How Much Can You Save with an All-Electric Car?

Can you save money each year by driving an all-electric car? The answer used to be a clear and strong "yes"—but now? The government grant (which used to save motorists thousands off the purchase price of a new EV) has been scrapped. And electricity prices are through the roof. So now the answer is not so obvious. Let's take a closer look.

• Vehicle tax savings
• Fuel savings
  • Fuel savings for different mileages

Annual Savings with an Electric Car

In fact, the typical petrol driver could still save close to £750 in 2023 and again 2024 in annual running costs by swapping to an electric car, through reduced vehicle taxes and fuel costs. (Note, at the beginning of 2022, the annual savings were closer to £1,000 per year but this has changed with electricity prices rising more than petrol prices in 2022 and 2023 as well as changes to road taxes for EVs.)

Over 5 years, we estimate that an electric car driver with typical mileage can save around £3,250 compared to driving a petrol car, in terms of tax and fuel savings.

*(Note: the £355 tax savings listed above is derived from no tax being paid for the EV in 2023 and 2024, assuming they are saving the £190 for a new car in year one in 2023 and £165 in 2024, totaling £355.)

So even though the government grant that helped motorists save on the initial purchase of a new electric car has been scrapped, and electricity prices are through the roof, switching to an EV can still be economical in many regards.

Note: Right now, electric cars don't pay road tax. But this will change from 1 April 2025, when electric cars are scheduled to pay the same as petrol and diesel cars. There will only be a few years left of the road tax advantage for electric cars.

Vehicle Tax Savings with an Electric Car

Most zero emissions electric cars don't pay any vehicle road tax, saving you hundreds or thousands of pounds over the years. Road tax is largely a function of CO2 emissions—the lower the emissions, the lower the road tax. List price of the car plays a role, too.

Road tax is highest in the first year—with the highest-emitting petrol cars charged as much as £2,365 in the first year. Rates in subsequent years drop, but vehicles with emissions (that is, all cars that aren't fully electric) will still need to pay between £155 and £520 per year from year 2 onwards. Over the first 5 years of a car's life, this means cars that aren't fully electric will be charged between £620 and £4,445 in road tax in total, depending on the list price and emissions level of the car.

As mentioned above, electric cars are meant to start paying the same rates as petrol and diesel vehicles from April 2025.

See the tax data section below for a full breakdown of road tax for different types of vehicles by year, list price, fuel type and emissions.

Tax savings for a typical car

With an average emissions of 130 g/km, most petrol cars on the road fall into the £190 vehicle tax band for the first year, then £165 in Year 2 and beyond. Over five years the typical internal combustion engine (ICE) car tax tallies to £850 (£190 plus 4 times £165).

Starting in 2025, electric vehicles will start paying the same. So, over the next five years of driving, a typical motorist buying a new electric car today could theoretically save around £355 in vehicle road tax alone (they would save the tax of approximately £190 in year one e.g. 2023 then £165 in 2024).

Alternative fuel cars (e.g. hybrids, bioethanol and liquid petroleum gas) would provide a bit of tax savings relative to a petrol car (£10 a year) just until 2025, but the savings are pretty small relatively.

Fuel Savings with an Electric Car

A driver can save around 9 pence per mile driving an electric car compared to an ICE car if they charge their EV at home (this is down from 11.8p of savings per mile early in 2022). For the typical petrol-vehicle driver who logs an average mileage of around 6,300 miles a year, the fuel savings for an EV can add up to around £579 per year. For example, someone driving 6,300 miles per year would spend around £567 per year on home-charging electricity costs vs £1,146 on petrol:

The average cost to charge an electric car is around 9p per mile (assuming the cost to pay for the electricity at home is 30 pence/kWh, which is the average unit cost of electricity). This is around 50% cheaper than the average cost of petrol per mile of driving (around 18p per mile).

Comparing EV vs. petrol fuel spend for different mileage amounts

What if you don't drive the average 6,300 miles a year—how much can you save on fuel then? To get a better idea of how much you can save on fuel with an EV, we've run the numbers across a range of mileages, from 1 mile up to 10,000 miles. Regardless of the mileage, petrol cars typically cost 2X as much to fuel compared to EVs.

Per mile, a typical EV costs around 9p to fuel while a typical petrol car costs around 18p.

Over 1,000 miles this adds up to savings of around £92.

Over 10,000 miles the savings would grow to around £919.

The more someone drives, the more they can save by driving an EV. Those clocking fewer miles will see less significant savings.

Government Grants to Reduce Purchase Price

To motivate drivers to buy low-emission cars, the government used to offer grants which effectively reduced the purchase price of a new car. The car dealer would reduce the price by the amount of the grant, so you didn't need to do anything extra to get the grant money—you simply paid less for a new electric car.

Unfortunately, the grant is no longer available for regular passenger cars. It is still available for eligible motorcycles, mopeds, vans, trucks and taxis. You can read more about the current EV government grants here.

FAQs

Sources

Road Tax Data

Prices below are based on a single 12-month payment, until April 2025 when the law changes for electric cars.

EV vs. Petrol Car: Vehicle Tax Rates