With the prices of electric vehicles somersault In recent months, consumers have been wondering whether electric vehicles can save them money compared to gasoline-powered cars. Experts say the answer isn’t always clear.
“What I like to say is that comparing gasoline to electric vehicles is like comparing oranges to 20 different varieties of apples,” said Keith Barry, an auto industry reporter for Consumer Reports.
There are several factors to consider when it comes to cost, including the price of new and used electric vehicles, electricity costs in your state, and how you plan to charge your car. While electric vehicle prices are falling, they’re still higher on average than gas-powered vehicles, which may be an immediate turnoff for some buyers.
At the same time, electric vehicles can reduce maintenance and fuel costs, allowing owners to get more money back, according to a report released Wednesday by the nonprofit Coltura.
“When you compare a gasoline sedan to an electric vehicle, the gap we saw is always positive, because an electric vehicle is always cheaper,” said Ron Barzilay, data and policy partner at Coltura.
Coltura’s findings show that the average EV driver saves $100 per month in fuel and maintenance costs, and that “super-users,” or drivers who consume up to 100 gallons of gas per month, would save an average of $400 per month by switching to an EV.
Here are some of the cost tradeoffs between electric vehicles and gasoline vehicles, according to data and industry experts.
How much does a new electric vehicle cost?
The price of new electric vehicles remains higher than that of gasoline-powered vehicles. Kelley Blue Book estimates that prices for new electric vehicles fell from $65,000 in May 2022 to $56,648 in May 2024, a 15% decline. But the average transaction price for gasoline-powered cars in July was still cheaper, at $48,401, according to Kelley Blue Book.
That’s partly because most automakers haven’t fully expanded outside the luxury market yet. “That’s where the highest margins are,” Barry said.
As the technology to build them becomes cheaper, automakers will begin to shift to more affordable models, leading to lower prices.
What about used electric vehicles?
The real place to find a good deal on an electric vehicle is the used market. According to a report from Recurrent, used electric vehicles under $30,000 now make up 60% of the inventory. As of May 2024, the average price of a used electric vehicle was $28,767, according to a study by iSeeCars.com.
“When the price of new products starts to drop, the price of used products drops even further,” Barry says.
What are the fuel and maintenance savings with an electric vehicle?
A new analysis from Coltura found that the average American driver, who drives about 11,000 miles per year, saves 8.1 cents per mile on fuel by driving an electric vehicle. That, plus 3 cents per mile in maintenance savings, adds up to more than $1,200 in savings per year.
That’s partly because electricity prices are cheaper and more predictable than the more volatile gas market, said Matthew Metz, Coltura’s founder and co-CEO. Coltura plans to update the index quarterly.
A 2023 study found that electric vehicles have 80% more problems and are less reliable than their gasoline counterparts. As newcomers, they are still working out some technological issues, experts say.
“It’s not really about whether they’re electric vehicles,” Metz said. “It’s just about having this sort of next generation of electronics.”
But while EV reliability may be lower than gasoline-powered cars due to unexpected issues that can arise, the daily wear and tear costs tend to be lower. For example, there’s no need for oil changes or tune-ups, and EVs have a more streamlined system under the hood.
“You don’t have every part of a gasoline car that can fail,” Barry said. “So when an electric vehicle performs as it is supposed to, it costs less to maintain.
Perhaps the only problem for electric vehicle owners is the tires, Barry said. Electric vehicles, being heavier, tend to wear out rubber more quickly.
Does my location impact charging costs?
If you live in New England, chances are you’re not paying as much as your friend on the West Coast. That’s because electricity and energy costs vary widely by region.
“It’s really hard to generalize what will cost less,” Barry said.
Electricity is generally cheaper than gasoline, but there are special cases where it may be better to drive a hybrid vehicle, Barry said.
Coltura ranked the 10 states with the highest savings. The West Coast came in first, followed by Washington and Oregon.
Kelley Blue Book also has a table (see below) that lists home charging costs by state using data from the U.S. Energy Information Administration.
Are there discounts available for electric vehicles?
The government is offering consumers a federal tax credit of up to $7,500 for new electric vehicles and $4,000 for used electric vehicles. However, there are conditions to meet, such as meeting certain income and eligibility criteria.
According to the Treasury Department, more than 150,000 people have taken advantage of the cut so far this year, which some experts say is a slow start.
Local, state and utility incentives are also available for those looking to subsidize the cost of their car, Barry said. You can search for offers in your state on the Department of Energy’s Alternative Fuels Data Center website.
How much does it cost to install a home charging station?
According to HomeAdvisor, the cost can range from $550 to $1,385. Level 1 chargers are the least expensive, with average prices ranging from $300 to $600, while Level 2 chargers, which charge electric vehicles faster, can cost anywhere from $700 to $2,000, including labor.
But it’s not a fixed scale. How much you spend can depend on other factors, like your home’s electrical infrastructure. The cost can reach thousands of dollars, Barry said, if you have to do heavier work, like digging trenches to lay cables.
“If you live in a new home or have a recently upgraded electrical panel, it’s very inexpensive,” Barry said.[But] “You might have a 200-year-old house where you need to have the entire electrical system upgraded.”
While the initial cost may scare some, Metz said home chargers should be viewed as a “long-term asset” for homeowners. “The value will come through,” he said.
