Thinking about making the switch to an electric vehicle? You’re not alone.
With over 1.75 million fully electric cars now on UK roads and EV adoption growing at 26% year-on-year, more employees are exploring whether going electric makes financial sense.
The upfront price difference between electric and petrol cars is narrowing, but there’s still a gap.
Purchase Price: The Initial Investment
The most obvious difference hits you first: electric cars generally cost 18-20% more to purchase than their petrol equivalents.
In 2026, the average new electric car costs between £48,000 and £50,873, whilst a comparable petrol car sits around £21,000. That’s quite a difference.
However, this average is skewed by the number of premium models in the EV market. More affordable options like the MG4 and Dacia Spring are bringing these costs down considerably.
Fuel Costs: Where EVs Start to Shine
This is where the numbers get interesting for employees.
Charging at Home
Home charging remains the most economical option for EV drivers. With electricity currently around £0.28 per kWh on standard tariffs, charging at home for 8,000 miles annually costs approximately £573.
Switch to an EV-specific tariff with off-peak rates as low as 7p per kWh, and you could reduce your annual home charging costs to around £92-£150 for the same mileage. That’s a saving of over £400 compared to standard rates.
The Petrol Comparison
With petrol hovering near £1.78 per litre, a typical petrol car costs around 14.5p per mile to run. For an average driver covering 8,000 miles annually, that’s approximately £1,160 on fuel alone.
Compare that with home charging costs of £573 on standard tariffs (or as little as £92-£150 on EV tariffs), and you’re looking at savings of £600-£1,000+ per year.
Maintenance and Servicing: Fewer Moving Parts, Lower Bills
Electric cars have a significant advantage here. With no oil changes, no timing belts, no exhaust systems, and far fewer moving parts, EVs are mechanically simpler.
Average annual costs
- Electric car servicing: £140-£250 (average £165)
- Petrol car servicing: £205+
That’s approximately 24% cheaper for EVs, potentially saving you £600-£1,200 annually on servicing, repairs, and maintenance combined.
The regenerative braking system in EVs also means less wear on brake pads and discs, reducing replacement costs significantly over the vehicle’s lifetime.
Road Tax (VED): No More Free Ride, But Still Cheaper
This is one area where the landscape has changed. From 1st April 2025, electric cars are no longer exempt from Vehicle Excise Duty.
Current VED rates for 2026
- First year rate for new EVs: £10
- Standard annual rate: £195
- Expensive Car Supplement (cars over £40,000): Additional £355 for the first five years.
Whilst EVs no longer enjoy zero road tax, the rates remain competitive with low-emission petrol vehicles, and you won’t pay the hefty first-year rates that high-emission petrol cars attract (up to £2,365 for the highest polluters).
Insurance: The Gap is Narrowing
EV insurance has historically been more expensive, but the difference is shrinking rapidly as insurers gain more data on electric vehicles.
In 2026, the average comprehensive EV insurance sits around £670 annually, typically just 1-15% higher than equivalent petrol models. Compare this with previous years when EVs could cost 30-50% more to insure, and the trend is clear.
For some models, particularly popular EVs with strong safety records, insurance costs are now virtually identical to petrol equivalents.
More information: Is Electric Vehicle Insurance More Expensive?
Salary Sacrifice: The Game-Changer for Employees
Here’s where the numbers become truly compelling for employees. Through salary sacrifice schemes like those offered by EZOO, you can save up to 60% on the cost of an electric vehicle.
How It Works
Instead of paying for a car lease from your take-home pay, salary sacrifice deducts the cost from your gross salary before tax and National Insurance are calculated. You then pay Benefit-in-Kind (BiK) tax on the vehicle.
BiK rates for 2026
- Electric cars: 4% (rising from 3% in 2025/26)
- Petrol/diesel cars: 20-37% depending on emissions.
That’s a massive difference. An electric car through salary sacrifice attracts just 4% BiK, whilst a petrol company car could be taxed at nearly ten times that rate.
What’s Included?
Most salary sacrifice schemes bundle everything into one predictable monthly payment:
- The vehicle lease
- Comprehensive insurance
- Maintenance and servicing
- Road tax
- Breakdown cover
- Tyre replacement
No unexpected bills, no hassle with insurance renewals, and no large upfront costs.
Looking Ahead: What’s Changing?
From April 2028, a new per-mile tax (eVED) will be introduced for electric vehicles at 3p per mile. For an average driver covering 8,500 miles annually, that’s approximately £250 per year.
However, even with this additional cost, electric cars through salary sacrifice schemes will remain significantly cheaper than purchasing or leasing a petrol car privately, thanks to the continued low BiK rates (rising gradually to 9% by 2029/30, but still far below petrol/diesel rates).
The Bottom Line for Employees
For employees with access to home charging and a salary sacrifice scheme, the financial case for going electric is compelling:
✓ Annual running costs: £600-£1,000+ less than petrol (with home charging).
✓ Maintenance savings: Up to £1,200 annually.
✓ Salary sacrifice savings: 20-60% off monthly costs.
✓ All-inclusive packages: No unexpected bills or admin hassle.
✓ Urban exemptions: Save on congestion and clean air charges.
Whilst the upfront purchase price remains higher, the combination of lower running costs and significant tax advantages through salary sacrifice means that for most employees, an electric car now represents better value over the ownership period than its petrol equivalent.
Related guide: Electric Car Grant: Are EVs More Affordable Than Ever?