New research from Compare the Market has found the average annual running cost of an electric vehicle (EV) is £369 less than that of a petrol car. The study, which scrutinises insurance prices, fuel costs, road taxes and MOT expenses, reveals that in June 2025, the typical yearly cost of operating an EV was £1,351, compared to £1,720 for a petrol vehicle.

With the Government's new Electric Car Grant (ECG) scheme launched at the start of August, drivers can now save an additional £1,500 on certain new EVs. Insurance premiums for the Citroën ë-C3, ë-C4, ë-C5, and ë-Berlingo - four models included in the scheme - averaged £451 in June this year, according to Compare the Market, potentially reducing overall running costs to £1,142 for these models.

As of the end of August, owners of EVs in Band 1 of the scheme - including the Ford E-Tourneo Courier and Ford Puma Gen-E - can enjoy an even larger discount of £3,750. More generally, the average car insurance premium for EVs has dropped by £176 year-on-year, falling to £660 in June 2025 from £836 in the same month the previous year.

The average running costs for electric vehicles (EVs) have seen a rise over the past year. This is partly due to EV drivers now having to fork out the same Vehicle Excise Duty (road tax) as petrol car owners, adding an extra £195 to their annual expenses. The surge in energy prices has also made EVs pricier to run, with the average cost of powering an EV for a year now standing at £441, compared to £400 the previous year.

However, despite these increases, EVs still prove to be more economical than petrol cars and their popularity continues to soar. They accounted for 26.5% of all new cars registered in August 2025, up from 22.6% during the same period last year, according to figures from the Society of Motor Manufacturers and Traders.

The researchers pointed out that the drop in EV insurance premiums year-on-year means drivers who compare quotes online when their policy is up for renewal - instead of automatically renewing - could bag themselves a bargain.

Sam Wilson, expert at Compare the Market, said: "EV drivers will be pleased to know that EVs remain more affordable to run than petrol cars on average. Alongside lower upfront costs, motorists driving certain EV models included in the Government's new ECG scheme could also benefit from the lower insurance premiums typically associated with EVs, further reducing annual running costs. As average insurance premiums fall for EVs more broadly, comparing policies online ahead of renewal could be one of the easiest ways for motorists to make savings."

AVERAGE ANNUAL COST OF RUNNING AN ELECTRIC VEHICLE

AVERAGE ANNUAL COST OF RUNNING A PETROL-FUELLED CAR

Insurance data was sourced from Compare the Market. It said 51% of Compare the Market customers aged between 45 and 54 were quoted less than the prices stated in this release for their car insurance for March 2024 and March 2023. These are for petrol and electric vehicle enquiries for comprehensive cover. Hybrid vehicles are included in the petrol-fuelled insurance figures.

Annual fuel costs were based on drivers travelling 6,000 miles per year (ONS NTS0901 - Petrol car mileage: all cars 2022). Petrol priced at £1.45 per litre in June 2024 and £1.31 June 2025 (Source: BEIS Monthly: Typical/average annual retail prices of petroleum products and a crude oil price index (tab 4.1.1 quarterly).

Fuel efficiency was 5.40 litres per 100km (Source: Department for Transport ENV0103). Electricity priced at £0.245 per kWh in June 2024 and £0.2703 per kWh in June 2025 (Source: Energy Price Guarantee 2024 and Ofgem 2025). Fuel efficiency is 16.9 kWh per 100km (Source: average efficiency for the ten most electric vehicle popular models on Compare the Market).

MOT cost for a car - £54.85 (source: https://www.gov.uk/getting-an-mot/mot-test-fees). Petrol car and EV cars registered on or after April 1, 2017. Rates for second tax payment onwards. Single 12-month payment - £195 - source GOV.uk.

Petrol drivers given £369 warning as EV costs rise - The Mirror