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Electric vehicles vs. petrol and diesel cars: What are the hidden costs?

  • Jun 18, 2025

  • 7 min read

More than half of British drivers are planning to switch to electric vehicles (EVs) this year, marking a nationwide acceleration away from petrol and diesel cars.

This is partly down to the fact people are realising it’s cheaper to drive electric. But it’s also thanks to businesses, who are making the switch much easier by offering EV salary sacrifice schemes.

The savings go far beyond the price tag. To get the full story, you have to factor in everything from fuel and maintenance to tax savings and long-term sustainability – hidden costs that people and businesses often overlook.

Let’s break these down so you can help your employees make the switch with confidence.

Hidden cost 1: Depreciation over time

Electric vehicles usually carry a higher price tag, mostly because of the cost of their batteries. But the gap is closing fast. As battery technology advances and the second-hand EV market grows, more affordable options are becoming available. And although concerns around depreciation have been valid in the past, demand for used EVs is rising. This is helping to boost their long-term value.

Petrol and diesel cars tend to be cheaper to buy initially, which can make them seem like the budget-friendly option. But over time, they often lose their value quickly – sometimes faster than EVs. With the UK’s 2035 ban on new petrol and diesel car sales approaching, their resale value could drop even further, making depreciation a hidden cost worth considering.

Hidden cost 2: Operating prices

Charging an EV – especially at home on a smart tariff like Intelligent Octopus Go – is much cheaper than filling up at a petrol station. You can often charge overnight for just a few pounds, making it a cost-effective option even for regular drivers.

Public charging costs vary depending on the provider, but the cost per mile is usually lower than petrol or diesel. It also means drivers avoid having to navigate unpredictable fuel prices. Over the lifetime of a petrol or diesel car, fuel is one of the biggest expenses – and one of the hardest to control.



Maintenance is another area where EVs shine. With fewer moving parts, they need less regular servicing. There are no oil changes, fewer fluids, and regenerative braking systems help extend the life of your brakes. That means fewer trips to the garage and lower ongoing maintenance costs.

Even better, our EV salary sacrifice scheme covers all your employees’ operating costs: maintenance, servicing, breakdown cover, and fully comprehensive insurance. Drivers can also choose between a free home charger with installation or £600 of public charging credit via Octopus Electroverse (around 4,000 miles of EV charging).

Petrol and diesel cars, on the other hand, need more frequent and often more costly servicing. From oil changes and filter replacements to clutch and exhaust repairs, their complex mechanics mean more things can, and often do, go wrong.

Hidden cost 3: Insurance fees

Worried about high insurance premiums for EVs? Don’t be. Insurance is already included as part of our EV salary sacrifice package, so your drivers are covered from day one, with no surprise costs or extra admin.

That’s especially reassuring given that, historically, EVs have been more expensive to insure. This was mostly because of the high cost of battery replacement and the need for specialist repairs. But that’s starting to change. As more electric models hit the road and repair networks grow, insurers are offering more competitive rates.

Petrol and diesel cars still tend to be cheaper to insure, thanks to well-established repair processes and easier access to spare parts. But as electric cars become more common, that cost difference will shrink, and could even disappear entirely in the future.

Hidden cost 4: Taxation and incentives

Just like insurance, Vehicle Excise Duty (VED) is included in your Octopus EV salary sacrifice package, so there’s nothing extra for you or your employees to sort out. It’s all taken care of upfront.

That’s especially handy with changes coming in April 2025, when EVs will no longer be exempt from VED. Even then, the costs are still lower: most EVs will pay just £10 in the first year, while drivers of typical petrol or diesel cars pay up to £130. The costs are higher for less fuel-efficient vehicles, which pay up to £5,490. After the first year, all drivers pay a standard annual rate of £195.

There are other perks, too. Many EVs qualify for other government incentives and rebates. And they’re exempt from the London Congestion Charge and Ultra Low Emission Zone (ULEZ) fees, making them a smart choice for urban drivers. The same goes for other cities with clean air zones, such as Bath, Bristol, Sheffield and Bradford. This can mean big savings if you regularly drive through city centres.

Petrol and diesel vehicles, on the other hand, face charges in many clean air zones. That means more money out of your employees’ pockets every time they drive into town.

Hidden cost 5: Charging infrastructure and costs

When switching to EVs, drivers often worry about the setup and costs associated with charging. This is understandable: the average cost to install a home EV charger in the UK ranges from £800 to £1,200. To make things easier, we offer free home charger installation as part of our salary sacrifice scheme, so employees don’t have to worry about the extra cost.

Home charging gives drivers the ability to charge overnight when electricity is cheapest – especially with a tariff like Intelligent Octopus Go. It's also far more convenient than heading to the nearest petrol station.

Public charging is also getting easier, with thousands of new chargers being added every month across the UK. Electroverse is Europe’s largest network, giving drivers one-tap access to over 900,000 chargers.

Petrol stations are widely available, but convenience comes with a price. There's no cheap "off-peak" petrol; instead, fuel costs remain consistently high and unpredictable, making budgeting harder for petrol and diesel drivers.

Help your employees save with EV salary sacrifice

EVs might seem more expensive at first glance, but the long-term savings quickly stack up. Drivers save an average of £5,850 over the time they own the car. That’s the kind of money petrol drivers typically spend on fuel in five years.


And this is just the beginning. As charging infrastructure expands and used EVs become more affordable, those who make the switch now will benefit the most. It’s simple: EVs are the smart choice for employees looking to swerve hidden costs and cut their emissions.


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