New Compare the Market figures say electric cars are now ‘£525 cheaper to run than petrol’

The research, which looked at the price of insurance, fuel and road tax, found the average annual cost of running an electric vehicle is £1,195. In comparison, a petrol car typically costs £1,720 to run for 12 months. The difference in running costs between different types of vehicles has increased from 2023, when an electric vehicle it was £357 cheaper to run on average.

The cost of car insurance has risen significantly year-on-year for both electric and petrol vehicles, the researchers said. The average premium for a middle-aged person driving an electric vehicle has risen by £139 in the past 12 months, while the average premium for a petrol car has risen by £157. However, the average premium for an electric vehicle is still £195 more than for a petrol vehicle if the driver is aged between 45 and 54.

Compare the Market: Average Premiums (March 2024)

However, falling energy prices mean the cost of electricity to drive an electric vehicle for a year has fallen by an average of £155. Electricity to power an electric vehicle for 12 months it costs £400 on average, compared to £555 last year. In contrast, the average cost of petrol to fuel a car for a year fell by £15 to £930.

Despite lower running costs, demand for electric vehicles has slowed in recent months as data from the Society of Motor Manufacturers and Traders shows that sales of battery electric vehicles grew by just 3.8% year-on-year in March 2024. The electric vehicle owners will also face significantly higher running costs next year as they have to start paying vehicle excise duty from April 2025. Many EV owners will also have to pay the expensive car supplement from 2025.

Julie Daniels, motor insurance expert at Compare the Market, said: “Drivers who have switched to an electric vehicle will be happy to see that they can be much cheaper to drive than petrol cars. In addition to helping the environment, EV owners now benefit from fuel and tax savings. However, the significant initial cost of purchasing an electric car and installing a charging point at home will prevent many drivers from affording this option.

“The rising cost of car insurance for electric vehicles and higher road taxes from 2025 could also make the switch less attractive for some drivers. One of the best ways to try and save money on car insurance is to compare prices before you renew.”

Methodology

Insurance data was obtained from Compare the Market. 51% of Compare the Market customers aged 45-54 were quoted less than the prices quoted in this release for their car insurance for March 2024 and March 2023. These are for petrol and electric vehicle claims for a full coverage. Hybrid vehicles are included in the petrol insurance figures.