Diesel vs PHEV in 2026: the real total cost of ownership in Iceland
We ran the numbers on five years of ownership for a mid-size SUV. Fuel, road tax, insurance, depreciation — the gap is smaller than you think.
The setup
We compared two real cars Icelanders cross-shop constantly: a 2024 Skoda Kodiaq 2.0 TDI 4x4 and a 2024 Toyota RAV4 PHEV AWD. Both are family-sized SUVs, both have all-wheel-drive, both retail in roughly the same 7–8M ISK band when new.
We modelled five years of ownership at 18,000 km/year — the Icelandic average — split 70% commuting, 30% longer trips.
Headline result
Over five years, the PHEV is 1.4M ISK cheaper to own than the diesel, assuming you can plug it in at home and you charge nightly. That gap shrinks dramatically — to almost zero — if you cannot home-charge.
Where the difference comes from
| Cost category | Diesel (Kodiaq) | PHEV (RAV4) | Notes |
|---|---|---|---|
| Fuel/electricity | 2.85M ISK | 1.10M ISK | PHEV assumes 75% miles on battery |
| Road tax (5 years) | 410k ISK | 95k ISK | Iceland's emissions bands punish diesel |
| Insurance | 720k ISK | 690k ISK | Negligible |
| Servicing | 480k ISK | 350k ISK | PHEV has no DPF, no DEF |
| Depreciation | 3.6M ISK | 3.4M ISK | PHEV holding value slightly better |
| Total 5-yr cost | 8.07M ISK | 5.64M ISK |
The "if you can't plug in" caveat
If you live in a Reykjavík apartment with no parking spot, the PHEV math collapses. Running a PHEV on petrol alone is worse than running a comparable mild-hybrid — you're carrying 300 kg of battery you can't use. In that scenario, the diesel actually wins the 5-year race by ~200k ISK.
If you can install a 7 kW home charger (typical install: 250–450k ISK including the unit), the PHEV recovers that and pulls ahead within 18 months.
The "what about pure EV?" question
A pure EV (Tesla Model Y Long Range, Kia EV6) beats both on running cost — by another 600–800k ISK over five years. The reasons people still pick a PHEV instead are real: highland trips, towing, no charger anxiety on multi-day road trips.
Bottom line
- Home-charging available → PHEV wins comfortably
- Home-charging available + mostly short trips → pure EV wins by even more
- No home-charging, mostly long trips, occasional highland → diesel still has a role, but it's narrowing every year