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 2026, a typical petrol driver could still save close to £500 in annual running costs by swapping to an electric car, through reduced vehicle taxes (particularly in the first year) and fuel costs. (Note, at the beginning of 2022, the annual savings was closer to £1,000 per year but this has changed with electricity prices rising more than petrol prices since then, as well as changes to road taxes for EVs.)

While a typical petrol car driver now spends approximately £1,052 per year on fuel, an EV driver charging at home on a standard tariff spends roughly £452–£550. For those able to switch to an EV-specific off-peak tariff (with rates as low as 7p/kWh), annual fuel savings can reach over £900.Over 5 years, we estimate that an electric car driver with typical mileage can save around £3,000-£3,300 compared to driving a petrol car, in terms of tax and fuel savings.

*Note: Tax savings from April 2025 onwards are £430 in year 1 (comparing typical petrol vs EV), but £0 in years 2-5, averaging £86/year over 5 years. And as of 1 April 2025, electric cars are no longer exempt from Vehicle Excise Duty (VED). Owners of zero-emission vehicles must now pay £10 in the first year, then the standard annual road tax rate of £195 per year from the second year onwards.

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.

Vehicle Tax Savings with an Electric Car

Under rules implemented in April 2025, new zero-emission cars now pay £10 in the first year, moving to the standard annual rate of £195 thereafter. It is also important to note that EVs with a list price exceeding £50,000 are now liable for the Expensive Car Supplement of £425 per year from their second year of registration for five years (making the total £620/year for years 2-6). This threshold is higher than the £40,000 threshold that applies to petrol, diesel, and hybrid vehicles.

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 £5,490 in the first year (a significant increase from previous years). Rates in subsequent years drop to the standard rate of £195 per year, but vehicles with a list price over £40,000 will also pay the Expensive Car Supplement of £425 per year for years 2-6, making their total £620 per year. Over the first 5 years of a car's life, this means cars that aren't fully electric will be charged between £890 and £7,970 in road tax in total, depending on the list price and emissions level of the car.

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 average emissions of 130 g/km, most petrol cars on the road fall into the £440 vehicle tax band for the first year, then £195 from Year 2 onwards. Over five years, the typical internal combustion engine (ICE) car (under £40,000 list price) tax tallies to £1,220 (£440 plus 4 times £195).

For a typical electric car (under £50,000 list price), the first year rate is £10, then £195 from year 2 onwards, totalling £790 over five years.

Over the next five years of driving, a typical motorist buying a new electric car in 2026 could save around £430 in vehicle road tax compared to buying a typical petrol car. The majority of this saving (£430) comes in the first year, with both vehicle types paying the same £195 annual rate from year 2 onwards.

Alternative fuel cars (e.g. hybrids, bioethanol and liquid petroleum gas) pay the same rates as petrol cars from 2025 onwards, so offer no tax advantage over petrol vehicles.

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. 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 £500+ per year (depending on the tariff). For example, someone driving 6,300 miles per year would spend around £480-£550 per year on home-charging electricity costs vs £1,052 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 7-8p to fuel at home, while a typical petrol car costs around 13-15p.Over 1,000 miles this adds up to savings of around £70.Over 10,000 miles the savings would grow to around £700.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

EV vs. Petrol Car: Vehicle Tax Rates