Average annual cost of car maintenance and use in 2023 was $12,182, about $1,500 higher than in 2022. Electric vehicles are quickly becoming popular choices for people looking to save money and minimize their carbon footprint. But is electricity cheaper than gasoline?
The price of being green: EVs versus gas-powered vehicles
When you start looking for your first electric vehicle, you'll have to learn few things. You'll probably be more interested in finding out how far your EV can go between charges than in calculating miles per gallon. MPGe, or miles per gallon of gasoline equivalent, is one figure that is frequently used. Cost per kilowatt hour (kWh), which is probably going to be more at a public charging station than it will be when you charge your car at home, is another way to gauge efficiency.
Your rate for auto insurance is another expense you should think about. Almost everywhere in the United States requires coverage for drivers of all car types. As EVs become more popular and repair costs decrease, auto insurance for electric vehicles may eventually become more affordable than for gas-powered vehicles.
You can better grasp the costs associated with owning and operating gas and electric automobiles by referring to the chart below. Each one's range or mileage as well as the typical cost of auto insurance are provided. Remember that since auto insurance is a highly customized product, your quote will probably not match the industry averages.
Vehicle (2023 model) | Base MSRP | EPA estimated range or fuel efficiency | Average annual cost for full coverage car insurance | |
Electric | Chevy Bolt | $27,000 | 120 MPGe / 259 mi total range | $2,100 |
Nissan Leaf | $29,000 | 111 MPGe / 149 mi total range | $2,100 | |
Tesla Model S | $75,000 | 120 MPGe / 405 mi total range | $2,800 | |
Tesla Model X | $80,000 | 102 MPGe / 348 mi total range | $4,400 | |
Tesla Model 3 | $40,300 | 132 MPGe / 272 mi total range | $2,600 | |
Toyota Prius | $28,000 | 52 / 52 MPG | $2,100 | |
Gas-powered | Ford F-150 | $34,600 | 25 / 25 MPG | $1,750 |
Honda Civic | $23,750 | 44 / 51 MPG | $1,900 | |
Nissan Altima | $25,000 | 27 / 39 MPG | $2,200 | |
Toyota Camry | $26,000 | 22 / 33 MPG | $1,800 |
Rewards and rebates
The federal tax credit is a significant benefit that automakers advertise to consumers who purchase new plug-in hybrid and all-electric cars. The actual credit amount will differ based on the battery's capacity and certain conditions, even if the maximum credit amount is $7,500. For instance, this credit will be given to the lessor rather than to you if you lease an eligible car.
Remember that these credits have a cap that is subject to change at any time and is imposed by each automaker. Through the U.S. Department of Energy, a list of currently qualifying vehicles and the maximum credit amounts can be accessed. The tax credit is subject to certain limitations. The car must be assembled in North America, for example, and applicants must make less than a specific amount per year.
There are also municipal and state incentives available for buying an electric car. Information about all the various state incentives available to consumers purchasing electric vehicles may be found at the National Conference of State Legislatures. Rebates on home energy bills, assistance with financing home charger installations, exclusions from HOV lanes with the proper car registrations, and other advantages and extra incentives are just a few. Owning and charging an electric car at home is also eligible for rebates and incentives from several electric utility companies.
There are also special financing alternatives available for purchasing a new electric vehicle. Green auto loans designed especially for fuel-efficient and electric vehicles provide additional benefits to owners in order to offset the higher initial cost of these vehicles. This could result in more reasonable monthly payments by having longer payback terms and lower interest rates.
Do EVs cost less than gas?
The cost difference between charging an electric automobile and filling up a car with gas is a significant consideration when thinking about buying one. Depending on the size of your battery, charging an EV at home using a Level 2 charger will cost anywhere from $0.12 to $0.24 per kWh, or around $6 to $18 for a full charge that can usually last more than 200 miles.
For the majority of drivers, this is far less expensive than gas. Using public fast chargers is more expensive; an entire charge can cost between $20 and $40. A kWh often costs $0.30 or more. Even though it costs more than home charging, an equivalent petrol fill-up for a vehicle with a 200-mile range is probably still less expensive. In general, EV drivers will save money over time by using less electricity than gas, especially while charging at home.
Cost to refuel or recharge | Total cost for 200 mi | |
$3.77 per gallon of gas | 200 miles @ 24.9 MPG | 8 gallons of gas = $30.16 |
$6–$18 for regular charging | 200+ miles | 1 charge = $6–$18 |
$20–$40 for fast charging | 200+ miles | 1 charge = $20–$40 |
Electric vehicle hidden costs
Although you may have decided to finance or purchase a new electric vehicle and have an idea of how much your auto insurance will cost, there are still additional expenses associated with owning an electric vehicle. These are some of the unstated expenses associated with having an electric car.
The reduction in value of electric cars
A brand-new car's value might decrease by up to 20% or more in the first year. This can be considerably higher for an electric vehicle, depending on how quickly advancements in technology have occurred. Older cars may become outdated as a result of newer models' increased battery life and range.
It matters what brand and model the car is. A Nissan Leaf only kept 34% of its resale value after five years, compared to roughly 48% for a Tesla Model 3. In contrast, a Toyota Camry kept 65% of its value when it was sold.
Degradation of electric car batteries
Battery degradation is another issue that owners of electric cars may encounter as their vehicles age. The amount of gas in an automobile doesn't run out as it gets older; but, the battery range of an electric car decreases with age, limiting the maximum distance it can travel before needing to be recharged. An electric vehicle's battery will inevitably run shorter than when it was brand-new, despite the fact that a variety of circumstances, such as cold temperatures and incorrect charging, can shorten battery longevity. Additionally, you will ultimately need to replace it, much like you would with a gas-powered car battery. In a moment, more on that expense.
Upkeep for electric cars
Since all-electric cars have fewer moving parts than gas-powered cars, one could assume that their maintenance costs are lower. This is partially true: regenerative braking extends the life of brake systems, and electric cars don't need frequent tune-ups or oil changes. Servicing an electric car only costs an estimated $949 per year, while servicing a gas vehicle costs $1,279 yearly.
Rather, the eventual battery replacement of an electric car might be one of the biggest expenses involved. While those opting for a pre-owned vehicle may encounter this expense sooner rather than later, those purchasing a brand-new EV might not have to worry about it for a number of years. Even without labor, the average cost of replacing a battery is $5,000 to $15,000.
Modern batteries, however, can live up to ten years or longer, depending on a number of factors, including the car itself, how it is driven, how it is charged, and more. Several automakers warranty their electric car batteries for eight to ten years or 100,000 miles.
Recharging electric cars
Any prospective owner of an electric vehicle's top concern might be how to charge one. An electric car can take anywhere from 30 minutes to several hours to fully charge, and peak hours may result in higher charging costs whether you use a public or at-home station. Owning an electric car presents additional difficulties for people who live in townhouses or condominiums where installing an at-home charger isn't practical or feasible.
Installing an EV charger is useful if you can charge your EV at home, but it does come with an additional expense. Usually, to convert your home, you'll need to contact an electrician and buy a separate charger. It's also a good idea to precisely estimate the whole cost of your electric vehicle to see whether it will save you money on gas for your current vehicle. Finding out how much your electricity costs per kilowatt during peak and off-peak hours is the first step. You might want to check with your power provider to see if there are any cost reductions available for electric car owners who charge their vehicles at home, since some electric utility providers do give incentives and rebates for doing so.
Is it wise to get an electric car?
Buying or leasing an electric vehicle (EV) provides several benefits, including a reduced carbon footprint, the possibility of cost savings, and more. You might eventually have no choice but to drive an electric car because there are even moves in some U.S. states to prohibit the sale of gas-powered automobiles, like California. But if now is the right moment for you to buy one is a personal choice that you should make based on your circumstances. If you reside in a remote place with limited access to public charging stations, it could be advisable to postpone. Additionally, you might not be able to afford many EVs due to their greater initial cost.
Naturally, you still have options if you choose not to go with an EV. Many affordable gas-powered and hybrid cars are available that are inexpensive to insure and operate. Nonetheless, as America progresses toward a more accepting attitude toward them, it can be a good idea to learn the truth about electric cars and how you might be able to easily incorporate one into your daily life.
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