Should I buy an electric car?

Electric cars have made their way into the mainstream thanks to the popularity of brands like Tesla – not to mention a range of government incentives. Should you buy an electric car and are they worth it?

An electric car charges on a sunny day on a London street.
(Image credit: Getty Images - Angel Santana Garcia)

Should I buy an electric car? It's a question that many people are asking themselves in today's more environmentally-conscious world.

We’re all trying to do our bit to go green – whether it’s dividing our recycling up into different coloured boxes or ordering fewer parcels from Mr Bezos via Amazon. But investing several thousand pounds in an e-vehicle takes this commitment a step further. 

In addition to the environmental benefits, the advantages of electric cars include no petrol costs and no road tax (for now). Depending on where you live, you might even be eligible for a government grant to help cover the costs of installing a charging point

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The good news for e-vehicle drivers is that energy prices are falling too. The annual cost of charging an electric car is now £530 cheaper than fuelling a petrol vehicle, according to the latest research from Compare the Market. What’s more, an electric vehicle energy tariff could help you cut costs even further. 

That said, it’s no secret that even the most affordable electric cars come with a hefty price tag. The median price of a new electric car in the UK is currently £49,640, while a used one will set you back £28,488. That’s according to recent data from Auto Trader. 

What’s more, it is worth looking into any incentives carefully before taking the plunge and buying a new car. For example, some of the perks (such as the road tax exemption) are slowly being pulled back. Meanwhile, other benefits like e-vehicle tariffs are only available on certain models of car. If you have a Jaguar I-Pace, for example, you will struggle to get one. 

With these factors in mind, we take a detailed look at the costs and savings associated with going green on the road. Are electric cars worth it?

How much do electric cars cost?

We have established that electric cars don’t come cheap – but how much do prices vary from model to model?

The most popular electric vehicles registered in the UK from January to September 2023 were the Tesla Model 3, the Nissan LEAF, and the Tesla Model Y. That’s according to analysis that Howden Insurance carried out using government vehicle registration data. 

You can buy a new Tesla Model 3 from £39,990, while a new Model Y will set you back £44,990 or more. The Nissan LEAF comes in at a slightly lower price point, with a new model starting at £27,290. 

If those price tags are a little too steep for your budget but you’re still keen to go green, the good news is that there are other options available to you. The UK’s cheapest electric car, the Dacia Spring, starts from a considerably lower £14,995. 

The only cheaper e-vehicle on the market is the Citroën Ami (£8,495) but, if you have a need for speed, you will be left disappointed. It only goes up to 28 miles per hour and its range between charges is 46 miles, designed for urban living. It is officially categorised as a quadricycle rather than a car.

If these cheaper models don’t float your boat, then you could always consider a second hand electric car. Sales of used battery electric cars almost doubled in 2023, according to the Society of Motor Manufacturers and Traders (SMMT). They now represent 1.6% of the used car market. 

Of course, this is still a very small share. However, it should continue to grow as the market matures and more existing e-vehicle owners look to change or upgrade their motor. 

If a second-hand electric car isn’t for you, but you can’t afford to cough up thousands of pounds up front, then you could consider a finance scheme as an alternative. You can finance an electric vehicle through a hire purchase, personal contract purchase or leasing scheme. 

Even then, it is a considerable financial commitment, so it is worth doing your research before moving ahead. 

Do you have to pay road tax on electric cars?

Currently, you don’t have to pay any road tax on electric vehicles in the UK – part of a government incentive to encourage road-users to go green. However, drivers should be aware that this is changing in April 2025. 

Many e-vehicle owners were hoping Jeremy Hunt would reverse this decision in his Spring Budget on 6 March. However, he stayed silent on the matter, prompting criticism that the government isn’t doing enough to promote e-vehicle usage. 

Damien Dally, managing director of Fiat UK, even went so far as to say that “we are sleepwalking into an electric vehicle crisis”, with the overall market share coming in “way below the 22% mandated by the government as part of the [zero emission vehicle] mandate”. 

The new road tax rules for electric vehicles will come into effect on 1 April 2025. New zero-emission cars that are registered on or after this date will only have to pay the lowest first-year rate initially, which is currently £10. However, after this, they will have to pay the standard rate (currently £180 per year). 

And if you already own an electric vehicle that you bought prior to this date, unfortunately you aren’t off the hook either. You will also have to pay the standard rate of £180. 

Vehicle tax rates tend to change each year in line with the Retail Price Index (RPI). The latest rates can be found on the government website.

How much does charging an electric car cost?

The average annual cost of charging an electric car is £400, according to the latest research from Compare the Market. That’s down £155 compared to a year ago. Meanwhile, the average cost of fuelling a petrol car is £930 a year. This figure has decreased compared to last year too, but at a slower rate, falling by only £15. 

Of course, the cost of charging an e-vehicle will vary depending on your circumstances – another important factor to bear in mind. For example, charging at home is cheaper than charging at a public charging station. Likewise, charging overnight on an e-vehicle tariff is likely to be considerably cheaper than charging in the middle of the day on a regular tariff. 

The electricity itself isn’t the only cost you need to bear in mind, though. Installing a charging point in your home also comes with a cost. See our article on “Seven things you need to know before installing an electric vehicle charger”. This details the cost of buying the charger itself (around £500-£1,200), as well as installation fees (often in the region of £500-£1,000). 

Depending on where you live, you might qualify for a government grant which can offset some of these costs. If you own and live in a flat or rent any residential property, you can get 75% off the cost of buying and installing a socket, up to a maximum of £350. You will need to own an eligible vehicle and have access to an off-street parking space. If you are currently renting, you will also need to get permission from your landlord.

Is it more expensive to insure an electric car?

The bad news for environmentally-conscious motorists is that e-vehicles are typically more expensive to insure. Analysis from Compare the Market reveals that this is true across all age groups.

Swipe to scroll horizontally
Driver age16-2425-3435-4445-5455-6465-7980+
Electric vehicle£2,320£1,176£888£740£627£608£1,026
Petrol vehicle£2,056£874£679£545£415£401£654

This comes at a time when insurance premiums have risen across all vehicle types, as insurers pass rising costs on to customers. 

This could be off putting to some drivers, particularly when you consider the other annual costs that are due to come in further down the line, such as Vehicle Excise Duty. 

Are electric cars worth it?

Compare the Market has crunched the numbers, and you can save a significant amount over the long run by buying an electric car – around £525 each year in total.

Swipe to scroll horizontally
CostPetrol carElectric car
Insurance£545£740
Fuel£930£400
Estimated VED (road tax)£190£0
MOT£55£55
Total cost per year£1,720£1,195

However, it is important to remember that it will take a significant amount of time for these savings to cancel out the upfront costs associated with buying the car and purchasing and installing the charging point.

What’s more, lots of the incentives that were once on offer are slowly being pulled back. For example, car buyers used to be entitled to up to £1,500 to put towards the cost of a new electric car under the government’s plug-in grant, but that ended on 14 June 2022. And with the road tax exemption in sight as the next victim, you might be left thinking the cost of going green is too much. 

However, it is important to look at your individual circumstances before making a decision. For example, if you drive a lot, it will take less time for fuel savings to cancel out your upfront costs. 

Likewise, if you live in London and drive into the city centre regularly, then you might be tempted by the fact that you don’t have to pay the congestion charge on electric vehicles – at least for now. The London congestion charge is currently £15 per day. This means that, if you drive into the congestion zone area every day, buying an electric car could result in a saving of over £5,000 a year. However, this perk will also be scrapped from 24 December 2025.

Similarly, if you are already looking to buy a new vehicle because your old one isn’t Ulez compliant, it might be worth thinking about going electric. The Ulez charge is currently £12.50 per day. Through the Ulez scrappage scheme, you could even claim up to £2,000 from the government to help offset the costs of upgrading your vehicle.

Another important factor to consider is that, from 2035, the sale of new petrol, diesel and hybrid vehicles will be banned in the UK. In other words, the future is electric. 

Once this deadline comes in, you will still be able to buy and sell combustion-engine vehicles second hand. However, it is likely they will fall in value considerably on the second hand market as they become less desirable – meaning you could get less for your vehicle when you decide to sell. 

If the government decides to impose financial penalties on drivers of polluting vehicles, it will only exacerbate this effect.

Katie Williams
Staff Writer

Katie has a background in investment writing and is interested in everything to do with personal finance and financial news. 

Before joining MoneyWeek, she worked as a content writer at Invesco, a global asset management firm, which she joined as a graduate in 2019. While there, she enjoyed translating complex topics into “easy to understand” stories. 

She studied English at the University of Cambridge and loves reading, writing and going to the theatre.