Can an electric car save you money?

Written by Lori Campbell on 5th May 2022

Switching to an electric car makes good sense for the planet, but for many it seems like an unaffordable option.

A new electric vehicle costs a hefty 38 per cent more on average than a petrol or diesel model, and the government discount of £1,500 on eligible electric vehicles barely makes a dent in the difference.

However, with prices at the fuel pumps closing in on an eye-watering £2 a litre and rising faster than the cost of electricity, there are potentially big savings to be made in the long run.

Here we weigh up whether owning an electric car can be a good deal for you, as well as the planet.

Cost to buy

The purchase price of an electric car is a big barrier to people making the switch. A new study by InsuretheGap found almost half (47 per cent) of UK drivers say they cannot afford an electric car and for 79 per cent, the government grant is not enough to make them consider buying one.

Electric cars are still significantly more expensive to buy than their conventional counterparts, which reflects the cost of the battery and other advanced parts. This gap will narrow as production ramps up but it will take some time.

As an example, a new petrol Vauxhall Corsa – the most popular car in the UK – starts from £15,485. This compares to £24,460 for the most basic electric version, the Vauxhall Corsa-e. The most popular electric car in the UK is the Tesla Model 3, which has a starting price of £42,500.

It’s worth considering a second-hand electric car (and gaining extra sustainability credentials in doing so), but these are still around £8,000 more costly on average than a petrol or diesel version, according to Auto Trader.

Government subsidies

With the ban on new petrol and diesel cars now just eight years away, the government is offering some incentives to encourage drivers to go electric.

Until April 2023, the plug-in grant gives a discount of up to £1,500 on vehicles with a recommended retail price (RRP) of less than £32,000, including VAT and delivery fees. The grant will pay for 35 per cent of the purchase price, up to a maximum of £1,500.

The Electric Vehicle Homecharge Scheme provides funding of up to 75 per cent towards the cost of installing a charge point at your home, although you now have to rent your home or live in a flat to be eligible.

Top 7 small electric cars

Savings for going green

If you live or work in a city, an electric car could bring you major savings. The congestion charge for London is currently £15 a day, with Bath, Birmingham, Bradford and Bristol all set to introduce similar clean air zones. There is no congestion charge for driving an electric car into city centres.

There are also considerable tax benefits to going electric: while cars registered after 2017 command some of the highest tax rates, electric vehicles are free to tax. They are also exempt from the surcharge that typically applies to cars that cost more than £40,000 when new – so if you have your eye on a Tesla for example, this will save you £355 a year.

Running costs

The cost of running an electric car will vary according to the make and model you buy, but they are typically a lot cheaper to run than a petrol or diesel car. To give you an idea, if you travel around 7,400 miles per year – the average for a British motorist – and charge your car at home, the charging cost per 100 miles is £3.75 (£277.50 a year).

This compares to £7.54 (£558 a year) for a petrol-powered Vauxhall Corsa – a saving of £280.50 on charging alone. With fuel prices continuing to rise, exacerbated by the Russia-Ukraine war, these savings will become even more substantial.

Charging your electric car at home, overnight, usually brings the biggest cost savings. Electricity costs are surging due to rising wholesale prices but tariffs for electric car users, which offer cheaper energy when charging overnight, remain competitive. For a typical electric car with a 60kWh battery and up to 200 mile range, the cost of a full charge at home is £15.10. You may also be able to find some free public charging points.

Unfortunately, insuring an electric car is still more expensive than petrol or diesel models, costing £629 on average per year compared to £429. However, this is likely to even out as more people make the switch.

Top 7 family electric cars

What is the cheapest electric car to run?

According to, the cheapest car to run is the Hyundai IONIQ Electric. It has a range of 155 miles on a fully charged 40.4 kWh battery, which works out at a cost of just £5.81 for a full charge and £3.75 for every 100 miles driven.

Second is the much-loved Tesla Model 3, which has a 50 kWh battery and range of 190 miles. It costs £7.19 to fully charge and £3.78 for every 100 miles driven.

So, is buying an electric car worth it?

The steep upfront cost of buying an electric car, and installing a home charging point if you aren’t eligible for the government grant, means that it’s still an unaffordable option for many.

But electric vehicles do cost substantially less to run than a petrol or diesel alternative in the long run. As well as helping the environment, you can benefit from substantial savings on fuel, tax and congestion charges.

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