If a spike in petrol prices is making you think about going electric – read this…
I had an interesting conversation recently with someone who is seriously considering switching back from an electric vehicle to a petrol or possibly a hybrid car.
Not because of range anxiety. Not because they cannot find a charger. But because every single month, they are out of pocket.
They drive an electric company car and claim mileage from their employer. But the numbers only stack up if you can charge at home. If you can’t, the economics start to look very different.
Whilst it is true that registrations of electric vehicles are still growing rapidly in the UK, according to the Society of Motor Manufacturers and Traders (SMMT), battery electric vehicles accounted for about 24% of new car registrations. What this doesn’t show, however, is whether there is also a trend of people switching back.
What is becoming clearer is that the EV experience is mixed. If you can charge at home, running costs can be extremely low. Government estimates suggest home charging costs around 8p per mile on average. But if you rely on the public charging network, the numbers change dramatically.
Zapmap’s charging price index shows the average pay-as-you-go public charging price is roughly 54p per kWh for slower public chargers and around 76p per kWh for rapid chargers. That works out at roughly 16p per mile for slower charging and around 23p per mile for rapid charging for a typical EV.
In other words, the cost of electricity for your car depends hugely on where you plug in.
That is very different from petrol. For petrol or diesel cars, a national mileage rate broadly makes sense. Fuel prices vary slightly between petrol stations, but the difference is relatively small. Petrol is petrol, wherever you buy it.
Electricity is different.
The price of charging an EV can vary massively depending on:
- whether you charge at home;
- whether you use a slow or rapid public charger;
- which charging network you use;
- where in the country you happen to be.
And yet most mileage reimbursement systems still assume something much closer to the petrol model.
HMRC’s current advisory electric mileage rates try to account for this by splitting charging into two categories: 7p per mile for home charging and 15p per mile for public charging.
But when rapid public charging can easily exceed 20p per mile, it is easy to see how some drivers might still find themselves paying the difference.
If you are driving an electric company car and regularly relying on public chargers, you are effectively subsidising your employer.
There is also a structural imbalance in the system.
Electricity used at home is charged at just 5% VAT, while public charging is charged at 20% VAT. So those who cannot charge at home are not only paying more per unit of energy, they are also being taxed more for it.
And even accessing cheaper home charging is not free. Installing a home charger typically costs in the region of £800 to £1,000, and while there are grants available in some cases, many drivers still have to fund that upfront themselves.
When you also consider that since April 2025, electric cars have started paying vehicle tax, including the expensive car supplement for higher-value vehicles, and the cost of parking, congestion charges and tolls are gradually aligning with petrol vehicles, the incentives are reducing.
The 2025 Budget announced that the Government is looking at introducing a new pay-per-mile electric vehicle excise duty (eVED) from April 2028. The scheme will charge pure electric car owners 3p per mile and plug-in hybrid owners 1.5p per mile to offset lost fuel duty revenue. Based on current proposals, this adds roughly £300 for 10,000 annual miles. This will add more complexity for those using their cars for work.
Company car drivers still benefit from favourable benefit-in-kind tax rates, and there are still some targeted grants available. But the simple message that EVs are always cheaper to run has become much more complicated, and for some drivers, particularly those relying on public charging, it simply is not true.
Employers will need to rethink their policies, whether that is to reimburse actual public charging costs based on receipts, rather than relying purely on a mileage rate, or provide corporate charging cards or fleet charging accounts, or even introduce different reimbursement rates for home charging, slow public charging and rapid charging.
The UK has spent years trying to encourage drivers to switch to electric vehicles. But the EV transition should not penalise people who don’t own a driveway, and it certainly should not leave people paying out of their own pocket to drive a lower-carbon vehicle for work.
If we are looking for a just transition, then national mileage rates need to be looked at, and employers should be asking if their company policies are fair to all.