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Electric vehicles can save consumers money in the long run relative to traditional gasoline-powered vehicles.
While the upfront purchase cost of an electric vehicle is still higher, the recurring costs of fuel and maintenance are generally cheaper, and the total lifecycle cost combined can be lower than that of a gas-powered vehicle, experts say.
However, research shows that whether electric vehicles beat gasoline vehicles on total cost depends on factors such as the model of electric vehicle, where the buyer lives and how the battery is charged.
As battery prices continue to fall, electric vehicles are expected to more easily reach the same cost as gasoline vehicles, experts say.
Some EV prices are ‘starting to break even’ with petrol models
In June 2024, consumers will pay an average of about $56,000 for a new electric vehicle, compared with $49,000 for a gasoline-powered vehicle. according to Kelley Blue Book.
However, the financial gap is narrowing.
Automakers have been cutting electric vehicle prices, and the federal government is offering tax credits of up to $7,500 to qualifying new EV buyers. Consumers can choose to take advantage of tax relief in the form of car prepayment discounts.
States and utilities may also offer tax credits to cover the cost of vehicle purchases or charging infrastructure.
“Electric vehicles are expected to continue to become cheaper, primarily due to falling battery costs,” said Maxwell Woody, a researcher at the University of Michigan’s Center for Sustainable Systems. study The cost of electric and gasoline cars.
Relative to the price of gas-powered vehicles, some small electric vehicles “are starting to break even even without incentives,” Woody said.
But most people still pay a premium for electric vehicles, said Chris Hutto, senior transportation and energy policy analyst at Consumer Reports.
For buyers, “it’s really a question of, what’s the (long-term) return on the additional cost?” Hutto said.
Why electric cars may win in the long run
According to Consumer Reports, owning an electric vehicle can save drivers $6,000 to $12,000 over the life of the vehicle compared to a comparable gas-powered model study Published in 2023.
“If anything, the (total) savings today are probably a little better,” Hutto said.
Electric cars are unlikely to be needed Repairs and maintenance are required in part because they have fewer moving parts than cars with conventional gas engines, according to the U.S. Department of Energy.
Woody said refueling an electric vehicle is “much cheaper” because of its greater energy efficiency and the generally lower price of electricity relative to gasoline.
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Hutto said Consumer Reports’ research looked at six popular electric vehicles that qualify for federal tax credits. State, city or utility company tax breaks are not included.
Likewise, a 2024 JD Power study found that the total cost of electric vehicles over five years of ownership exceeded that of gas-powered vehicles in all states except Maine and West Virginia.
EV buyers in Colorado, Illinois, Nevada and New Jersey will save more than $8,000 during this period, according to the agency analyzepublished in Automotive News last month.
Why geography is important
JD Power’s analysis highlights a key caveat: The relative economic benefits of electric vehicles depend largely on specific circumstances, such as the driver’s geographic location.
For example, the total lifecycle cost of a midsize electric SUV with a 300-mile range can vary by $52,000, or nearly 40 percent, depending on location, according to research from the University of Michigan.
The disparity is largely due to regional differences in electricity and gasoline prices, Woody said.
“In places like Texas where gas prices are particularly low, it’s hard to break even with electric vehicles,” Woody said.
Additionally, Woody said, electric vehicles often make more financial sense for those who charge at home. Public charging fees are typically higher, he said.
This is especially true in areas where EV owners can take advantage of lower residential electricity prices during off-peak hours, such as overnight charging, Woody said.
“It’s hard to save money on an electric car if you can’t charge it at home,” he said.
According to research from the University of Michigan, home charging access can reduce the life cycle costs of a midsize SUV with a range of 300 miles by about $10,000 on average and as much as $26,000.
“Cities that are particularly EV-friendly have several things in common, including low electricity costs (or at least time-of-use pricing that includes low-price options), high gas prices, mild climates, and direct access to electricity. The study analyzed 14 different U.S. cities. cost.
The study found that overall, even without tax incentives, the total cost of ownership of small and low-range electric vehicles (with a range of about 200 miles) is cheaper than similar-sized gas vehicles in all cities.
Likewise, long-range electric vehicles with a range of about 300 miles, especially smaller vehicles like compact sedans and midsize sedans, are “comparable” without incentives. However, the study found that even with subsidies, models with the longest range (about 400 miles) are often not cost-competitive with gasoline vehicles.
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