The federal government has rolled out generous tax credits for switching to an EV, and gas prices remain high, which has more people than ever asking — do electric cars really save money?
Table of Contents
- Gas Prices Today: Nowhere To Go But Up?
- Charging Costs for Electric Vehicles
- Commercial EV Charging Stations Aren’t Cheap
- Charging Your EV at Home: The Cost-Effective Choice?
- Is Home Renewable Energy the Way to Go?
- Electric Vehicle Purchase Cost: Buying New
- Buying a Used Electric Vehicle
- Electric Vehicle Long Term Maintenance Requirements
- Consensus: How Much Can You Save with an Electric Vehicle?
Here, we’ll look at the data comparing the cost of EVs to what you’ll pay over the lifetime of a traditional internal combustion engine vehicle. There’s no hard and fast answer for what kind of car will make the most sense for your wallet, but this data should help you make a more informed decision.
Gas Prices Today: Nowhere To Go But Up?
On March 11, 2022, gas averaged $4.33 per gallon across the United States, over $1.50 more than the cost a year before.
That’s making EVs seem more appealing than ever. According to a study from the U.S. Department of Energy’s National Renewable Energy Laboratory and the Idaho National Laboratory, electric car owners can save as much as $14,500 on fuel costs by owning an electric car for 15 years.
That’s almost $1000 in savings for every year of driving. Put another way, the cost for running an electric car is thought to be the equivalent of $2 per gallon. And, considering this study looked at 2020 gas prices, it’s a reasonable assumption the savings are even more substantial today.
However, driving an electric vehicle isn’t all worry-free from a money standpoint. That’s because electricity isn’t free, even if you’re not paying for it at the pump. Here’s how the costs of owning and operating an EV break down.
Charging Costs for Electric Vehicles
Charging costs for an electric vehicle depend on many factors: where you charge (home or publicly), the time of day, electricity costs in your state, the size of the car battery, and more.
Commercial EV Charging Stations Aren’t Cheap
Public charging may be convenient, but it comes at a price. At most stations, you’ll be able to choose between level 1 (fast and costly) or level 2 (slow and cheaper).
Charging stations tend to, well, charge in different ways. Some bill by the minute or kilowatt-hour, while others charge a flat fee to hook up. Many will penalize you if you stay plugged in after the battery is filled.
According to Mach1, the cost of visiting public charging stations averages out to be two to three times more expensive than charging at home. Rates vary, but tend to fall between $10-$45 to charge a car fully. This analysis assumes most electric car owners will make about 11 visits to these stations per 15,000 miles of drive time.
Note that some public spaces like grocery stores and hotels offer free charging. Take advantage of these spots, and you can save a considerable amount on your car’s operating costs. Just note that many have a time limit, meaning they will work to top you off but might not be suitable for a multi-hour charge session.
One thing to keep in mind with charging an EV on the go is the value of your time. You may spend just five minutes filling up at the pump, but it will take from 30 minutes to several hours to recharge an EV, even with fast level 3 charging. This may occasionally leave you waiting around for the battery to re-juice when you would rather be driving—a vital consideration for road trips.
Access is also an issue. Commercial charging stations are becoming far more common, but there are still fewer than 50,000 nationwide compared to over 150,000 gas stations. Consequently, any trip that goes beyond the mile range of your EV will require some careful planning regarding where you stop.
Charging Your EV at Home: The Cost-Effective Choice?
Most electric car owners plug their vehicles in at home for nightly charging sessions. Many power companies charge more per kilowatt during peak energy usage times, so it’s common for EV owners to have their chargers set on timers to start in the middle of the night.
Along with your car purchase, you’ll need to account for the cost of setting up a home charging station for level 2 or faster charging. According to cost estimates on Fixr, you can expect to pay about $1,200 for professional installation.
Note: while it’s possible to charge most EVs on a standard three-prong outlet, the full process can take 40+ hours—not practical for most drivers.
Another advantage on the side of EVs is the relative stability of electricity prices. While gas can jump $1.50 per gallon in a matter of months, electricity rates are more resistant to market fluctuations, making it easier to predict your running costs long term.
Is Home Renewable Energy the Way to Go?
One way to gain control over your home car charging is to invest in renewable energy sources like solar panels. In fact, research shows that rooftop solar panels will pay off faster for electric car charging than for your home alone, primarily since you’re offsetting the money you’d otherwise spend on gasoline.
Find a Solar Energy partner near you.
When used for electric cars, solar panel systems can generate annual returns of 10-30%, meaning that it’s possible to break even on the setup within eight years—after that, it’s all free power for the rest of the panels’ 25–30-year lifespan.
Electric Vehicle Purchase Cost: Buying New
Before you can consider fuel costs, you need to buy your EV in the first place. That might come with some sticker shock. According to Kelley Blue Book, the average electric car costs $10,000 more than the average gas-powered vehicle.
But here’s the good news. It’s easier than ever to save money buying an EV, both through financial incentives and browsing used markets.
You can expect to save up to $7,500 off the price of a used EV immediately, thanks to federal tax credits alone.
Depending on where you live, there may be other rebates available at the state level. (Plug In America lets you search for available rebates by your zip code.)
The $7,500 tax credit only applies to the first 200,000 vehicles a manufacturer sells. Some brands, like Tesla and GM, have already hit that limit for specific models. Here’s a list of EVs that still qualify.
Buying a Used Electric Vehicle
As we’ve covered previously, used EVs are some of the best car buys available. Relatively low demand means that most are undervalued (although that might change with soaring gas prices) and not driven hard before reselling. Stick with a newer model, and it will likely have almost the same driving stats as fresh-off-the-assembly-line options.
Electric Vehicle Long Term Maintenance Requirements
Thanks to their battery, EVs have fewer moving parts than gas-powered cars. This means you can forget about oil changes, wear on transmissions, spark plugs going bad, and other minor maintenance requirements that add up over time. Most EVs also utilize regenerative braking. This means the motor does most of the braking, further reducing wear on the brake pads and rotors.
In fact, a report from analytics firm We Predict found that service costs were almost a third lower for EVs than gas-powered vehicles after three years on the road.
Even plug-in hybrids (which contain a battery and internal combustion engine) will have lower maintenance costs than regular vehicles. The gas engine runs less frequently in PHEVs, meaning it takes longer for them to wear down, and they need less oil and coolant in the long run.
Consensus: How Much Can You Save with an Electric Vehicle?
The evidence is clear—you can save money on almost every aspect of owning an electric car, but likely not quite as much money as you’d expect – or at least initially. Over time, particularly if gas prices continue to rise, an electric vehicle will certainly save you money.
- EVs cost an average of $10k more to purchase new than equivalent gas-powered cars. However, most qualify for a $7,500 federal tax credit and other rebates.
- Used EVs tend to be a better value than their gas equivalents. There is (usually) less demand for them, and used EVs are typically driven less than traditional vehicles before coming up for sale.
- While charging prices vary considerably, the cost to drive an EV averages $2 per gallon of gas equivalent. In contrast, gas prices are topping $4 nationwide.
There’s little doubt that owning an EV can save you money in the long run. How much you save will depend on the car you buy, your driving and charging habits, how long you keep it, and whether national gas prices continue to climb.
If you want to save as much money as possible, it’s best to follow these tips:
- Buy a new EV that qualifies for the maximum federal tax credits. Used EVs now qualify for the EV tax credits as do PHEVs.
- Invest in a fast-charging station at home and use it during off-peak hours.
- Find and utilize free charging stations in your community
- Consider investing in renewable electricity generation at home, such as solar panels