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Neither electric cars nor petrol cars are always cheaper to own. An EV can make up a higher purchase price through cheaper energy and lower maintenance, particularly for a driver who charges at home and covers substantial mileage. But depreciation, financing, insurance, taxes and resale value can outweigh those savings. The right comparison is between similar vehicles, using your local prices, annual mileage and expected ownership period—not a universal cost-per-mile claim.
What total cost of ownership includes
Total cost of ownership (TCO) is the cost of having and using a vehicle over a defined period, less what you recover when you sell it. Comparing sticker prices or fuel bills alone misses major costs that can change the result.
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For a purchase, a useful framework is:
TCO = purchase price + financing + energy + maintenance and repairs + insurance + taxes and registration + charging equipment and installation, where applicable − incentives − resale value.
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NITI Aayog’s India methodology groups vehicle purchase, annual operating costs and residual value, including energy, maintenance, road tax and registration, insurance and financing. The European Commission’s calculator likewise treats purchase price, subsidies, residual value, depreciation, road tax, energy, insurance and maintenance as relevant inputs. The exact categories and rules depend on the country and whether you buy or lease.
Separate upfront cost from recurring cost
Purchase price, charger installation and some taxes may be paid upfront; energy, insurance and maintenance recur. Financing adds interest and fees over time. Resale value is a future offset, not guaranteed cash: it depends on the vehicle, condition, mileage and used-car market when you sell. Keep these categories separate in your worksheet so you do not accidentally count a cost twice.
Compare equivalent vehicles
Start with vehicles that serve the same purpose: similar size, passenger and cargo capacity, performance and equipment. A smaller EV compared with a larger petrol car—or a new EV compared with an older used petrol car—may answer a different question. Use the same mileage and ownership period for both, and make sure each price reflects the same tax treatment and any incentives actually available to you.
What the available comparisons show—and why they differ
Published examples do not produce one universal winner. Their results depend on location, vehicle category, purchase and resale assumptions, financing, energy prices and which costs the analysis includes.
| Source and scope | Reported comparison | Important qualifications |
|---|---|---|
| Welsh Government, 2026 | Illustrative eight-year total: £36,643 for a petrol small hatchback and £34,065 for a battery-electric small hatchback. | Worked example for ownership beginning in 2025, at 10,000 miles per year. It is an illustration, not a current universal market result. |
| AAA, 2026, United States | Average annual cost to own and operate a new vehicle: $12,863. | Models five years and 75,000 miles; includes fuel, maintenance, repair and tire costs, license, registration and taxes, depreciation, and finance charges. |
| AAA, 2026, United States, medium sedans | Gas models: $10,582 annually. Comparable EV medium sedans: $3,080 more per year, or 29.1% higher. | Category-specific new-car comparison. AAA attributed the EV difference to higher depreciation, fees and finance costs, despite lower energy costs. |
| AAA, 2026, studied vehicle categories | EV charging costs were about 66%–70% lower than fuel costs. | Energy savings in the study could still be outweighed by depreciation, fees and financing. |
| UK Department for Transport, January 2024 | Home charging: around 8p per mile; petrol or diesel fuel: 13p–17p per mile. | Dated UK examples. Actual costs vary with tariffs, fuel prices, vehicle efficiency and charging mix. |
| BEUC, EU average ownership-cost analysis; report webpage accessed 2026 | BEVs were already the lowest-cost option for used-vehicle buyers and were projected to be the most economical new medium cars from 2026 onwards. | Analysis accounts for leasing and energy prices but excludes maintenance, insurance, and country-specific taxes and subsidies, so it is not a complete all-in comparison. |
The examples answer different questions. The Welsh Government’s illustrative small-hatchback comparison favors the EV over eight years under its assumptions. AAA’s 2026 U.S. medium-sedan comparison favors gas models on annual ownership cost, while finding substantially lower EV energy costs. BEUC’s EU result excludes several costs that belong in a full household budget. Differences in geography, vehicle samples, financial assumptions and included costs explain why these results should not be combined into a single global average.
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How to compare the costs for your own situation
Build one estimate for each vehicle over the period you expect to keep it. Use the same distance driven and sale date, and record the source and date for each input. If a figure is a promotional rate, a one-time allowance or a forecast, label it rather than treating it as a permanent price.
- Choose the vehicles and period. Select comparable models and a realistic ownership term, such as the years until you expect to sell or replace the car. Use the same annual mileage for both.
- Enter the net purchase cost. Begin with each vehicle’s price in your market. Subtract only incentives for which you qualify and expect to receive. Add financing interest and fees consistently; if you pay cash, do not invent a finance charge.
- Estimate resale value at the end of the term. Use a credible estimate for the same age, mileage and local market. Subtract that value from ownership cost. If the estimate is uncertain, calculate a low, middle and high resale case rather than presenting one forecast as certain.
- Calculate energy cost from your driving and charging mix. Estimate annual distance divided by real-world efficiency, then multiply by your applicable electricity or fuel price. For an EV, separate home, off-peak and public charging if you expect to use different rates. For a petrol car, use fuel economy and the price per litre or gallon in your market.
- Add model-specific maintenance, repairs and tires. Use service schedules and estimates for the exact models and years. Include tires and likely repairs; do not assume an EV has no maintenance or that every EV has the same service costs.
- Get insurance and tax figures for your location. Obtain quotes for the actual vehicles and driver, then include registration, road tax, fees and other applicable charges over the same ownership period. Check current local eligibility and rules for any tax incentive.
- Add charging equipment only when it applies. Include the purchase and installation cost of a home EV charger if you need one. If you already have suitable charging access or will rely on public charging, model the costs and rates that apply to your situation instead.
- Compare the total and test uncertainties. Add costs, subtract incentives and resale value, then compare both the whole-period total and the annualized cost. Change the assumptions most likely to move the answer—mileage, charging rates, resale value and financing—and see whether the result holds.
A simple worksheet
| Cost or credit | EV estimate | Petrol estimate |
|---|---|---|
| Purchase price after eligible incentives | Your local vehicle and incentive figures | Your local vehicle and incentive figures |
| Financing interest and fees | Your loan terms, if applicable | Your loan terms, if applicable |
| Energy over the ownership period | Electricity by charging type and expected use | Fuel use and local fuel price |
| Maintenance, repairs and tires | Model- and term-specific estimate | Model- and term-specific estimate |
| Insurance, taxes, registration and fees | Quotes and current local charges | Quotes and current local charges |
| Home charger and installation, if needed | Quote for your property and electrical setup | No EV charger cost |
| Expected resale value | Subtract from total | Subtract from total |
Do not treat the worksheet as an invitation to fill every line with a guess. Get quotes where possible, and mark estimates clearly. A comparison that uses exact insurance quotes and plausible resale ranges is more useful than one with precise-looking totals based on unsupported assumptions.
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Annual mileage and energy efficiency
Energy savings accumulate with distance. A driver covering more miles has more opportunity for a lower cost per mile to offset an EV’s higher purchase cost, if there is one. A low-mileage driver may not save enough on energy during the planned ownership period to make up the difference. Efficiency matters too: compare the actual vehicles, not a generic EV and generic petrol-car rate.
AAA’s 2026 U.S. study illustrates why cheaper energy is not the same as cheaper ownership. Across its studied categories, EV charging costs were about 66%–70% lower than fuel costs, but the study also found that depreciation, fees and financing could outweigh those savings. Its medium-sedan result is specific to that category and analysis, not a forecast for every driver.
Where and when you charge
Home charging can make EV running costs more favorable, especially when a household can use a low-cost or off-peak tariff. Public charging prices and the share of energy obtained away from home can change the calculation. The UK Department for Transport’s January 2024 examples—around 8p per mile for home charging versus 13p–17p per mile for petrol or diesel—are useful as a dated illustration, not as current prices for every UK household.
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A home EV charger is an optional, situation-dependent cost, not a purchase every EV owner necessarily needs. Include equipment and installation if they are required for your parking arrangement; confirm the relevant price and electrical requirements for your property rather than applying a generic figure.
Depreciation, financing and resale
Depreciation is the loss in value between purchase and sale. A higher resale value can materially reduce the effective cost of ownership; a lower-than-expected one can erase operating savings. Financing affects the cash cost too: compare actual loan rates and fees, and do not assume that a lower energy bill cancels out a higher finance charge.
AAA’s 2026 U.S. medium-sedan analysis is a useful warning against judging ownership by energy alone: its comparable EV models cost more annually than gas models largely because of depreciation, fees and financing, even though charging was cheaper than fueling. The result may differ for other vehicle classes, markets and ownership periods.
Maintenance, repairs and tires
EVs can avoid some engine-related service items, including oil changes, but that does not make all maintenance free. Tires, repairs, insurance and vehicle-specific service still belong in the estimate. Tire costs may also differ by vehicle; the Welsh Government’s illustrative comparison notes that tire costs may be slightly higher for EVs.
In that eight-year Welsh example, the estimated maintenance cost was £600 for the BEV and £800 for the petrol hatchback. Those estimates describe the example, not a guaranteed maintenance bill for another model or owner.
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Insurance, taxes and local incentives
Insurance varies by model and driver, so quote both cars rather than assuming one powertrain is cheaper to insure. Registration, road taxes, fees and incentives also depend on location and can change over time. Use current rules for the place where the car will be registered, and include incentives only if the buyer and vehicle qualify.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to use a calculator without trusting a misleading result
Calculators can make the arithmetic easier, but they do not make an estimate more reliable than its inputs. The European Commission’s calculator lets users change country, mileage and ownership years and enter purchase price, subsidies, residual value, road tax, energy, insurance and maintenance. Its calculations are based on German market and financial-system data, so a result should not automatically be treated as representative of another country.
The U.S. Department of Energy’s Alternative Fuels Data Center offers a vehicle cost calculator based on driving habits and warns that vehicle prices and specifications change frequently. Verify the model-year data and local assumptions before relying on a result.
- Set the same annual mileage and ownership period for both vehicles.
- Check whether the calculator includes financing, taxes, insurance, maintenance, charger installation and resale value.
- Enter your own electricity tariff and realistic share of public charging where the tool permits it.
- Confirm the country, currency and vehicle-market assumptions behind the result.
- Compare the tool’s output with direct insurance quotes, current energy prices and a defensible resale estimate.
When an EV is more likely to cost less overall
An EV’s economics are more favorable when its purchase price after eligible incentives is close to the comparable petrol car, charging is reliably available at low cost, and the owner drives enough miles over a sufficiently long period to benefit from energy savings. A strong resale value and moderate financing costs also help. These conditions are not guarantees; use actual model prices and ownership estimates.
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The Welsh Government’s 2026 illustrative small-hatchback example shows how an EV can come out ahead under a particular set of assumptions. It modeled eight years beginning in 2025 and 10,000 miles a year, with purchase costs of £29,500 for the electric car and £23,500 for the petrol car. It assumed resale values of £8,000 and £5,000 respectively, annual insurance of £700 and £600, and maintenance over the full period of £600 and £800. Its energy assumptions were £0.28/kWh and 4 miles/kWh for the EV, and £1.35/litre and 45 mpg for petrol. The government reported illustrative total costs of £34,065 for the EV and £36,643 for petrol; those totals describe that worked example, not a forecast for a current buyer.
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When a petrol car may cost less overall
A petrol car can be cheaper to own when its upfront price and financing are substantially lower, the driver covers relatively few miles, EV charging is expensive or inconvenient, or the EV’s expected resale value is weaker. A used petrol car compared with a new EV can also favor petrol on initial outlay, though that is not an equivalent new-car comparison. Use comparable age, condition and vehicle capability when the goal is a fair powertrain comparison.
AAA’s 2026 U.S. medium-sedan comparison found annual costs of $10,582 for gas models, with the comparable EV medium sedans $3,080 higher annually, or 29.1%. AAA attributed the gap to higher EV depreciation, fees and finance costs in that category. It is evidence that the ownership result can reverse despite lower EV energy costs—not proof that petrol cars always win.
How to interpret the EU used- and new-car finding
BEUC reported that battery-electric vehicles were already the lowest-cost option for used-vehicle buyers and projected them to be the most economical new medium cars from 2026 onward in its average EU ownership-cost analysis. That finding is useful context, but it is not an all-in estimate for every country or household: the analysis accounts for leasing and energy prices while excluding maintenance, insurance, and country-specific taxes and subsidies. Those exclusions can affect an individual’s result.
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Choose the car with the lower credible cost over the period you will actually own it, not the one with the lowest advertised price or energy cost. First obtain local purchase or lease figures, financing terms, insurance quotes and applicable taxes. Then model realistic energy use and charging, maintenance, charger installation if needed, and resale value. Test a range for resale and energy prices if those inputs are uncertain.
Prices, incentives, insurance, energy tariffs and used-car values are among the assumptions most likely to change. Recheck them at the time you buy, and treat a calculator’s output as conditional on its market data and inputs. A published example can show how the arithmetic works; only a location- and vehicle-specific comparison can establish which option is cheaper for you.
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