Is an electric car actually cheaper than petrol? The honest answer for 2026/27: it depends on your mileage, charging arrangement, vehicle, insurance, finance and acquisition method. Electricity, VED and company-car tax can favour an EV, but the result is not a fixed percentage saving and depends on the assumptions used. A private-buyer comparison should use current quotes and tariffs; a company-car comparison must use the vehicle's list price, CO2 figure, fuel type and tax year.
This guide prices every line — purchase, energy, VED, BIK, insurance, servicing, depreciation — so you can see where each technology wins. Run your own comparison with the EV vs Petrol TCO Calculator, and check the company-car angle with the Company Car BIK Calculator.
Energy can be cheaper per mile
Public charging erodes the saving
Tax treatment depends on the vehicle
The Five Cost Categories
| Category | EV | Petrol |
|---|---|---|
| Purchase price | Compare the exact models and specification | Compare the exact models and specification |
| Energy per mile | Depends on efficiency, tariff and charging mix | Depends on efficiency and fuel price |
| VED (2026/27) | £10 first year for eligible new cars registered from 1 Apr 2025, then £200 standard; expensive-car supplement may apply | Depends on registration date and CO2; £200 is the 2026/27 standard rate for many cars |
| BIK (company car) | 4% for 0 g/km in 2026/27 | Depends on CO2 and fuel type; 128 g/km petrol is 31% in 2026/27 |
| Maintenance | Use actual service plan and repair assumptions | Use actual service plan and repair assumptions |
| Depreciation | Use a model-specific residual-value assumption | Use a model-specific residual-value assumption |
No single category decides the total — the interaction does. A buyer with off-street parking may have access to a lower-cost home tariff, while a driver relying on public charging may see a different result. Finance, insurance, maintenance and resale assumptions can outweigh energy costs.
Energy Costs: Where the EV Wins Big
| Charging method | Cost per kWh | Cost per mile | Annual cost (10,000 miles) |
|---|---|---|---|
| Home, off-peak (illustrative) | 7p | ~1.8p | £180 |
| Home, standard rate (illustrative) | 24p | ~6.3p | £630 |
| Public charger (illustrative) | 45p | ~11.8p | £1,180 |
| Petrol (£1.45/L, 42 mpg assumption) | — | ~15.7p | £1,570 |
These are illustrative assumptions, not a UK-wide average or a live quote. Actual results depend on the car's usable efficiency, charging losses, tariff, fuel price and the proportion of home, workplace and public charging. HMRC's company-car advisory electric rates are a separate reimbursement measure and should not be treated as a private retail tariff.
Tax: VED and BIK
For 2026/27, a zero-emission car registered on or after 1 April 2025 pays £10 VED in its first year and £200 at the standard rate after that; the expensive-car supplement can also apply. A petrol car's VED depends on registration date and CO2. For company cars, a zero-emission car has a 4% appropriate percentage in 2026/27. A 0 g/km EV with a £42,000 list price therefore has a £1,680 cash-equivalent benefit and costs a 40% taxpayer £672 of income tax before any employee contribution or availability adjustment. A 128 g/km petrol car is 31% in 2026/27: £13,020 benefit and £5,208 tax on the same list price. Fuel provided for private use is a separate benefit; electricity and fuel arrangements should be checked against the HMRC rules.
| Car | BIK % | Benefit (£42k) | Tax at 40% |
|---|---|---|---|
| EV (0 g/km) | 4% | £1,680 | £672 |
| Petrol (128 g/km) | 31% | £13,020 | £5,208 |
| Diesel (non-RDE2) | 35% | £14,700 | £5,880 |
Maintenance and Depreciation
EVs generally have fewer powertrain service items than petrol cars, but tyres, brakes, suspension, inspections, repairs and manufacturer schedules still apply. Use a model-specific service plan rather than assuming a universal saving. Depreciation is also model- and market-specific: the percentages below are illustrative assumptions, not a forecast or a claim about every EV or petrol car. Leasing does not remove depreciation; it prices residual-value risk into the lease.
| Car | Year 1 | Year 3 | Year 5 |
|---|---|---|---|
| EV (illustrative assumption) | 25–30% loss | 40–50% loss | 55–65% loss |
| Petrol (illustrative assumption) | 15–20% loss | 30–38% loss | 40–50% loss |
Worked Example: Private Buyer
Illustrative MG4 EV vs VW Golf — 10,000 miles/year, 5 years, with the stated home-charging and cost assumptions.
| Cost component | MG4 EV | VW Golf |
|---|---|---|
| Purchase price | £26,995 | £27,500 |
| Energy/fuel (5yr) | £1,575 | £7,850 |
| VED (5yr, illustrative) | £810 | £1,000 |
| Maintenance (5yr) | £1,500 | £3,000 |
| Insurance (5yr) | £4,000 | £3,000 |
| Residual value | −£12,150 | −£15,125 |
| Total cost | £22,730 | £27,225 |
Under these assumptions the EV costs £4,495 less over five years. This is an illustrative result, not a typical saving: the calculation assumes a £26,995 EV, a £27,500 petrol car, the stated energy/fuel inputs, £810 EV VED (£10 plus four £200 years), £1,000 petrol VED, model-specific maintenance, insurance and residual values. Check the current list prices, quotes and VED category before relying on the result.
Worked Example: Company Car Driver
Illustrative Tesla Model 3 vs BMW 3 Series — 15,000 miles/year, 4 tax years, 40% taxpayer.
| Cost component | Tesla Model 3 | BMW 3 Series |
|---|---|---|
| Purchase/lease base | £42,990 | £42,500 |
| Energy/fuel (4yr) | £2,700 | £13,950 |
| BIK tax (4yr, announced rate schedule) | £4,200 | £21,336 |
| VED (4yr, illustrative) | £800 | £800 |
| Maintenance (4yr) | £1,600 | £2,800 |
| Insurance (4yr) | £3,600 | £2,800 |
| Residual value | −£19,345 | −£23,375 |
| Total cost | £36,545 | £60,811 |
Under these assumptions the EV costs £24,266 less over four years. The EV BIK calculation uses 4%, 5%, 7% and 9% for 2026/27 to 2029/30; the 128 g/km petrol illustration uses 31%, 31%, 32% and 33%. The result still depends on list price, availability, private-use contribution, fuel provision, employer policy, insurance, maintenance, VED and residual value. It is not a guaranteed saving for every company-car driver.
Salary Sacrifice Makes EVs Cheaper Still
If your employer offers an EV salary-sacrifice scheme, the lease can reduce cash salary in return for a car benefit, but the contract, National Minimum Wage rules, tax band, employee NI rate, BIK, pension effects and employer policy all matter. For illustration, a higher-rate taxpayer sacrificing £500 a month might save £2,520 a year using 40% income tax plus 2% employee NI, before considering the BIK charge; the actual result must be calculated from the employee's circumstances. Employer Class 1A NI and any employer contribution are separate from the employee's saving. Salary sacrifice is not automatically the cheapest route for every employee.
| £500/month EV lease (40% taxpayer) | Personal lease | Salary sacrifice |
|---|---|---|
| Annual lease cost | £6,000 | £6,000 |
| Tax and NI saving (illustrative) | £0 | −£2,520 |
| BIK tax (4% × £50,000 × 40%, 2026/27) | £0 | +£800 |
| Net annual cost | £6,000 | £4,280 |
When Petrol Still Wins
- Low mileage — a low annual mileage may not recover a higher purchase or finance cost through energy savings.
- No home charging — public rapid rates erase most of the fuel advantage.
- Short ownership — under 3 years you absorb the steepest depreciation without the running-cost payback.
- High finance rates — the bigger purchase price means more interest.
- Towing or heavy use — EV range drops sharply under load.
Sensitivity checks before choosing
Run the comparison again with a higher public-charging share, a lower annual mileage and a different ownership period. Then change the purchase price, insurance quote and expected residual value independently rather than applying one blanket EV or petrol adjustment. For a company car, run the list price, CO2 band, tax year, employee contribution and private-fuel assumption separately. The break-even result is only useful when the inputs resemble the driver's actual use.
Keep invoices, tariff evidence, mileage records, finance quotes, insurance renewals and service costs. If the car is provided by an employer, retain the car policy and benefit statement as well as the list price and registration details. These records allow the calculator's scenario to be reconciled to the real ownership cost and prevent an illustrative tax rate from being presented as a guaranteed saving.
Compare fairly
- 1Confirm your annual mileage and whether you have off-street parking for home charging.
- 2Price the exact models and specifications — do not assume an EV premium or discount from a general average.
- 3Use your real electricity tariff and petrol price, not headline figures.
- 4Add VED, BIK (if a company car), insurance and maintenance over your expected ownership period.
- 5Decide on the ownership period and make every assumption visible — a first-year result may not match a five-year result.
The Bottom Line
For 2026/27 an EV may have a strong running-cost or company-car-tax case, but there is no universal mileage break-even point. The result depends on the actual vehicle, tariffs, VED category, company-car availability, finance, insurance, maintenance and residual-value assumptions. Use the calculator with current inputs rather than treating this guide's examples as a forecast.
Frequently Asked Questions
Is an electric car cheaper to run than petrol in 2026/27?
How much does home charging cost per mile?
Do EVs pay road tax in 2026/27?
Why do EVs depreciate faster than petrol cars?
Is an EV cheaper for company car drivers?
Does salary sacrifice make an EV even cheaper?
When does a petrol car make more financial sense?
How should I compare home and public EV charging costs?
Run your own comparison with the EV vs Petrol TCO Calculator and the Company Car BIK Calculator. Pair this guide with Electric Car BIK UK 2026/27 and Cash Allowance vs Company Car UK for the complete car-finance picture.
Keep the comparison auditable
Save the vehicle registration or exact specification, list price, mileage assumption, tariff, fuel price, charging mix, insurance quote, finance quote, service estimate and residual-value assumption used in the comparison. For a company car, retain the P11D/list-price evidence, CO2 figure, fuel type, tax year, employee contribution and employer fuel policy. Re-run the scenario when a quote, tax year or ownership period changes; a calculator result is a modelled comparison, not a guaranteed saving.
Official sources
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Review notes and assumptions
Updated 2026-09-20
Assumptions
- The result depends on the vehicle, mileage, tariff, fuel price, charging mix, insurance, finance, maintenance, depreciation, VED and company-car status.
- Ownership figures are scenario estimates using current inputs; quotes, future prices, vehicle values and tax rules can change.