By the LetsLease team
Most guides on this answer the question by listing the pros and cons of each and leaving you to weigh them up. That is not much help, because the honest answer does not depend on the cars at all. It depends on two things about you.
Can you charge at home or at work, reliably and without thinking about it? And what kind of miles do you actually do? Answer those two and the choice mostly makes itself. This post explains what the four options really are, including the one that is sold as a hybrid but behaves like a petrol, and then gives you the test.
The Short Answer
If you can charge reliably and your journeys fit the range, go fully electric. It is the cheapest to run and by far the best for company car tax.
If you can charge but need long range flexibility, a plug-in hybrid works, provided you will genuinely plug it in. If you will not, it is the worst of the four.
If you cannot charge, take a full self-charging hybrid. And be careful with mild hybrids, which are sold as hybrids but cannot drive on electricity at all.
The Four Options, Honestly Described
| Type | Can it drive on electricity? | Does it need charging? | Company car tax |
|---|---|---|---|
| Mild hybrid (MHEV) | No, not at all. The motor only assists the engine. | No, there is no plug | Treated as the petrol or diesel it is based on. No advantage. |
| Full hybrid (HEV) | Yes, short distances at low speed | No, it charges itself from the engine and braking | Below petrol and diesel, above a plug-in hybrid |
| Plug-in hybrid (PHEV) | Yes, a real electric range before the engine takes over | Yes, and it only makes sense if you do | Currently banded by electric range. Announced changes alter this later this decade. |
| Fully electric (BEV) | Only electricity, there is no engine | Yes, always | The lowest of the four by a wide margin |
The Mild Hybrid Trap
Start here, because this is where people lose money without realising. A mild hybrid has a small battery and motor that assist the engine, recover a little energy under braking and smooth out the stop-start system. It cannot move the car on electricity alone. There is no plug and there is nothing to manage.
The efficiency gain is modest and real. The problem is the label. Because it is badged and marketed as a hybrid, buyers assume it brings the tax advantages people associate with the word. It does not. For company car tax a mild hybrid is treated as the petrol or diesel it is based on, so a company car driver choosing one for tax reasons has gained nothing at all.
If the tax position is part of why you are looking at a hybrid, confirm in writing which of the three types a quote refers to before you order. MHEV in the specification means mild hybrid.
Full Hybrid: The Option That Asks Nothing of You
A full or self-charging hybrid has a larger battery and can run on electricity for short distances at low speeds, topping itself up from the engine and from braking. There is no plug and nothing to remember, which is the whole point of it.
It is at its best in town, in traffic and on shorter journeys, where the electric motor does real work and regenerative braking keeps the battery fed. It contributes least on long motorway runs. For anyone who cannot charge at home or at work, this is almost always the right answer, and it is the option most often overlooked in favour of a plug-in hybrid that will never get plugged in.
Plug-in Hybrid: Excellent, Conditionally
A plug-in hybrid has a much bigger battery you charge from a socket, giving a genuine electric range, commonly somewhere between 40 and 60 miles on current models, before the petrol engine takes over. Charged every day, it runs as an electric car during the week and a petrol one on longer trips, which is a genuinely good combination.
Uncharged, it is the worst car on this page. It carries two powertrains and the weight of both, so an unplugged plug-in hybrid uses more fuel than the ordinary petrol version of the same model. This is not a theoretical worry. Research by the International Council on Clean Transportation into real world plug-in hybrid use across Europe found average fuel consumption running at roughly three to five times the official test figure.
The cause is behaviour, not engineering. The same research found company car drivers covering only around 11 to 15 percent of their miles on electric power, against roughly 45 to 49 percent for privately owned plug-in hybrids, where the driver is paying for the fuel themselves. If you will plug it in, it works. If you are honest with yourself and you will not, choose a full hybrid instead.
A tax change worth knowing about
Company car tax on plug-in hybrids is currently banded by electric range, so a longer range means a lower bill. Announced changes replace that structure later this decade with a single rate across the low emission band, removing electric range as a variable and raising the cost most for the longest range plug-in hybrids. On a three or four year agreement signed now, that change lands inside your term. Rates change each tax year and depend on your circumstances, so put the specific car to your accountant. Our guide to hybrid leasing for businesses goes into this properly.
Fully Electric: Cheapest to Run, If It Fits
An electric car is the cheapest of the four to run if you can charge at home, and it carries by far the lowest company car tax, which is why company car drivers have moved to them so quickly. There is no engine, no oil, no exhaust and far fewer moving parts to go wrong.
The two things that decide whether it fits are charging access and journey pattern. Charging at home overnight makes an EV cheap and effortless. Relying entirely on public charging makes it neither, and it is the single most common reason people find an EV disappointing. Range matters less than people expect once you are charging at home, because you start every day full.
The Test That Settles It
Work through these in order and stop at the first one that describes you.
- You can charge at home or at work, and your regular journeys are within a normal EV range. Lease an electric car. It is cheapest to run and best for tax.
- You can charge, but you regularly do long trips that would mean public charging you would rather avoid. A plug-in hybrid fits, as long as you will plug it in daily.
- You cannot charge, and most of your driving is urban, suburban or stop-start. A full hybrid. It needs nothing from you and delivers where you drive.
- You cannot charge, and you do high motorway mileage. An efficient petrol or diesel is still the honest answer, and a hybrid will do less for you than the badge suggests.
- You are choosing on company car tax alone. Electric first, plug-in hybrid second, and not a mild hybrid, which brings no tax benefit at all.
Why Leasing Suits This Decision
Powertrain technology and the tax rules around it are both moving quickly, and buying a car outright means betting on where they land. A lease is a fixed term after which you hand the car back and reassess, and the finance company rather than you carries the risk on what the car is worth by then. That is a genuinely useful property when the ground is shifting, and it is why so many drivers have used leasing to try an EV rather than committing to owning one.
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Not sure which suits your driving? Tell us how you actually use a car and we will tell you honestly which of the four fits.
Hybrid vs Electric FAQs
It comes down to whether you can charge. If you can charge at home or at work and your journeys fit the range, electric is cheapest to run and best for company car tax. If you cannot charge at all, a full self-charging hybrid is the right answer.
A plug-in hybrid sits in between and only makes sense if you will genuinely plug it in every day. If you will not, it is the worst of the options, because it carries a battery and motor it never uses.
A plug-in hybrid has a much larger battery that you charge from a socket, giving a real electric range of roughly 40 to 60 miles on current models. A full hybrid has a small battery it charges itself from the engine and braking, with no plug and no electric range to speak of.
The practical difference is what is asked of you. A full hybrid needs nothing. A plug-in hybrid needs charging to deliver anything, and delivers a great deal if you do it.
A mild hybrid has a small motor that assists the engine but cannot drive the car on electricity at all, and there is no plug. The efficiency gain is modest and genuine.
It is worth having if it comes on the car you wanted anyway, and not worth choosing for tax reasons, because for company car tax a mild hybrid is treated as the petrol or diesel it is based on. That catches people out constantly, since it is sold and badged as a hybrid.
No. A mild hybrid is taxed as the petrol or diesel car it is based on, because it cannot run on electric power alone and its emissions are only slightly lower.
If the tax position is part of why you are looking at a hybrid, confirm in writing which type a quote refers to. MHEV in the specification means mild hybrid and brings no company car tax advantage.
Yes, if you want it to make any sense. An unplugged plug-in hybrid uses more fuel than the plain petrol version of the same car, because it is hauling around a battery and motor it never uses.
This is measured rather than theoretical. Research into real world use across Europe found plug-in hybrid fuel consumption averaging three to five times the official figure, driven almost entirely by how rarely they were charged.
They can be, but only where drivers can charge. The same research found company car drivers covering just 11 to 15 percent of their miles on electric power, against 45 to 49 percent for private owners who pay for their own fuel.
Before committing a fleet, check charging access driver by driver rather than assuming it. Reimbursement policy matters too, since a driver who is paid for petrol but funds their own electricity has no reason to plug in.
A fully electric car, if you can charge at home. Electricity bought on a domestic tariff costs considerably less per mile than petrol, and an EV has no oil changes, no exhaust and far fewer moving parts to service.
That advantage narrows sharply if you rely on public rapid charging, which is much more expensive than home charging. Charging access, rather than the car itself, is what decides the running cost.
Usually not, and this is the most common reason people find an EV disappointing. Relying entirely on public charging removes both the cost advantage and the convenience, and you end up planning journeys around chargers.
If home or workplace charging is not realistic, a full hybrid gives you a good part of the efficiency benefit with none of the charging requirement. Consider an EV again when your charging situation changes.
Most current plug-in hybrids offer somewhere between 40 and 60 miles of official electric range, which covers the majority of daily commutes if you charge every night.
Official figures are measured under standard test conditions, so treat them as a comparison tool rather than a promise. Cold weather and motorway speeds both reduce real world electric range noticeably.
Yes, changes have been announced. Plug-in hybrids are currently banded by electric range, so a longer range means a lower bill for the driver, and that structure is due to be replaced later this decade by a single rate across the low emission band.
The practical consequence is that a three or four year agreement signed now runs into the change while you still have the car. No rates are quoted here because they change each tax year and depend on your circumstances, so ask your accountant to model the full term.
Not by much, and this is where hybrids contribute least. On a long steady motorway run the electric motor does little, there is minimal braking to recover energy from, and the car is carrying the extra weight of its battery and motor.
Hybrids earn their keep in town, in traffic and on stop-start journeys. If your mileage is overwhelmingly motorway, an efficient petrol or diesel remains a perfectly rational choice.
Electric cars usually cost less, because there is no oil, no belts, no exhaust and far fewer moving parts. Hybrids sit close to an equivalent petrol car, since they still have a full combustion engine to look after.
Electric cars do get through tyres faster, because they are heavier and deliver torque instantly, so a maintenance package with good tyre cover is often worth more on an EV than the servicing element is.
Fully electric, by a wide margin, followed by a plug-in hybrid with a long electric range. A mild hybrid brings no advantage at all and a full hybrid brings some but far less than the plug-in options.
Tax rules change each tax year and announced changes will alter how plug-in hybrids are banded later this decade, so confirm the position for the specific vehicle with your accountant rather than working from any general ranking, including this one.
Leasing suits this decision unusually well, because both the technology and the tax rules are moving quickly. A lease is a fixed term after which you hand the car back and reassess, rather than a long term bet on where things land.
It also means the finance company rather than you carries the risk on what the car is worth at the end, which matters more than usual with electric cars, where used values have been less predictable than for petrol equivalents.