Electric Cars vs Petrol Cars: Complete Cost Comparison Guide For 2025
The age-old question in the automotive industry for the past decade has been: what's best - electric cars or petrol/diesel cars? Electric cars are undoubtedly the future. In the UK, the sale of new petrol and diesel cars will cease by 2035. This adjustment aligns the UK with the EU and other global markets, mandating that all new cars and vans must be electric by 2035. This directive forms a crucial part of the broader initiative aimed at combating climate change within the UK and on a global scale. There has been a surge in demand for electric cars over recent years: EVs represented 1.6% of all new car registrations in 2019, but in 2024 they represented 17% of all new car registrations.
They are also unquestionably greener, but are they cheaper to run? What are the positives and negatives of both types of cars? This post aims to outline the comparison between electric cars and ICE cars (internal combustion engines) and resolve the debate over which is superior. It serves as a guide for transitioning to an electric car, particularly aimed at individuals who identify as petrol enthusiasts.
The Upfront Costs: Electric Vs Petrol
Purchasing an electric car outright can be very expensive; they are typically between 20% and 40% more expensive than new petrol cars. The average price of an electric car currently sits between £48,000 and £50,873, with the cheapest EV available being the tiny two-seater Citroën Ami, which has a range of 46 miles and is priced at £7,695. In contrast, the average medium-sized petrol car costs £21,964, almost £28,000 less than purchasing a brand-new EV.
Purchasing an electric car outright can be very expensive; they are typically between 20% and 40% more expensive than new petrol cars. The average price of an electric car currently sits at £49,818, with the cheapest EV available being the tiny two-seater Citroën Ami, which has a range of 46 miles and is priced at £7,695. In contrast, the average medium-sized petrol car costs £21,964, almost £28,000 less than purchasing a brand-new EV.
The second-hand electric vehicle market is booming, offering affordable opportunities for drivers to go electric. The UK used electric car sales hit a record high in the summer of 2024, with 53,423 EVs sold – a staggering 57% year-on-year increase.
It is important to note that although the initial cost of buying an electric car is higher than a petrol alternative, government grants and tax savings initiatives like The Electric Car Scheme make electric cars more cost-efficient than petrol cars. Employees who make use of their electric car salary sacrifice benefit can save between 30% and 60% on any brand-new electric car. You can also include service, maintenance and breakdown cover package with your electric car which will save you even more money in the long run.
Cost Of Running An Electric Car Vs A Petrol Car
This image is sourced from https://www.autocar.co.uk/car-review/volkswagen/id-3
When you're considering purchasing or leasing a new vehicle, it's crucial to factor in the average running costs based on your driving habits.
One significant advantage of driving an electric car is its substantially lower running costs compared to petrol or diesel alternatives. Powering an electric motor costs between 3 and 5 times less per mile than petrol, potentially saving drivers between £1,000 and £1,500 annually for a 10,000-mile journey, making them way more efficient. However, these savings depend on where you charge, with home charging typically cheaper than motorway charging, as well as your energy tariff.
In the UK, petrol and diesel prices have fluctuated in recent years. For instance, the estimated annual cost to fill a fuel tank for a Ford Focus is £1,230, while charging a Volkswagen ID.3 costs around £630 annually. This equates to approximately £600 in potential savings on refuelling costs per year. The table below breaks down this information, showing the powertrain, approximate cost per mile, and estimated annual fuel cost for comparison.
| Make & Model | Powertrain | Approximate Cost per Mile | Approximate Annual Fuel Cost |
|---|---|---|---|
| Volkswagen ID.3 | Electric | 7.8p | £780 |
| Ford Focus | Diesel | 14.5p | £1,450 |
We've created a handy calculator that lets you compare the costs of driving a petrol car with the costs of leasing an electric car through a salary sacrifice scheme.
Petrol Or Electric: What’s More Efficient?
Electric vehicles are significantly more efficient at converting energy into motion than traditional petrol or diesel cars. While conventional vehicles typically convert only 20-35% of their fuel energy into actual movement, EVs can convert around 60-80% of electrical energy into power at the wheels. This superior efficiency means that even when accounting for electricity generation and transmission, EVs use less total energy to travel the same distance. Plus, features like regenerative braking, which captures energy usually lost during braking to recharge the battery, make EVs even more efficient in stop-start traffic. For UK drivers, this translates to lower running costs - charging an EV can cost as little as 3p per mile at home, compared to 19-21p per mile for refuelling petrol or diesel vehicles.
The Long-Term Value: Are Electric Cars More Economical Than Petrol?
When comparing electric vs petrol cars, the long-term financial benefits of choosing an EV become increasingly clear. While the initial purchase price of an electric car may be higher, the total cost of ownership over time often makes electric cars cheaper to run than their petrol counterparts. Let's break down the long-term savings when choosing electric over petrol:
Differences In Repairs And Maintenance
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Although electric cars typically come with a higher initial price tag compared to their petrol or diesel counterparts, they boast lower maintenance requirements and reduced servicing costs. Because of the electric motor, there are fewer moving engine parts which means electric cars incur approximately half the servicing, repair, and maintenance expenses of petrol vehicles, potentially saving drivers between £600 to £1,200 annually. On average, servicing an electric car costs £165, while a petrol car requires around £205, representing a 24% higher servicing cost for petrol vehicles.
Concerns about battery capacity and battery degradation often deter potential electric car buyers, particularly due to the perceived high cost of battery replacement. Modern electric car batteries are built to last, typically maintaining strong performance for up to 20 years or 186,000 miles. While battery capacity gradually decreases over time, most EV owners only experience a 10-15% reduction in range after years of use. However, in reality, replacing specific sub-optimal cells is more common than replacing the entire battery. In the unlikely event that a complete battery replacement is necessary, the average cost is £7,235. We would expect this figure to change as battery capacity for EVs improves (which will subsequently diminish range anxiety for newer drivers!) For added peace of mind, manufacturers provide comprehensive battery warranties, usually covering 8 years or 100,000 miles.
Regarding other maintenance aspects, electric cars follow the same maintenance procedures as petrol cars. Regular maintenance, such as ensuring recommended tyre pressure, is crucial, as electric cars tend to be heavier due to the battery weight, which can accelerate tyre wear.
What About Tax?
Road tax, known as VED or car tax, is an annual payment imposed on vehicles that are used or parked on public roads in the UK. It is calculated based on emission levels and those with higher emission levels will pay more because they contribute to more pollution and therefore cause harm to the environment.
Currently, drivers of electric cars are exempt from paying road tax because these vehicles do not produce harmful emissions. This can save over £500 per year compared with cars with high carbon emissions. However, from the 1st of April 2025, EV drivers will have to pay VED (or road tax) for the first time in the UK. They will be liable to pay the lowest first-year rate of VED which is currently £10 per year. From the second year of registration, they will then have to pay the standard rate of £190 per year. You can read more about the changes by visiting the Government website.
Benefit-in-Kind: Petrol Vs Electric
The Company Car Tax is also known as the Benefit-in-Kind (BiK) tax for cars and is calculated based on the following three factors.
First, calculate the level of CO2 emissions produced by a car; an electric car will have none because it doesn’t produce any emissions. Second, consider the P11D value of the car, which represents its on-road price. Third, take into account your personal tax bracket.
What Is The BiK Tax For Petrol And Diesel Cars?
The BiK tax levied on highly polluting internal combustion engine cars (i.e., petrol and diesel cars) can go as high as 37%.
The low BiK rate has opened up the potential for drivers to make significant savings when buying an electric car, whereas petrol and diesel cars are becoming less affordable to run due to their higher BiK rate and running costs. Interestingly, hybrid cars do not enjoy a BiK rate as low as electric cars, some plug-in hybrid cars pay a BiK rate as high as 12%.
What Is The BiK Rate For Electric Vehicles?
Jeremy Hunt, The Chancellor of the Exchequer, shared in the 2024 Spring Budget announcement that he's keeping company car tax rates lower for electric vehicles. He's also made a promise to limit tax rate increases to just 1% per year for three years, starting in 2025. This means BiK tax will reach 5% by 2028.
The graphic below shows the monthly cost breakdown for the Nissan Ariya if you were to salary sacrifice it via The Electric Car Scheme. You can see that the average Benefit-in-Kind tax across the three-year lease with 10,000 miles per annum and a 40% tax bracket will cost approximately £55 per month. This would be significantly higher for a petrol or diesel car of a similar size. Salary sacrifice has been designed to accelerate the adoption of electric vehicles, to push the UK closer to green initiatives.
| Salary Sacrifice Calculations | Nissan Ariya Electric | |
|---|---|---|
| Average Monthly Salary Sacrifice (inc VAT) | £584 | |
| Employee Income Tax Savings | - £234 | |
| Employee National Insurance Savings | - £12 | |
| Average Benefit-in-Kind Tax Over Term | £55 | |
| Net Cost / You Pay | £393 |
You can learn more about BiK tax by visiting our dedicated blog: Electric Car Benefit-in-Kind (BiK) Salary Sacrifice Guide.
Electric Car Tax Bands & BiK Rates
The table below shows how future BiK tax bands will work based on your vehicle’s CO2 emissions. At The Electric Car Scheem, we are working towards an assumption that the BiK rate in 2028/9 will increase by one percentage point year-on-year to 6% and the same will happen in 2029/30 (increasing to 7%).
| CO2 (g/km) | Electric Range | 2023 - 2024 (%) | 2024 - 2025 (%) | 2025 - 2026 (%) | 2026 - 2027 (%) | 2027 - 2028 (%) |
|---|---|---|---|---|---|---|
| 0 | NA | 2 | 2 | 3 | 4 | 5 |
| 1 - 50 | > 130 | 2 | 2 | 3 | 4 | 5 |
| 1 - 50 | 70 - 129 | 5 | 5 | 6 | 7 | 8 |
| 1 - 50 | 40 - 69 | 8 | 8 | 9 | 10 | 11 |
| 1 - 50 | 30 - 39 | 12 | 12 | 13 | 14 | 15 |
| 1 - 50 | < 39 | 14 | 14 | 15 | 16 | 17 |
You can view the rest of the table, where CO2 increases to 170+ g/km here.
Is There A Difference In Car Insurance Prices?
Typically, car insurance for electric cars is more expensive than for petrol cars. This is due to the higher value of electric cars, making them more expensive to replace in the event of a write-off - claims for EVs are 25.5% more expensive and their repair times can be up to 14% longer. According to NimbleFins, the average cost of EV car insurance is £654 for the most popular models in the UK, with quotes ranging from £400 to £1,000 per year. Insurance quotes are influenced by various factors such as age, gender, location, mileage, and more.
In the last year, insurance costs for all types of cars have gone up. This increase is attributed to several factors, such as higher prices for used cars and spare parts, a shortage of labour, longer vehicle loan durations, a surge in personal injury claims, and a decline in insurers' investment returns. You can learn more about EV insurance rising in our blog: Why Is Electric Car Insurance So Expensive?
With The Electric Car Scheme and through salary sacrifice, you can access car insurance which allows you to save 30-60% on that too!
Congestion Charges & Parking: Electric vs Petrol Cars
There are smaller, everyday positives to driving an electric car like savings on congestion charges and parking chargers that cannot be applied to petrol alternatives.
Congestion Charges
The Ultra Low Emission Zone, otherwise known as ULEZ, extended its reach to all London Boroughs (excluding the M25). There a number of ULEZ zones around the UK with some outlined in the table below.
| Cities | Daily Charge | Active |
|---|---|---|
| Bath | £9 for small vehicles, £100 for large vehicles | 24/7 |
| Bristol | £9 for small vehicles, £100 for large vehicles | 24/7 |
| Edinburgh | £60 | 24/7 |
| Glasgow | £60 | 24/7 |
| Oxford | £2 for ULEZ vehicles, £4 for low emission vehicles, £10 for non-compliant vehicles | 7am - 7pm daily |
| Newcastle & Gateshead | £12.50 for small vehicles, £50 for large vehicles | 24/7 |
Within this designated area, drivers of older vehicles face a daily charge, a measure implemented to curb the high air pollution stemming from older cars in densely populated areas. If your vehicle doesn’t meet ULEZ emission standards and isn’t exempt, you will have to pay a £12.50 daily charge to drive within the zone. This is something that those driving ICE cars will have to pay but EV drivers are exempt under the Cleaner Vehicle Discount until 25th December 2025.
Parking Charges
In London, some boroughs offer free annual residential parking permits for electric car drivers. These include:
This image is sourced from https://www.motorpasion.com/futuro-movimiento/esta-ciudad-no-tiene-sola-calle-donde-aparcar-gratis-coches-electricos-se-libran
Barking and Dagenham,
Hammersmith and Fulham,
Newham,
Westminster,
Hounslow,
Redbridge,
Richmond upon Thames,
Kensington and Chelsea.
Some parking companies also offer subsidised parking for electric cars in London like RingGo, which offers a 50% discount for fully electric vehicles in the London Borough of Hammersmith and Fulham, making parking 50% cheaper for electric vehicle drivers when compared to petrol/diesel owners.
Workplace Benefits
Through salary sacrifice schemes like The Electric Car Scheme, employees can save between 30-60% on a new electric car, making the switch to electric significantly more affordable than traditional petrol car ownership. When combined with the current 2% Benefit-in-Kind rate (compared to up to 37% for petrol cars), the tax advantages make electric cars a particularly cost-effective choice for company car drivers.
Resale Value
A crucial long-term consideration that we haven't yet discussed is resale value. While the used electric car market is still evolving, many electric vehicles are holding their value well, particularly as awareness of their benefits grows and charging infrastructure improves. The increasing adoption of EVs and the upcoming 2035 ban on new petrol car sales are likely to support strong resale values for electric vehicles in the future.
Hidden Costs And Savings
While the major costs of switching to an electric car are well documented - from the purchase price to charging costs - there are several less obvious financial factors to consider. Some of these hidden elements can lead to unexpected savings, while others might require initial investment for long-term gain. Understanding these less apparent costs and benefits is crucial for making an informed decision about switching to an electric vehicle.
Home Charger Installation
Installing a home charger is an initial investment that many don't factor into their EV calculations, but it can lead to significant long-term savings. A typical home charger installation costs between £500 to £1,000, but this can vary based on your property's electrical setup and the type of charger you choose. The good news? You can include a home charger in your salary sacrifice agreement through The Electric Car Scheme, allowing you to save 30-60% on the installation cost too.
You should install a home charger if you can because it will save you money in the long term and generally makes life easier because you don’t have to plan your charging as diligently! All you need to do is plug your car in overnight and it’ll be fully charged for the next morning! Although this isn't a fast charging solution, it’s perfect for charging your car over a long time.
Through The Charge Scheme, our latest initiative, employees can now salary sacrifice their EV charging costs and save 20-50% on all charging - whether that's at home, in public, or at work. This means the initial investment in home charging infrastructure becomes even more cost-effective over time.
Energy Tariff Changes
Switching to an electric car often prompts a review of your home energy tariff - and this can lead to unexpected savings. Many energy providers now offer specific EV tariffs with lower rates during off-peak hours, typically overnight. For example, some tariffs offer rates as low as 5p per kWh during off-peak times, compared to standard rates of 20-30p per kWh.
Here's what to consider:
Special EV-friendly tariffs often provide significantly cheaper night-time rates,
Smart chargers can be programmed to charge only during off-peak hours,
Some tariffs offer free charging periods during weekends,
Combining solar panels with EV charging can further reduce costs.
Workplace Charging Benefits
More employers are having workplace charging points installed, offering another layer of potential savings. This means you don’t have to worry about fast charging when on the go! When combined with salary sacrifice, workplace charging can provide substantial benefits:
Many employers offer free or subsidised charging at work,
Charging while parked at work reduces the need for home charging infrastructure,
Workplace charging can be included in your salary sacrifice arrangement,
Some employers participate in The Charge Scheme, providing additional savings on workplace charging.
Future Cost Considerations
Looking ahead, several factors could influence the cost of running an electric car:
Battery technology and battery capacity improvements are likely to reduce replacement costs,
The growing charging network should lead to more competitive public charging rates - meaning fast charging prices may increase,
Energy prices may fluctuate, but the efficiency of EVs provides some protection against rising costs,
Government policies continue to favour electric vehicles, potentially leading to additional savings opportunities,
Vehicle-to-grid technology could allow EV owners to return energy to the grid, creating a new revenue stream.
We're already seeing positive trends in these areas. For example, battery costs have fallen by over 80% in the past decade, and this trend is expected to continue. The expansion of the UK's charging network is also reducing "range anxiety" and making public charging more accessible and potentially more affordable through increased competition.
Lease An Electric Car Through The Electric Car Scheme
The Electric Car Scheme is an electric car salary sacrifice scheme that makes it easy for employees to access government tax incentives and save money on electric cars. Companies offer The Electric Car Scheme as an employee benefit to attract and retain talent whilst also boosting their environmental, social and governance goals.
In short, salary sacrifice is a financial agreement where an employee agrees to sacrifice part of their pre-tax salary in exchange for a non-cash benefit (in this case, an electric vehicle).
You can compare how much you could save by leasing an electric car through salary sacrifice schemes like The Electric Car Scheme compared to how much you would pay leasing a petrol car by visiting our Salary Sacrifice Calculator!
How Does Salary Sacrifice Work?
An employee selects an electric vehicle with a set budget, and the employer then leases the car on their behalf. The lease cost is then deducted from the employee’s gross salary, lowering their taxable income. This arrangement can lead to significant savings for the employee and employer because it reduces the amount of Income Tax and National Insurance that needs to be paid.
This is appealing because of the low Benefit-in-Kind tax rates for electric vehicles. This ultimately means employees can enjoy driving a new EV at a reduced overall cost to traditional car leases or purchases - it’s a win-win to accelerate the UK’s push to net zero. You can learn more about Benefit-in-Kind (BiK) by reading our blog dedicated to the subject.
What Are The Benefits Of Electric Car Salary Sacrifice?
As mentioned previously, an EV salary sacrifice scheme is advantageous for employees and employers. Here are some of the benefits of an electric car salary sacrifice scheme:
Save 30-60% on a brand-new electric car,
Include servicing, maintenance and insurance,
Reduce your carbon footprint,
Improve employee benefit offerings,
Boost ESG efforts as a company!
Leasing an electric car through The Electric Car Scheme is a win-win for both employees and employers. You can see how it works and some of the cars available to lease in the video below!
Last updated: 29/01/2025
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
