To that point, 41% of Americans are at least somewhat likely to buy an electric vehicle as their next car, according to a recent poll from the University of Chicago and The Associated Press.
Yet, many consumers view high cost as a deterrent — 60% cited it as a “major reason” they wouldn’t purchase an electric vehicle, or EV.
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Most new EVs are luxury models with an average sale price of more than $61,000 — roughly $12,000 more than the auto industry average, according to Consumer Reports.
But upfront cost doesn’t tell the whole story.
In many cases, electric vehicles can be a better financial deal for buyers over the long haul relative to their gasoline-only counterparts, after accounting for recurring costs such as maintenance, repair and fuel, ie, gasoline or electricity.
Those costs tend to be lower for EVs and may therefore outweigh an initially higher sticker price over a multiyear ownership period, experts said.
EVs might save you $6,000 or more, but ‘it depends’
The typical EV owner saves $6,000 to $10,000 over the life of most such vehicles compared with a gasoline-only model, according to a Consumer Reports study from 2020. The study compared vehicles of similar size and segment — luxury, for example — and defined a car’s life as 200,000 miles.
Since that study was published, many EVs have gotten cheaper and conventional vehicles more expensive, said Chris Harto, senior transportation and energy policy analyst at Consumer Reports.
The Inflation Reduction Act, which President Joe Biden signed in August, extended a federal tax credit for new EVs through 2032. That tax incentive — which is worth up to $7,500 and carries some qualification restrictions — aims to make EVs more affordable.
When comparing similar cars on total cost during ownership, battery electric vehicles tend to come out ahead of [internal combustion engine] vehicles, on average,” said Debapriya Chakraborty, an economist and assistant professional researcher at the Electric Vehicle Research Center at the University of California, Davis.
However, there are many caveats that could change that outcome for an individual buyer, she said.
These include regional electricity and gasoline prices; the availability of home vs. public charging, the latter of which is typically more expensive; and the range of the electric vehicle.
Yes, EVs are [generally] a better deal, if you include all the [financial] Incentives you could potentially get and primarily charge at home,” said Maxwell Woody, a research assistant at the University of Michigan’s Center for Sustainable Systems.
But there are many variables that could change the calculus, he added.
Consumers can use various online calculators, such as one from the US Energy Department or the UC Davis Electric Vehicle Research Center, to estimate their total EV ownership costs and carbon emissions based on various car models and travel habits.
How regional factors can affect total EV cost
Witthaya Prasongsin | Moment | GettyImages
To illustrate the caveats, Woody — who is conducting a study of regional lifecycle costs of gasoline versus electric vehicles — offered an example of hypothetical car buyers in Chicago and Houston.
He compared the total lifetime cost in each city for a small electric sport utility vehicle with a 300-mile range and a $48,000 suggested retail price to that of a small gas-powered SUV with a $31,000 price tag.
In Chicago, an average buyer would come out ahead with the electric over 15 years. They would pay about $84,000 total, versus $87,000 for the gas car, Woody said.
In Houston, the opposite is true: An average buyer would pay about $82,000 for the gas vehicle and $85,000 for the EV over the same time period.
Here’s why: Buyers in Chicago can get an extra $4,000 incentive from the state, making EVs less expensive at the time of purchase, Woody said. Chicago also has relatively inexpensive electricity, so the EV is also much less expensive to operate, he added.
On the other hand, Houston has among the lowest gas prices in the country, reducing the overall fuel-cost savings reaped from an EV when compared with a traditional car. Texas also doesn’t offer an additional tax incentive to EV buyers.
The analysis accounts for cooler weather in Chicago, which generally makes EVs less efficient, Woody said.
Cost savings aren’t the only factor driving EV sales
A charging station for electric and hybrid cars using solar panels to generate electricity.
Artur Debat | Moment | GettyImages
EV sales accounted for 5.8% of the nearly 14 million new cars sold in the US last year, according to Kelley Blue Book data. That was up from 3.1% the year before.
Globally, about 13% of new cars sold in 2022 were electric, and EVs are “surging in popularity,” according to the International Energy Agency.
Potential lifecycle cost savings isn’t the only factor driving purchases, though.
Thirty-five percent of Americans say reducing their personal impact on climate change is a major reason they would buy an electric car — the No. 2 reason behind saving money on gasoline, at 46%, according to the University of Chicago-Associated Press poll.
There are several types of EVs: for example, all-electric vehicles, which run only on battery power, and plug-in hybrid electrics, which have both battery and gasoline engines.
There are direct-to-consumer savings, and broader societal benefits, to purchasing an EV.
policy director of Plug In America
Since they don’t burn fossil fuels, fully electric cars don’t emit planet warming greenhouse gases from their tailpipes.
Some emissions are created when electric cars are built and charged, if the electricity comes from dirtier sources such as burning coal instead of clean sources such as wind and solar. However, electric cars have a much lower overall climate impact even when factoring in those life-cycle emissions, according to researchers at the Massachusetts Institute of Technology.
“Electric vehicles are the key technology to decarbonize road transport,” the International Energy Agency said.
Just 1.6 million of the 270 million passenger cars and trucks on US roads are electric — amounting to less than 1% of all vehicles, according to the World Economic Forum.
burwell photography | E+ | GettyImages
The Biden administration on April 12 proposed auto emissions rules expected to dramatically boost EV sales. The rules set more stringent pollution standards for cars and trucks, which would essentially force the auto industry to sell many more EVs to meet the requirements. The White House estimates as many as 67% of all new vehicles sold in the US will be electric by 2032.
The standards come as the world’s worst climate scientists said in a March report that a major course correction is needed to avert the impacts of climate change, such as more severe floods, droughts and wildfires.
Transportation is the largest annual source of greenhouse gas pollution in the US, accounting for 28% of total national emissions in 2021, according to the Environmental Protection Agency.
“There are direct-to-consumer savings, and broader societal benefits, to purchasing an EV,” said Ingrid Malmgren, policy director of Plug In America.
Why battery and range matter for buyers
Battery size, which influences the range of an EV, can make a big difference in ownership cost, since the battery is generally the most expensive part of the car, said Woody of the University of Michigan. More range typically means a higher price tag.
Today, EVs with a roughly 200-mile range generally have a sticker price comparable to or lower than a gasoline-powered car, even without tax incentives or other lifetime savings, Woody said.
Consumers who buy an EV with a 300-mile range may need a federal tax break to achieve sticker-price parity with gas-only cars, while those with a 400-mile range are generally still more expensive upfront even with tax incentives, Woody said. .
To that point, an all-electric vehicle with a range of 200 miles has among the lowest lifecycle ownership costs of all types of passenger vehicles, according to a 2021 report issued by Argonne, a US Department of Energy laboratory.
Such a vehicle costs consumers 45.3 cents per mile over a 15-year ownership period, beaten out only by hybrid electric vehicles, according to Argonne. That compares with 48 cents per mile for gasoline-only cars. However, a 300-mile-range all-electric vehicle ranked last, at 51.8 cents per mile, due to relatively high battery costs.
Koiguo | Moment | GettyImages
The report accounts for factors including maintenance, repair, taxes, fees and insurance. It doesn’t account for tax incentives, however.
Total ownership costs for all-electric vehicles are expected to keep dropping as battery technology improves and to be broadly cost-competitive with other car models in about five years, Argonne said.
Many automakers, including Tesla and Ford, dropped prices on their EVs in 2023. And current price trends indicate that EVs with a $25,000 sticker price aren’t far off.
The price of the average new car rose almost 5% in 2022 to $49,507, while the price of the average EV fell 0.6% to $61,448 — which is higher but now lower than the average luxury car, according to Kelley Blue Book.
Fuel and maintenance costs
Switching to an all-electric vehicle would yield an average fuel savings of 55% for consumers nationwide, according to a University of Michigan study published in January.
More than 90% of households would also reduce the greenhouse gases they generate, the study found.
The largest cost reductions would occur in the South and West, the study said. A small share of households, 0.1%, in Alaska, Maine, Massachusetts, Michigan and Rhode Island, would see their energy costs rise by switching to an all-electric car.
Fuel cost reductions brought by the adoption of all-electric cars “are significant enough that more than double the American households (ie over 80%) would have low [transportation] energy burdens,” relative to 33% today, the report said. Lower-income households wouldn’t benefit as much as those with higher incomes, it found.
Frederic J. Brown | Afp | GettyImages
Residential charging is more cost-effective than public charging, the study found. Such a dynamic may reduce savings and convenience for renters who can’t install a charging station at home, for example, said Chakraborty of the University of California.
Electric cars also have fewer moving parts, meaning they generally require less maintenance, said Malmgren of Plug In America. EVs often come with longer warranty periods than gas-powered cars; By law they must carry eight-year, 100,000-mile warranty periods, with more consumer-friendly rules in California, she said.
“There are fewer things to break,” Malmgren said. “You’re not replacing brake pads, transmissions, belts, hoses, fluids.”
“They’re just way easier to maintain,” she said.
Between fuel and maintenance, the average electric SUV owner saves $1,700 a year in fuel and maintenance costs, according to Harto of Consumer Reports. That assumes a $3.50 per gallon gasoline price, a rough ballpark of current prices, he said.
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