We all grew up using gas-powered cars. We might have questioned mileage numbers and maintenance costs, but the industry and the supporting infrastructure was based on using gas. As e-cars finally gained sufficient acceptance, perhaps largely due to Tesla, the oil industry – and any established industry fighting for its survival – shifted the focus on range per charge, time to recharge, and even costs.
Sometimes, the established industry is still the best choice; it didn’t gain acceptance for nothing. And sometimes it’s difficult to separate fact from fiction when “the usual” is challenged. Here’s a thorough analysis comparing costs between the two car power sources. I’ll add comments afterwards.
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Here’s whether it’s actually cheaper to switch to an electric vehicle or not — and how the costs break down
Dec 29 2021
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.
Electric vehicles have a higher upfront cost
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.
Tax credits can lower the cost of an electric vehicle
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.
Electric vehicles tend to have cheaper fuel and maintenance costs
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.
So which is cheaper overall?
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 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.
While cheaper, electric vehicles come with trade-offs
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. Matt DeLorenzo, senior managing editor for Kelley Blue Book, says …
“Time is money if you have to sit around
a couple hours waiting for your car to
charge. 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. DeLorenzo suggests …
“If you only have one car, I think you’re better
off owning a plug-in hybrid. 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 fail-
ure, you have a gas engine to fall back on.”
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I like the comment that costs and convenience depends on your driving situation. In my case, for example, as I’m working to create net zero sustainable environments, in 2013 I bought an electric SMART car, which is owned by Mercedes, to see if I could reasonably include, as part of “sustainable living,” both the car we drive and the home in which we live. We can.
My home has sufficient photovoltaic panels to power both my home and the car, so my cost for driving with my e-car is zero. The car has an annual maintenance cost of about $220, which is less than 20% of what we pay for our gas car. Our gas car, bought in 2010, delivers 37 mpg, and is paid for, so we kept it for long road trips and use it maybe once a month. We use our e-car for 100% of our local driving.
If I were to only have one car, I’d either buy a plug-in hybrid, as the article suggests, or rent a car for long-distance drives, such as for vacations.
In terms of recharge time, at day’s end we just plug it into our home’s outlet and it’s fully recharged each morning; we don’t wait for it to recharge. However, if you drive more than the range of your e-car each day, then your costs and recharge convenience will vary from mine. However, I am seeing more and more recharge stations and fewer and, as they continue to close, fewer gas stations.
In terms of initial cost, as more and more e-cars come on the market, competition increases and costs decrease … as happens with any commodity. And that’s already happening with e-cars.
Finally, the #1 reason homeowners bought a Garden Atrium was aesthetics, their quality-of-life experience, not the utility bill savings or the desire to be more Earth-friendly. Similarly, I actually find our e-car more fun to drive.
Adding observations and thoughts from D …
“The future is in electric cars. You are at the beginning of a transition from fossil fuels to electric. It will take some time to finalize this transition, just as it took time to move from horses to cars. There is currently a fairly wide choice of vehicles available that are electric. Each year, there will be more.
“The average amount of daily driving by an American is 30 miles. Most individuals do not use up all the battery power in an electric car each day. So choose your vehicle thoughtfully, knowing your personal needs and requirements. Most people can plug in at home and satisfy their daily driving needs.
“Electric cars are fun and quite ‘zippy.’ Enjoy the ride.”