 daily compared to non-ULEZ compliant cars.
Overall, while EVs involve higher upfront and insurance costs, they offer savings in charging, maintenance, and urban charges, making them a financially viable option for many drivers in the UK.
