Why running an EV makes financial sense

Volvo C40 Recharge

The annual running cost of an electric vehicle is now £579 cheaper on average than a petrol-fuelled car., according to new research from comparethemarket.com.

What’s more, this difference in cost has increased from last year when EVs were just over £400 cheaper to run.

The research, which analyses the price of insurance, fuel, and road taxes, reveals that the average annual cost of running a petrol-fuelled car is now £1,843, whereas an electric vehicle costs £1,264 to drive for 12 months. 

While petrol cars are usually more expensive to run due to the annual road tax exemption for EVs, the cost of driving both types of car has risen year-on-year.

For EVs, the cost has increased by £137 year-on-year, primarily due to higher energy costs in recent months. 

The average annual energy bill for an EV has increased by £167 year-on-year to £519, based on driving 6,700 miles, the UK average.

Despite the average EV car insurance premium falling by £29 year-on-year, EVs are still typically more expensive to both buy and insure than similar petrol cars. EV owners also usually choose to install a home charging point which would add an additional cost.

In contrast, the average annual cost of running a petrol-fuelled car has risen by a much steeper £313 year-on-year to £1,843.

This sharp rise in running costs has mainly been driven by the increase in the price of petrol and higher car insurance premiums. 

The average annual fuel cost for a petrol car is now £943 – a £221 increase compared to the previous year. In contrast to EV insurance premiums falling marginally year-on-year, the average car insurance premium for petrol cars has risen by £82 year-on-year due to a rise in the value of second-hand cars and replacement part inflation. 

Cost name 2022 costs 2021 costs
Insurance £690 £719
Fuel £519 £352
Est. VED (Road Tax) £0 £0
MOT £55 £55
Total cost per year £1,264 £1,127

“Despite surging energy bills, motorists who’ve made the switch will be glad to see that electric vehicles cost substantially less to run than a petrol alternative,” said Alex Hasty of comparethemarket.com.

Cost name 2022 costs 2021 costs
Insurance £680 £598
Fuel £943 £722
Est. VED (Road Tax) £165 £155
MOT £55 £55
Total cost per year £1,843 £1,530

EVs are nearly 50% cheaper to run than petrol cars

Hyundai Kona Electric

Electric vehicles are nearly £1,000 cheaper to run than petrol cars over a year, according to new research from comparethemarket.com.

The figures show the average cost to run an EV for 12 months is £1,091 compared with £2,062 for a conventional car – a difference of £971.

The running costs for petrol cars are substantially higher as drivers of these vehicles pay an average of £640 for car insurance and £1,212 for the fuel each year.

Owners of petrol vehicles also typically need to spend at least £155 per year on road tax, while EVs are exempt.

Average running costs for 12 months

Vehicle Type Insurance Fuel MOT Road Tax Total
Electric £583 £454 £55 £0 £1,091
Petrol £640 £1,212 £55 £155 £2,062
Difference -£57 -£759 £0 -£155 -£971

The annual cost of driving an electric car has fallen by £77 in the most recent six months (May 21 – Dec 20), compared with the previous six months (Jun 20 – Nov 20).

This decline is due to a £54 drop in the cost of insurance for electric vehicles and a £23 dip in energy costs.

Electric car drivers can further reduce their running costs if they switch to the cheapest premium available. This typically costs £489, which means motorists could save £93 by shopping around for a better deal.

Electric car charging bay

Despite the substantially cheaper running costs, the up-front price of electric vehicles is a sticking point for many drivers considering making the switch from petrol.

A second-hand electric car is typically worth £22,813, based on the average value of electric vehicles from insurance renewal data.

This suggests it would take more than 20 years for the lower running costs to cover the purchase of an electric vehicle. However, motorists may be able to cover some of the purchase price by trading in their existing vehicle.

“The popularity of electric cars continues to accelerate as these vehicles now make up around one in ten new car sales,” said Dan Hutson, head of motor insurance, comparethemarket.com.

“Motorists who’ve made the switch will be glad to see our figures show electric vehicles cost roughly half as much to run as their petrol alternatives.

“These drivers benefit from substantial savings in fuel bills, insurance and tax – as well as doing their part for the environment.

“Electric car owners could save even more on running costs if they shop around for the cheapest deal when their insurance premium comes up for renewal.

“These drivers may also want to think about switching to a new Electric Vehicle Tariff for their home energy. EV Tariffs are designed to help motorists cut their energy bills by making it cheaper to charge electric cars overnight.”