Keep your car or switch to electric?

The decision is rarely about the car itself

The question “should I switch to an EV?” usually gets framed around the car — battery range, charging convenience, performance. But financially, the only thing that matters is whether the running-cost savings of the EV will recover the higher upfront price within a horizon you actually plan to keep the car.

That’s the calculation. Everything else is preference.

What actually changes when you upgrade

When you keep your current petrol or diesel car, you continue paying:

• Annual fuel
• Insurance
• Maintenance and servicing
• Registration / road tax
• Depreciation on the car’s current resale value

When you upgrade to an EV, your costs become:

• Net upfront premium (EV purchase price − trade-in value of your current car − any incentives or rebates)
• Annual electricity to charge it
• Insurance (often slightly higher because EVs cost more to repair)
• Maintenance (typically much lower — fewer moving parts, no oil changes)
• Registration / road tax
• Depreciation on the EV’s purchase price

The running-cost saving is real. EV running costs are typically 50–70% lower than ICE running costs at current energy prices. The question is whether that saving overcomes the extra you paid upfront.

Break-even is the answer

For most upgrade scenarios, the running-cost gap is around $2,000–$4,000 per year. The upfront premium of an EV after trade-in and incentives is typically $20,000–$30,000 over a comparable petrol car.

That gives a break-even point somewhere between 5 and 10 years. If you keep cars for 8+ years, the math usually favours the EV. If you trade in every 3 years, the math usually doesn’t — you’ll have absorbed most of the EV’s depreciation without recouping the running-cost savings.

The shape of the comparison matters too. Cumulative cost of “keeping the ICE” rises steadily; cumulative cost of “upgrading to the EV” jumps at year 1 (the upfront premium) then rises more slowly. The break-even is the year these two cumulative lines cross.

Where the math is sensitive

A few inputs swing the answer hard:

• Trade-in value. If you can trade in your current car for close to its private-sale value, the EV upfront premium shrinks. If you have to scrap or sell at a loss, the premium grows.
• Incentives. A government rebate or tax credit comes off the upfront price directly. Even modest incentives can pull break-even forward by 2–3 years.
• Annual kilometres. Drivers who do 25,000+ km/year see EV savings dominate. Drivers who do 5,000 km/year see almost no difference.
• Energy prices. A widening gap between petrol and electricity prices makes the EV win faster. If that gap narrows, break-even pushes out.

Run your own numbers with realistic assumptions, and run them twice — once optimistic, once pessimistic. If both versions point the same way, your decision is robust.

The depreciation factor

EV resale values have been volatile. Early adopters of expensive luxury EVs have seen steep depreciation as new models with longer range and lower prices arrive each year. Mainstream EVs from established manufacturers have held value better.

If you’re worried about depreciation, the conservative move is to factor a higher depreciation rate into your calculation than you would for a comparable ICE car. The EV may still win the comparison — but you’ll have made an honest decision rather than a hopeful one.

When keeping the ICE is the right call

Sometimes the right answer is to keep what you have. Specifically:

• Your current car is paid off and runs reliably.
• You only drive 5,000–10,000 km/year, so running-cost savings are small in absolute terms.
• You plan to replace cars every 3 years, so you won’t reach break-even.
• The EV you’re considering is more than 3× the value of your current car — you’re financing a bigger upgrade than the math justifies.

A reliable, paid-off car is one of the most cost-effective assets a household can have. The financial case for an EV has to genuinely beat that, not just the case for “buying any new car.”

Next steps

Use our ICE to EV upgrade calculator to model the full upgrade decision with trade-in, incentives, and break-even. To compare just the running-cost gap (without the upgrade decision), the EV savings calculator isolates that comparison. To see the full lifetime cost of either option, the total ownership cost calculator covers all the pieces.