With gas prices up over 58% compared to last year, you might be thinking about switching to an electric car to save money.
But considering that electric vehicles tend to be more expensive than gas-fueled cars, and that electricity has its own costs, is it actually cheaper to go electric? The short answer is yes — although it also depends on your driving habits, where you live and the type of vehicle you buy, too. You may even want to consider a hybrid vehicle that has both a gas and electric engine.
Here's a look at how the costs of electric vehicles compare to gas-only cars.
The average transaction price for an electric vehicle (EV) is $56,437, according to Kelley Blue Book — roughly $10,000 higher than the overall industry average of $46,329 that includes gas and EVs. In terms of pricing, an EV is equivalent to an entry-level luxury car.
To save time charging EVs and extend battery life, many drivers also install what's known as "Level 2" chargers in their home, for a total cost of around $2,000, including installation. With a Level 2 charger, it will take less than eight hours to charge your vehicle, according to JD Power.
Most EVs come with a Level 1 charging cable that can be plugged into a common 120-volt household electric outlet, but it can take up to 40 hours to fully charge your vehicle. It's cheaper, but less convenient.
While surveys show that the price gap between EVs and gas-fueled vehicles is expected to shrink in the next decade, that will depend on continued improvements in battery technology, which could result in cheaper production costs.
In the meantime, customers can offset some of the premium paid for EVs through tax credits. The federal government offers a non-refundable tax credit worth $2,500 to $7,500 for newly purchased electric vehicles made after 2010.
However, the credit only applies to the first 200,000 vehicles a manufacturer sells. Tesla and General Motors already surpassed this number, so no credit is available from these manufacturers. A list of electric vehicles that still qualify for the federal tax credit can be found here.
It's also possible that your state offers its own tax credit or rebate. The EV advocacy group Plug In America has an interactive map that shows electric car incentives in each state. New York, for example, offers a rebate worth up to $2,000.
While EVs usually have higher upfront purchase prices, owners can save a lot on operating expenses. A 2020 Consumer Reports study found that EV owners, on average, spend 60% less on fuel compared to internal combustion engine vehicles.
This calculation includes the average use of commercial charging stations (11 visits per 15,000 miles, for a car with a range of 200 miles), which can be two to three times more expensive than charging your car at home. Rates vary when charging at commercial stations, but the total cost per session is roughly $10-45 to fully recharge your car's battery.
As for charging at home, domestic electricity rates vary by state, based on a number of factors like regulation and how the electricity is generated, but the average monthly cost is about $25 per month.
And since EVs have fewer parts than gas-fueled cars (there's no oil to change, no spark plugs to replace), they tend to have lower maintenance costs as well. A recent report by the analytics firm We Predict reveals that after 36 months on the road, service costs were 31% lower for electric cars and light trucks when compared to similar gasoline-based vehicles.
A U.S. Department of Energy report shows that after 15 years, electric cars generally cost less than similar gas-only models, when you factor in the price, maintenance, financing, repairs, the federal tax break and fuel costs. The electric version of a small SUV costs $0.4508 per mile, $0.0219 less than the $0.4727 per mile rate you get with a similar gas-based model.
Based on the average lifespan of a car — 200,000 miles, according to Car and Driver — the cost of a gas-fueled car would then be $94,540, while a similar EV would be $90,160, for a difference of $4,380. Note that this total does not include a possible state tax breaks, however, since they were not included as part of the study.
While EVs are generally cheaper than their gas counterparts in the long run, newer EVs with a battery range above 300 miles can end up costing more. Electric light duty vehicles that cover 300 miles with one battery charge have a per mile cost four cents higher than similar gas models, although that's mostly because they're newer, cutting-edge electric vehicles that are sold at luxury car prices.
One of the biggest knocks against EVs is that charging the car's battery isn't convenient if you don't have access to commercial charging stations or at least a Level 2 charger at home. And even with the faster Level 3 chargers that you find at commercial stations, it can still take up to 30 minutes to fully charge your EV.
"Time is money if you have to sit around a couple hours waiting for your car to charge," says Matt DeLorenzo, senior managing editor for Kelley Blue Book. "That's the competitive disadvantage EVs have, they're inflexible when it comes to refueling requirements, whereas a gas car you just have a few minutes at a gas station and you're back on the road."
Since there are only around 46,000 commercial charging stations compared to 150,000 gas stations, potential buyers will want to make sure one is available nearby, using this interactive map. And since the average range of EVs is under 200 miles, you might want to consider a hybrid electric vehicle if you frequently drive long-haul trips. A hybrid has both an electric motor and a gas engine, which allows you to switch between the two depending on the how far you plan to drive.
"If you only have one car, I think you're better off owning a plug-in hybrid," suggests DeLorenzo. "With gas at $5 a gallon [in some parts of California], you'd get a car with 30-50 miles of electric range, and if you only commute 15-20 miles, you could use it mostly as an electric vehicle. But if you have a road trip, or there's a power failure, you have a gas engine to fall back on."