November 2025

Total cost of ownership: EVs vs ICE cars in the UK

Pink octopus making cost comparison between a petrol or electric vehicle

When it comes to buying a new car, most people focus on the upfront price. But the Total Cost of Ownership (TCO) tells a much bigger story. It includes everything from purchase price and depreciation to fuel, maintenance, insurance, and taxes over the lifetime of the vehicle.

With new UK government grants available to support electric vehicle (EV) adoption - alongside rising fuel prices and tightening emission regulations - understanding the real cost of EV ownership versus petrol and diesel (ICE) vehicles has never been more important.

Let’s get plugged in…

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What makes up the total cost of ownership?

The TCO for any vehicle is made up of several key elements. Let’s break them down:

Purchase Price & Grants

  • EVs typically have a higher upfront cost than ICE vehicles.

  • In the UK, grants are available for certain electric vans, taxis, and wheelchair-accessible vehicles, helping lower the initial outlay.

  • For fleets, capital allowances on EVs can also provide significant tax advantages.

Depreciation & Residual Value

  • EV depreciation was once a big worry, but improved battery technology and strong demand in the used EV market are narrowing the gap with ICE cars.

  • Battery warranties (often 8 years) help maintain resale value.

Fuel vs Electricity Costs

  • Fuel costs (ICE): The average petrol price hovers around £1.50 per litre. For a family hatchback doing 40 mpg, that’s ~17p per mile.

  • Electricity costs (EV): Charging at home on a standard tariff costs ~7 - 10p per mile; off-peak tariffs can cut this further. Even using public rapid charging (25–30p per mile), EVs remain competitive.

Maintenance & Servicing

  • ICE vehicles need oil changes, exhaust and clutch replacements, and more frequent servicing.

  • EVs have fewer moving parts, regenerative braking reduces brake wear, and routine servicing is often cheaper.

Studies suggest maintenance costs can be up to 30% lower for EVs.

Insurance

EV insurance can be slightly higher due to specialist repairs, but this is improving as the market matures.

Taxes & Incentives

  • Benefit in Kind (BIK): For company cars, EVs enjoy a low BIK rate (currently 2%), compared to up to 37% for petrol/diesel models.

  • Vehicle Excise Duty (VED): EVs are exempt until April 2025.

  • Congestion and Clean Air Zones: EVs avoid charges that ICE cars often face in places like London.

Charging Infrastructure Costs

  • Home charging unit installation: £800 - £1,200 (often subsidised by grants).

  • Workplace charging schemes also have government support.

Like-for-Like Comparison: EV vs ICE

Let’s compare two popular UK vehicles:

  • Nissan Qashqai (Petrol) vs Nissan Ariya (Electric)

  • 5-year ownership, 12,000 miles per year

Cost Element Petrol QashqaiElectric Ariya
Purchase Price (OTR) ~£30,000~£40,000
Grants / Incentives£0Up to £2,500 (if van variant)
Fuel / Electricity~£10,200~£3,600 (home charging)
Maintenance & Servicing~£3,500~£2,500
Road Tax (VED)~£800£195
Congestion/ULEZUp to £3,000£0
Residual Value (est.)£12,000£18,000

5-Year TCO Estimate:

  • Petrol Qashqai ≈ £35,500

  • Electric Ariya ≈ £29,395

Despite the higher upfront price, the EV works out cheaper over time.

The UK incentives that tip the balance:

  • Plug-in Van Grant: Up to £2,500 - £5,000 off the cost of a new electric van.

  • Taxi Grant: Up to £4,000 for eligible electric taxis.

  • Workplace Charging Scheme: Government contribution towards charge point installation.

  • Capital Allowances: Businesses can deduct 100% of the cost of EVs from taxable profits.

  • The Electric Car Grant: The UK government has officially revived the Electric Car Grant, scrapped in 2022 but now returning with up to £3,750 off a brand-new electric car.

How to minimise EV TCO

  • Use home or workplace charging on off-peak tariffs.

  • Choose an EV that suits your mileage and charging needs (battery size matters).

  • Factor in grants and tax incentives at purchase.

  • Consider leasing if depreciation risk worries you.

Are electric cars really cheaper to own than petrol or diesel cars?

Yes - while EVs usually cost more upfront, their lower running costs (fuel, tax, maintenance) mean they often work out cheaper over 3 - 5 years, especially if you drive higher mileages or can charge at home.

How much does it cost to charge an EV in the UK?

Home charging typically costs 7 - 10p per mile, depending on your tariff. Public rapid charging can be 25 - 30p per mile. Compared to petrol or diesel (15–20p per mile), EVs are usually cheaper to “fuel.”

What grants are available for EVs in the UK?

The Plug-in Van Grant (up to £5,000), Taxi Grant (up to £7,500), and Workplace Charging Scheme are still available in 2025. This year the UK government reinstated the Electric Car Grant, scrapped in 2022 but now returning with up to £3,750 off a brand-new electric car.

Do EVs depreciate faster than ICE cars?

Not anymore. Strong demand for second-hand EVs and long battery warranties (often 8 years) have stabilised residual values. Some EVs now hold value better than equivalent petrol/diesel models.

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