Feature
Are electric cars really more expensive?
Put off by the price of an electric car? Don't write them off just yet - you could be saving money in the long run. We look at the cost of owning and running an EV in detail.
Words by: Andrew Woodhouse
Last updated on 6 May 2025 | 0 min read
Electric vehicles are entering a new phase in the UK market. Rising energy costs, changing government incentives, and rapidly evolving consumer habits are reshaping the cost of buying and running an electric car.
So, are electric vehicles still a more expensive option, or is the tide turning in 2025?
So, are electric vehicles still a more expensive option, or is the tide turning in 2025?
Upfront costs are dropping
Historically, buyers have been put off by the high purchase price of electric vehicles. But brands have read the room and responded to the growing popularity of affordable Chinese brands by adopting lower-cost designs and production methods.
As a result, the number of electric models with a recommended retail price under £30,000 has surged over the last year, from just nine models at the start of 2024 to 34 by early 2025. Although many of these affordable models compromise on battery range, they should prove popular with consumers. Brands are working to match petrol and diesel models on price. Meanwhile, established brands are entering cost-cutting partnerships with Chinese tech companies to offer better value.
As a result, the number of electric models with a recommended retail price under £30,000 has surged over the last year, from just nine models at the start of 2024 to 34 by early 2025. Although many of these affordable models compromise on battery range, they should prove popular with consumers. Brands are working to match petrol and diesel models on price. Meanwhile, established brands are entering cost-cutting partnerships with Chinese tech companies to offer better value.
Running costs and charging realities
Electric vehicles are mostly cheaper to run than petrol or diesel cars, but rising energy prices have eroded some of that advantage. As of 2025, the average domestic electricity rate is around 24.5p per kWh. Charging a typical 60kWh battery at home now costs approximately £15. Public rapid chargers are more expensive, often exceeding 70p per kWh. Using home chargers and off-peak tariffs remains key to keeping your costs down.
Overall, electric vehicles are still cheaper to maintain than petrol or diesel models. With fewer moving parts and less wear on components like brakes, servicing tends to be simpler and cheaper over time.
Overall, electric vehicles are still cheaper to maintain than petrol or diesel models. With fewer moving parts and less wear on components like brakes, servicing tends to be simpler and cheaper over time.
Electric car insurance
Generally, electric vehicles are in the higher insurance groups and so cost more to insure.
This is because electric cars tend to include more advanced technology than traditional petrol or diesel models, making them more expensive to repair. That said, insurance costs are becoming more competitive as electric and hybrid cars grow in popularity – so it’s becoming easier to find a bargain on electric car insurance. Compare insurance quotes on individual models to get an accurate price.
This is because electric cars tend to include more advanced technology than traditional petrol or diesel models, making them more expensive to repair. That said, insurance costs are becoming more competitive as electric and hybrid cars grow in popularity – so it’s becoming easier to find a bargain on electric car insurance. Compare insurance quotes on individual models to get an accurate price.
Tax and incentives for electric vehicles
As of April 2025, electric cars are no longer exempt from Vehicle Excise Duty (VED).
New electric vehicles now pay £10 in their first year and £195 annually thereafter. Cars with a list price over £40,000 also incur an extra £425 per year for five years, significantly increasing ownership costs for premium models. But this means electric cars are still in the cheapest tax band, with VED rising significantly for petrol and diesel models based on their emissions. While many of the major incentive schemes like the plug-in charging grant and Electric Vehicle Homecharge Scheme (EVHS) have ended or narrowed focus, there are still some financial incentives for buying electric, which are listed here.
New electric vehicles now pay £10 in their first year and £195 annually thereafter. Cars with a list price over £40,000 also incur an extra £425 per year for five years, significantly increasing ownership costs for premium models. But this means electric cars are still in the cheapest tax band, with VED rising significantly for petrol and diesel models based on their emissions. While many of the major incentive schemes like the plug-in charging grant and Electric Vehicle Homecharge Scheme (EVHS) have ended or narrowed focus, there are still some financial incentives for buying electric, which are listed here.
Residual values and depreciation trends
Residual values remain a sticking point for electric vehicles. Used electric car prices have dropped sharply (40% over the past two years), as high supply and cautious demand force retailers to slash prices. For example, while the new Citroën e-C3 costs around £4,000 more than its petrol counterpart, it's projected to be worth £1,000 less on the used market after just one year.
Prices in the second-hand market have stabilised recently, but aggressive discounting from manufacturers continues to put pressure on resale values. The steepest depreciation tends to occur in the first year, but from that point onward, electric vehicles now depreciate at roughly the same rate as petrol vehicles.
Prices in the second-hand market have stabilised recently, but aggressive discounting from manufacturers continues to put pressure on resale values. The steepest depreciation tends to occur in the first year, but from that point onward, electric vehicles now depreciate at roughly the same rate as petrol vehicles.
Buyers have more affordable choice than ever before
With more than 20 new car brands entering the UK market since 2019, many of them focused on electric, car buyers benefit from unprecedented choice. Increased competition is forcing legacy brands to adapt quickly and compete on price, range, and features.
Younger and more diverse demographics are open to owning an electric car, especially if the price is right. And while concerns about quality and data privacy may put off some buyers from lower-priced Chinese models, younger buyers are proving more receptive, motivated by the affordability.
Younger and more diverse demographics are open to owning an electric car, especially if the price is right. And while concerns about quality and data privacy may put off some buyers from lower-priced Chinese models, younger buyers are proving more receptive, motivated by the affordability.
Electric vehicle sales boomed in 2024
We saw a significant uptick in new electric registrations over 2024, with nearly 382,000 units registered, which is a 21% increase from the previous year.
Electric vehicles accounted for 20% of all new car registrations, reaching 25% in the final quarter of last year. The used electric market also experienced a resurgence, with demand outpacing supply. In 2024, approximately 175,000 used electric vehicles were bought, which is a 47% increase from the previous year. We also saw an influx of Chinese electric manufacturers, like BYD and Leapmotor, introduce competitively priced models over 2024. One example is Leapmotor's T03, priced at £15,995 which makes it one of the UK's most affordable electric cars.
Electric vehicles accounted for 20% of all new car registrations, reaching 25% in the final quarter of last year. The used electric market also experienced a resurgence, with demand outpacing supply. In 2024, approximately 175,000 used electric vehicles were bought, which is a 47% increase from the previous year. We also saw an influx of Chinese electric manufacturers, like BYD and Leapmotor, introduce competitively priced models over 2024. One example is Leapmotor's T03, priced at £15,995 which makes it one of the UK's most affordable electric cars.
The question of whether electric is more expensive depends on how you define cost. Upfront prices remain high for many models, but running costs, servicing, and incentives help level the playing field. With falling new model prices and stabilised used values electric cars are well on their way to becoming the norm on British roads.
The next 12 months could prove pivotal in unlocking the early majority of electric buyers and redefining what affordable really means in the electric era.
The next 12 months could prove pivotal in unlocking the early majority of electric buyers and redefining what affordable really means in the electric era.
Financing an electric car
Most new cars are bought through finance, like Personal Contract Purchase (PCP), and electric cars are no different.
You can find PCP deals on Autotrader, and compare different fuel types, makes and models to find the right car for your monthly budget. Another option would be to lease. With car leasing, you make monthly payments for a fixed length of time and, once the lease has ended, you return the car. It’s hassle-free and monthly payments are normally low. If you're interested, you can learn more about leasing an electric car. Finance and leasing can be a great way to manage the cost of a brand-new car, but make sure you budget properly. Include extra costs like fuelling or charging, insurance and tax to get your final figure (total cost of ownership) over the duration of your contract. And speaking of the contract, always check the fine print for any exclusions or caveats – never assume something is included, as it could be an extra cost for you later down the line.
You can find PCP deals on Autotrader, and compare different fuel types, makes and models to find the right car for your monthly budget. Another option would be to lease. With car leasing, you make monthly payments for a fixed length of time and, once the lease has ended, you return the car. It’s hassle-free and monthly payments are normally low. If you're interested, you can learn more about leasing an electric car. Finance and leasing can be a great way to manage the cost of a brand-new car, but make sure you budget properly. Include extra costs like fuelling or charging, insurance and tax to get your final figure (total cost of ownership) over the duration of your contract. And speaking of the contract, always check the fine print for any exclusions or caveats – never assume something is included, as it could be an extra cost for you later down the line.