Electric cars are quick, green and often packed with novel technology. But that’s not enough to convince most people to kick gasoline to the curb. They need to know: Will an EV cost me extra or save me money in the long run?
Several studies have shown that EVs can save owners thousands of dollars over time. Despite higher upfront prices, lower operating costs ultimately make them the cheaper option in the long run.
The ultimate calculus is personal and depends greatly on where you live and what car you buy. In this guide, we aim to review the costs of going electric at a high level and give you the tools you need to make this decision for yourself.
We’ve divided the cost of ownership of EVs into five buckets and scored each based on how it compares to a conventional combustion car.
Upfront Cost: Likely More
The EV market has historically suffered from a lack of affordable options, and the average electric car costs significantly more than the average gas car. On paper, that is.
According to Kelley Blue Book, the average transaction price for a new EV was $56,351 in September, 16% higher than the industry-wide average price of $48,397. However, the federal EV tax credit can bring that upfront cost down by up to $7,500 for qualified vehicles and buyers. That can close the gap to just under $500, though it will depend heavily on the specific vehicle you’re shopping for.
If you choose to purchase your vehicle, only a small subset of electric models currently qualify for the credit due to stringent new rules aimed at supporting North American EV manufacturing. But as carmakers adjust their supply chains and erect new plants, more should gain eligibility over the coming years.
Thanks to the so-called “leasing loophole,” though, all leased vehicles qualify for the $7,500 credit. Most leasing companies pass those savings onto the customer in the form of a reduced monthly payment. That helps explain why there are so many attractive EV lease deals right now. Remember to also check for state and local incentives, which can bring costs down further.
Furthermore, don’t count out the used market. The average 1-to-5-year-old EV is now cheaper than a similarly aged gas vehicle at around $28,000. If you can find one listed for $25,000 or less and meet income requirements, you can secure a federal incentive worth 30% of the purchase price, up to a maximum of $4,000. And remember, the federal credits for used and new EVs can now be accessed at the time of purchase. So you don’t need to wait until tax time for a refund.
The upfront cost is important, but it isn’t everything. Studies have shown that the total cost of ownership for EVs beats combustion vehicles once you factor in other expenses like maintenance and fueling, which we’ll get into below. And EV prices are declining as new, mainstream models enter the field and battery prices drop.
Fueling: Likely Less
An EV can technically charge anywhere with a parking spot and a power outlet, but the cost depends on local electricity rates, time of day and charging speed. Home charging with a Level 2 setup—that means using a 240-volt outlet, like the one an electric dryer or oven would use—is your cheapest, most efficient option. Public DC fast chargers are more expensive, and Level 1 charging with a household, 120-volt outlet is too slow and inefficient to charge your battery overnight.
Let’s break down Level 2 costs using the Chevy Equinox EV, which has an 85 kWh battery. With the average electricity rate in the U.S. at 16.68 cents per kWh, you’d spend about $14.80 for a full charge. (We’re not factoring in minor charging losses. Modern Level 2 chargers have efficiency of well over 90%, so the losses are negligible.)
The average gas price per gallon in the U.S. was $3.13 at the time of publication, and the average gas car gets about 24.4 miles per gallon. At 16.68 cents per kWh and an average efficiency of 3 miles per kWh, that same distance would cost $1.35 in the Equinox EV—just over a third of what it’d cost compared to an equivalent gas car. Over time, it can add up to hundreds of dollars in savings.
Sure, setting up Level 2 chargers involves some upfront costs. That includes the charging unit itself and installation fees, which can range from a few hundred to a couple of thousand dollars. Luckily, federal and state incentives can help offset that, so be sure to take advantage of those while they exist.
The Inflation Reduction Act’s 30C EV Charger Tax Credit offers up to 30% of the cost (up to $1,000) for non-urban or low-income communities. Find out if your location qualifies for this credit using this eligibility locator tool.
States also offer additional incentives, and some automakers throw in deals too. Ford, for instance, now includes free home chargers and installation with the Mustang Mach-E and F-150 Lightning.
We understand that not everyone can charge at home. In that case, public charging is the only option, and that can cost more than home charging and sometimes even more than gas, depending on the location and time of day.
According to Leafscore, fully charging at a Tesla Supercharger can cost, on average, between $20 and $25 at a rate of $0.25 per kWh to add about 250 miles of range. This can be more expensive for non-Tesla EVs and vary substantially depending on regional electricity costs. If you’re paying $0.56 per kW at an Electrify America station in California during peak hours, for instance, you may end up paying as much as or more than it’d cost to gas up an equivalent internal combustion car. Public Level 2 slow charging is frequently far cheaper.
So it’s safe to conclude that home charging is the most cost-effective option. But if you’re relying only on public charging, look closely at charging costs in your area for the stations you’d use most frequently. You can find good stations using an app like PlugShare, but you’ll likely need to use the charging company’s specific app to find pricing information. Multiply the size of your battery in kWh by the price per kWh and you’ll get the price of a full charge. Divide that by how far you can go, and you’ll get your cost per mile, allowing for a more direct EV vs. gas comparison.
Maintenance: Likely Less
Common wisdom around EVs dictates that, since EVs have far fewer moving parts, they require fewer repairs and less upkeep. Electric powertrains consist of a battery and a couple of motors, which are simpler than an engine, transmission and their associated hardware. As such, many EV owners report paying for nothing besides wiper fluid and tires for years on end.
Research backs up this notion. Consumer Reports found that Teslas had the lowest 10-year maintenance costs of any car brand, at $4,035. (Bear in mind the costs don’t reflect any repairs covered by warranties.) A 2020 study from the nonprofit group found that EV and plug-in hybrid owners fork over 50% less in repair and maintenance costs than drivers of comparable gas cars.
According to research sponsored by the U.S. Department of Energy, the estimated scheduled maintenance cost for an EV is 6.1 cents per mile, as compared to 10.1 cents per mile for conventional cars.
However, one-off repairs after collisions can be more expensive for EVs. In 2022, collision repairs for EVs cost $6,587 on average, around 56% more than the $4,215 average for all cars, according to CCC Intelligent Solutions, which processes insurance claims for car repairs. EV repairs also tended to take longer than normal, the firm told The Wall Street Journal. Car rental company Hertz has aggressively sold off its fleet of Teslas, in part due to higher-than-expected repair costs.
But there’s one thing you probably shouldn’t worry about: Battery replacements. Replacing an EV’s high-voltage battery (not the little 12-volt one found in every car) can cost north of $20,000. However, that’s extremely rare. While EV batteries lose some capacity over time, studies show they rarely fail.
Insurance: Likely More
According to the National Association of Insurance Commissioners, EVs cost an average of $44 more monthly to insure than gas cars. Teslas, in particular, are more expensive than other EVs. The Tesla Model Y and the Model 3 have the highest premiums not just among EVs but in the broader car industry.
Insurance comparison website Insurify says that a 2024 Tesla Model Y can command a monthly premium of $169-$424, depending on the plan and provider. A gas-powered Toyota RAV4, on the other hand, costs between $126-$319 per month to get insured.
However, experts from the Insurance Information Institute told CNBC that insurance costs are finally starting to ease up as EVs proliferate. Still, EV premiums remain on the high side for now, mainly due to pricier replacement parts, repairs needing specialized expertise, and higher claim payouts.
But remember, your individual premium will depend on a whole mix of factors: credit score, vehicle make and model, where you live, the provider and more.
Depreciation: Likely More (At Least Right Now)
This is not the electric car’s strong suit. EVs have shed value more rapidly than the industry average. Teslas especially depreciate at a rapid pace. EV expert and YouTuber Kyle Conner said recently that his Model S Plaid lost 67% of its original value in just two years, going from a purchase price of $140,940 to $46,400.
Even mass-market Teslas witness a significant price drop. According to car research firm iSeeCars, a new Model Y depreciates by about 59% after five years. By comparison, a Toyota RAV4 only loses about 31% of its value after five years. While this problem isn’t unique to Muskmobiles—other EVs are also depreciating faster than the industry average—it’s definitely more pronounced for Tesla buyers.
So, what’s behind this trend? Tesla’s aggressive price cuts in 2023 slashed prices across the board for used EVs. Plus, the tech is moving quickly—newer, more affordable EVs are entering the market, many of which qualify for hefty federal tax credits, putting downward pressure on existing models.
Moreover, there are some lingering concerns about the high cost of collision repair for Teslas, prompting car rental giant Hertz to offload its Tesla fleet. However, industry researchers like Black Book and Recurrent expect EV depreciation to moderate over time. If you’re concerned about value loss, consider leasing or buying used—both options help mitigate depreciation risks.
But there are problems that should get solved long-term as well. One reason used EV prices are so wild is that there are still no industry-wide standards for how to value a battery pack, which is the most important part of the car. Presumably, that will change in time and many companies and industry groups are actively working on solutions for that right now.
Conclusion
When you add up all the factors, EVs turn out to be cheaper to own than gas cars over the long haul—especially in segments like compact sedans and compact and mid-size SUVs.
According to Atlas Public Policy, a Chevy Bolt EV can save you over $10,000 over a seven-year ownership period compared to a Toyota Corolla. That’s saying something given that the Corolla is one of the best-selling cars in the world, popular for its reliability, efficiency and low running costs. By choosing a Tesla Model Y over a Toyota Highlander, you can save more than $4,000.
With lithium prices dropping and more affordable EV models hitting the market, these cost benefits are only expected to grow. So the future isn’t just cleaner—it’s also set to be much friendlier on your wallet.
Additional reporting by Suvrat Kothari
Contact the authors: [email protected], [email protected]