EV road tax: why you’re still on the right journey - a message from our CEO, Gurjeet

The recent budget brought some wins and losses for EV drivers: an extra £1.3bn in grants and the reconfirmation of low tax rates on salary sacrifice; but also a new “pay-per-mile” tax, coming in 2028.

If you’re an EV driver, or are thinking about switching, you might be asking yourself if driving electric is still the right thing to do. Let’s get into it. 

The switch to EVs remains compelling and our drivers are consistently telling us how they won’t go back to petrol. And aside from government support, there are many other ways EVs are getting cheaper. You might not hear these in the headlines.

Just as in our phones, tech developments bring better products and lower costs in our cars.

Since 2015, battery prices have globally dropped 77%, reducing the cost of a typical car battery by over £20,000 - radically changing the game. New cars are launching all the time. 2025 brought models such as the Dacia Spring, available from just £189 a month, to the BMW iX3 with over 400 mile range. 

Running costs can be much cheaper. Drivers can save over 80% on fuel vs petrol when they charge at home, thanks to Octopus Energy’s market-leading smart tariffs. 

And as an Octopus EV driver, you can charge for just 6p/kWh at home - roughly 2p per mile when you drive, compared with 13-18p per mile for a petrol car.

Even if the 3p per mile tax launched today, adding it to the cost of charging at home this would essentially mean Octopus EV drivers paying 5p per mile - still much cheaper than petrol or diesel. The government has also increased the costs of petrol and diesel, with the discounted 5p fuel duty being removed in September 2026 and from April 2027, they will also be ending the fuel duty freeze, with it due to go up with inflation from then on.

If you can’t charge at home, the public charging network is growing at pace. Changes to planning law will also make it easier to install pavement gullies, allowing drivers to access their home energy tariffs when parking on the street.

Our team has run the latest numbers on charging costs - you can geek out on the details below. 

If you already have a car with Octopus EV, we’ve got you covered. You weren’t expecting the 3p per mile tax, and we can understand that this extra cost would be frustrating mid-contract. So, as part of our commitment to give you the best experience we can, we’re making adjustments on our side to absorb it, so you don’t have to.

The EVUK report earlier this year summed it up well. An overwhelming majority of people buying an EV can save money compared to an equivalent petrol car, at an average of almost £6,000 over the course of their lease. Those fundamentals haven’t changed. 

We set up Octopus EV to make the switch to electric easy and affordable for everyone - and we’re looking forward to working hard for you on this in 2026. 

For now, thank you for trusting us to take you on that journey. We hope you have a wonderful festive season and an electric 2026. 

Yours sincerely,

Gurjeet Grewal 

CEO

In case you want to deep dive further on the numbers, we wanted to give you full transparency. Let’s take a look. 

Data point(s) 1: 

• Charging an electric car at home can cost between 2p to 7p per mile. 
• Charging an electric car on the public network varies from 17p to 25p per mile

How did we calculate this?

Step 1: Car efficiency - how many miles can you drive on 1 kWh of electricity?

Typically, electric cars achieve 3-4 miles/ kWh; up to 5 miles/kWh for the most efficient EV.

Source: EV Database has efficiency across all electric cars.

The EV Database reports efficiency as Wh per mile, the inverse of our approach.

To get to miles per kWh, take 1000 and divide by the efficiency number on the EV Database. 

For example: 

• EV Database shows the efficiency of the MG4 is 274 Wh per mile 
• To get to miles per kWh, take 1000 / 274 = 3.65 miles per kWh 

Step 2: Cost of electricity - how much does 1 kWh of electricity cost?

Electricity costs vary, for example 

• Home charging, Octopus EV customers on Intelligent Octopus Go - EV Saver: 6p/kWh 
• Home charging, Octopus Energy Fixed 12months for SW15 postcode: 25p/kWh
• Kerbside charging e.g. Believ in SW15, or Connected Kerb in TW20: 56p/kWh
• Ultra rapid charging at SW15 Shell chargers: 89p/kWh 

These costs are accurate at time of publishing (Dec 2025)

Public charging costs sourced from Electroverse.

Step 3: Calculating cost per mile

Calculation: If we divide the electricity cost by a typical 3.5 miles per kWh, this tells us how much it costs per mile.

• Home charging, low cost overnight charging: <2p per mile 
• Home charging, standard day rate: 7.1p per mile
• Kerbside charging: 17.5p per mile 
• Ultra rapid charging: 25.4p per mile

Data point 2: 

• Petrol costs 13p to 18p per mile. Source: Nimblefins
• Tax on petrol is 7p per mile or more

RAC Foundation estimates that 55% of the cost of petrol is tax. 

If the cost of running a petrol car is 13p or more per mile, this implies tax is 7p per mile or more.

Data point 3: The £25 million grant for pavement gullies 

The electric vehicle (EV) pavement channels grant funds local authorities to install cross-pavement channels in England. This will support residents without access to off-street parking to charge their EVs at home and benefit from cheaper, domestic tariffs.

The £25 million capital fund will be allocated to local authorities over the financial year of 2025 to 2026 in England.

Data point 4: Battery prices have plummeted 

BloombergNEF reported that battery prices have dropped to $108 per kWh in Dec 2025. 

A typical EV battery size may be c 60kWh, although they do vary, as seen in the EV Database. 

In 2010, this car battery would have cost $88,440. 

Today, this same car battery would cost $6,480.

Source: BloombergNEF

Data point 5: Dacia Spring available for £189 per month 

Price accurate at time of publishing (15/12/25) via personal contract hire from Octopus EV. 

Data point 6: BMW ix3 with 500mile range on WLTP test cycle 

Source: BMW