How EVs and gasoline cars compare in terms of overall costs

Electric vehicles can save consumers money in the long run compared to traditional gasoline-powered cars.

Although electric vehicles are often more expensive to purchase, recurring costs for fuel and maintenance are generally cheaper, meaning their total lifetime cost can be lower than that of a gasoline vehicle, experts say.

However, research shows that whether or not EVs beat petrol cars in terms of overall costs depends on factors such as the EV model, where the buyer lives and how they charge the battery.

Electric cars are expected to more easily reach the same cost levels as gasoline cars as battery prices continue to fall, experts said.

The average consumer paid about $56,000 to purchase a new electric car in June 2024, compared to $49,000 for a gas-powered vehicle. according to to Kelley Blue Book.

However, that financial gap is becoming increasingly smaller.

Automakers have been slashing electric car prices and the federal government is also offering a tax credit of up to $7,500 to eligible buyers of new electric cars. Consumers can choose to receive that tax benefit as an advance discount on the car.

States and utilities can also offer tax breaks to cover the costs of purchasing vehicles or charging infrastructure.

“The expectation is that electric cars will become increasingly cheaper, largely driven by [lower] battery costs,” said Maxwell Woody, a researcher at the University of Michigan’s Center for Sustainable Systems, who co-authored a recent study. study on the costs of electric cars and petrol cars.

Compared to gasoline car prices, some smaller electric cars are “already starting to break even even without the incentives,” Woody said.

But most people are still paying an EV premium, says Chris Harto, senior transportation and energy policy analyst at Consumer Reports.

For buyers it’s really a question of: what is it? [long-term] recoup those extra costs?” Harto said.

According to Consumer Reports, owning an electric car saves the average driver $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] The savings today might be a little better,” Harto said.

EVs are less likely needed repair and maintenance, in part because they have fewer moving parts than cars with conventional fuel engines, according to the U.S. Department of Energy.

It is also “significantly cheaper” to fuel an electric car due to its higher energy efficiency and generally lower electricity prices compared to gasoline, Woody said.

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The Consumer Reports study examined six popular electric cars that qualified for a federal tax credit, Harto said. Tax credits from states, municipalities or utilities were not included.

Similarly, a 2024 JD Power study found that EVs beat their gas counterparts in total costs over a five-year ownership period in all states except Maine and West Virginia.

Electric car buyers in Colorado, Illinois, Nevada and New Jersey would save more than $8,000 during that period, the report said. analysispublished last month in Automotive News.

The J.D. Power analysis highlights an important caveat: the relative financial benefits of an electric car depend heavily on case-by-case factors, such as the driver’s geographic location.

For example, according to the University of Michigan study, the total lifetime cost of a midsize electric SUV with a 300-mile range can vary by $52,000 – or nearly 40% – depending on location.

Such differences are largely due to regional differences in electricity and gasoline prices, Woody said.

“In places like Texas where gas prices are particularly low, it’s harder for an electric car to break even,” Woody said.

Additionally, electric cars generally make more financial sense for those who charge their batteries at home, Woody said. Public charging generally costs more, 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.

“If you don’t have access to home charging, it becomes very difficult to save money with an electric car,” he said.

Access to home charging reduces the lifetime cost of a 300-mile midsize SUV by an average of about $10,000, and up to as much as $26,000, according to the University of Michigan study.

“Cities that are particularly friendly to [EVs] have several things in common, including low electricity costs (or at least point-of-use pricing, including a low-price option), high gasoline prices, temperate climates, and direct purchasing incentives,” the study said. analyzed costs in 14 different US cities.

Overall, small and low-end electric vehicles (with about 200 miles) had a lower total cost of ownership than similarly sized gasoline vehicles in all cities, even without tax breaks, the study found.

Likewise, longer-range EVs with a range of about 300 miles, especially for smaller vehicles like compact cars and midsize sedans, can be “comparable” without incentives. However, the models with the longest range (about 650 kilometers) are generally not yet cost competitive with gasoline cars, even with subsidies, the study found.