How Electric Cars Can Save You Money

While the most obvious benefit of electric cars is a significantly lower impact on the environment, the additional cost-saving potential is why more and more people are switching to electric-powered driving. In our guide, we cover six of the main money-saving sources associated with running an electric car.

Cost-saving benefits of electric cars

The costs of running an electric car are undoubtedly more affordable than the running costs of petrol or diesel cars. While the upfront cost of electric cars can be off-putting, many people find the long-term savings make the initial investment worthwhile.

1. Charging is cheaper than petrol or diesel

The biggest of all savings is the obvious; replacing trips to the petrol station with charging the car instead. On average, the pence per mile of a petrol car ranges between 13-18 pence, whilst the average cost per mile of an electric car can be as little as 2 pence per mile, depending on the charging method. This offers the potential for up to 16 pence per mile saving!

Based on the annual average of 7,000 miles of driving, you could spend just £511 to charge an EV over a year (tariff of 24.5p/kWh), compared to £1,206 to fuel a petrol car (£1.36/litre). The exact costs will vary depending on the vehicle, but this rough guide demonstrates the potential savings you could make on powering an EV over time. You can use our free charging calculator to estimate the time and cost to charge a particular vehicle.

Charging at home is even cheaper than public charging, so investing in a home charger offers a more cost-effective and convenient way to top up your car.

2. Lower service and maintenance costs

Electric vehicles do not have traditional Internal Combustion Engines (ICE) and have far fewer working parts. As a result, there are fewer things that’ll need replacing or maintaining, and a lower chance of things going wrong. The simplicity of EVs means you benefit from greatly reduced maintenance costs over the course of the vehicle's life.

Electric cars are often heavier than ICE vehicles, putting extra pressure on the tyres. The extra weight could lead to tyres wearing out more quickly than you’re used to, so make sure to keep an eye on the tread depth.

Take the Vauxhall Corsa for example, which is one of the most popular models in 2025. The Corsa has both petrol and electric powertrain options, making it simple to compare the servicing savings between the same vehicle with model and fuel variations.

• New petrol Vauxhall Corsa - average annual service cost of £446 in years 1-3, followed by £1,038 in years 3-5.
• New Vauxhall Corsa Electric - average annual service cost of £306 in years 1-3, followed by £704 in years 3-5.

While the difference in the first few years is less than £100, this saving increases even further with age, as many EVs are demonstrating significant performance throughout their lifespan, exceeding the expectations we’ve come to expect from ICE vehicles.

3. No congestion charges

Clean Air Zones (CAZ) and Low Emission Zones (LEZ) are designed to reduce pollution in city centres by charging vehicles to enter in an effort to discourage entry. These zones charge between £8 and £50 for entry, depending on vehicle type. Zero and low-emission cars are exempt from paying most congestion charges to enter the inner sectors of the UK's largest cities. So you can enjoy the convenience of city centre driving without contributing to poor air quality.

The exception to this is the London Congestion Charge, which is £15. Electric cars and low-emission hybrids aren’t exempt from this charge, but can claim 100% under the Cleaner Vehicle Discount (CVD). However, this discount will no longer apply after 24th December 2025.

4. Cheaper (and better!) parking

Many supermarkets, council car parks, and retail parks across the UK offer free or discounted parking for electric vehicles. Additionally, you’ll often find charging points in premium spaces closest to the entrance so you can top up your car’s battery while running errands or enjoying a shopping trip.

5. Government grants

The UK government’s Office for Zero Emission Vehicles (OZEV) offers several grants to make obtaining and using an electric vehicle more affordable.

Plug-in grant

Some types of low-emission vans are eligible for a grant to make the switch to electric more affordable, and is a great incentive for businesses looking to include more electric and hybrid vehicles in their fleet. When buying an electric van, you don’t need to apply for this grant. The dealership will automatically apply a discount to the purchase price.

Electric vehicle chargepoint grant

People looking to install a charging point at home may be eligible for the electric vehicle chargepoint grant. As part of this, you receive either £350 or 75% off the cost to buy and install a socket, whichever amount is lower. The average cost for an EV charger ranges from £800 to £1,500, depending on the type of charger and any complexities involved with installation. An OZEV-authorised installer must carry out the work.

Both homeowners and renters can use this scheme, though people who rent may wish to discuss this with their landlord, as there is a separate scheme for landlords, which they might want to consider if they own several properties.

Workplace Charging Scheme

A similar charging point installation grant for businesses exists to help offset some of the costs of setting up EV charging at workplaces. An OZEV-authorised installer must carry out the work.

The Workplace Charging Scheme covers up to 75% of costs (including VAT) involved with the purchase and installation of charging points, up to:

• £350 per socket
• 40 sockets across all sites per applicant. This means if you have 20 sites, for example, each site will be able to have 2 charging points

Many types of companies are eligible to apply, including charities, public sector organisations, and businesses.

6. Tax relief for businesses

There are additional tax incentives for businesses to make it easier to switch to electric-powered driving.

• Capital allowance - for electric cars bought by the company, claim 100% capital allowance in the first year. This means you can offset the cost of the car (or cars) from your profits before tax. Unfortunately, this doesn’t apply to hybrids, but the usual capital allowance rates for these apply, so you’ll have the same benefits as you would with petrol or diesel cars.
• Benefit in Kind (BiK) tax - as company cars are a taxable benefit, employees have to pay Benefit in Kind tax on vehicles issued to them by their employer, including electric cars and hybrids. Petrol and diesel cars are taxed at 37%, while electric cars are taxed at just 3% in 2025/26, and will only rise to 9% in 2029/30.

How much does an electric car cost?

Buying a brand new electric vehicle outright is more expensive than buying a new petrol or diesel car. Outright purchase is a considerable expense for many of us, no matter what type of vehicle you’re looking at.

If we look at the Vauxhall Corsa again, we can see there’s quite a bit of difference in the cost of the petrol and electric versions; however, there is some price overlap with certain models, so this might not be as significant as it initially seems.

• A new petrol Vauxhall Corsa ranges from £19,200 to £30,035 RRP (model dependent)
• A new Vauxhall Corsa Electric ranges from £26,905 to £34,445 RRP (model dependent)

As EVs have been around for a while, buying a secondhand EV can be a lot more affordable, though you won’t be getting the latest innovations or tech we see in the more efficient models of late.

Leasing an electric vehicle means you can access brand new models every few years without needing to make a significant purchase or take out a loan. Another financial benefit of leasing is that you’ll avoid the negative impacts of depreciation, as this will fall on the lender as the legal owner.

Insurance

Generally speaking, the cost of insuring an electric car can be higher than insuring a petrol or diesel car, but this is already starting to change and is likely to continue to reduce over time.

EV insurance premiums tend to be more costly due to a range of factors, such as higher vehicle value, specialised repairs and expensive replacement parts, and because there isn’t as much historical data available about risks and accidents.

The average cost to insure an EV is around £650, but as with any car insurance, this varies due to factors like age, vehicle, and driving history. As ICE vehicles are phased out over the coming years and EVs become the norm, insurance costs will level out and become less of a burden on your budget.

Road tax

Before April 2025, road tax for electric vehicles was free, making this saving a significant benefit for drivers. However, the UK government has set out new regulations on road tax (officially known as Vehicle Excise Duty), which will apply to all vehicles in an effort to ensure road infrastructure can be maintained.

EVs tend to have more of an impact on roads, mainly due to being heavier than lighter ICE vehicles. As the number of EVs and hybrids is increasing, it makes sense that more drivers will need to contribute to road tax to help keep roads drivable in the long run.

The amount of road tax EV drivers will need to pay depends on the date of registration.

• Registered on or after 1 April 2025: pay the lowest first-year tax rate of £10. The standard rate of £195 will apply from the second year onwards.
• Registered between 1 April 2017 and 31 March 2025: pay the standard rate of £195 per year.
• Registered between 1 March 2001 and 31 March 2017: pay £20 per year, the lowest paid band of road tax.

Find an electric car that works for your wallet

One of the most affordable ways to get behind the wheel of a high-tech, shiny new electric vehicle is through leasing. Our hassle-free lease plans allow you to choose the vehicle you want and how long you want it for, then simply work with our friendly team to arrange fixed monthly payments that are easy to manage.

Explore our latest electric leasing deals today!