Electric cars are expensive, no doubt, but they’re becoming more practical to own, to the extent that you’re likely to save money buying an EV instead of a gas-powered vehicle. A 2020 Consumer Reports study that compared nine popular EVs with three comparable gas cars showed savings of “many thousands of dollars” over the life of the vehicle, in most cases between $6,000 and $10,000.
Even though an EV almost certainly has a higher sticker price, there are plenty of cost savings (some more obvious than others) over the time you’re likely to own it.
Let’s take a look at some of the ways an electric car costs less.
Federal plus state tax incentives for EVs can add up. The availability of these incentives and your total savings depends on where you live, what make and model of electric car you buy, and when you buy it. These savings can potentially add up to make an electric car’s price, after the tax credits, cheaper than a comparable gas car. Keep in mind that your household income may affect your tax credit eligibility, so you should talk with a tax professional if these potential savings are a deal-maker or deal-breaker for you.
Data shows that EVs are much cheaper to maintain over the car’s lifetime, though they are not, as some advocates would suggest, completely maintenance-free. Savings are due largely to the fact that EVs have fewer moving parts than a car with a gas engine, and do not require fluid changes. However, they still require basic maintenance such as tire and brake replacements. The aforementioned Consumer Reports study polled the magazine’s subscribers and after filtering out outliers (such as very high or very low miles reported driven) and accounting for other factors (such as brand, to account for the fact that luxury auto manufacturers typically charge more for repairs), the study shows that overall, an electric vehicle costs about half as much to maintain as a comparable vehicle with a gasoline engine.
The study even suggests that the lifetime maintenance costs may be overestimated, since Consumer Reports subscribers who responded and provided data for older EVs owned mostly the early-model Nissan Leaf and Tesla Model S, and Nissan and Tesla have already made numerous improvements to later models of these vehicles. In other words, newer examples of the Leaf and Model S may cost even less to maintain.
Charging an EV is generally cheaper than buying gas. This depends on energy costs where you live (consider both electricity costs and fuel costs at gas stations for comparison purposes), as well as whether you charge at home or at a public charging station. Installing an at-home charger incurs upfront costs, but over time you will be able to avoid relying as much on using public charging stations, which are more expensive.
The Consumer Reports study of EV costs determined that EV owners can save 60% charging up instead of filling a gas car, based on an analysis that first determined how many EV owners can get most of their charging done at home as opposed to on the road. The report then compared those costs to gas costs (noting, of course, that most EV owners will not always be able to charge at home, and accounting for other variables). In short, keep in mind that while charging an EV is often cheaper than filling a gas car with fuel, the factors that determine how much you’re saving have a lot of variables.
We could consider this a footnote on the fuel cost discussion, but it’s worth calling out separately — because EVs typically have better performance than a gas car with comparable horsepower and torque figures, that EV can potentially save even more money. Another way to look at it: a driver who has a heavy foot and likes to be the first off the line at every traffic light will be better off in an EV, financially speaking. Such driving habits waste a ton of fuel, requiring more trips to the gas station, but an EV’s electric motor provides instant torque for a quick start. Thus, an electric car is the better choice for drivers with impatient driving behavior.
Consumer Reports compared several EV models, ranging from the Nissan Leaf to the Tesla Model Y, to gas cars with similar 0-to-60-mph acceleration figures. This analysis showed what we already know, that overall ownership costs are lower for EVs, but also that this holds true even when shopping for performance (specifically, acceleration) rather than efficiency. Instead of simply considering the consequences of using more gas to shave a couple minutes off your commute, you can shop with better performance in mind and still save money, according to the Consumer Reports EV cost study.
Various energy and maintenance cost analyses show that the longer you own an EV, the more you’re likely to save compared to owning a gas car for the same amount of time. No one really expects a car to cost less to maintain as it gets older, but EVs tend to stay pretty consistent, while gas cars gradually get more expensive to maintain. The Consumer Reports study, in particular, notes that as late-model EVs get older, there will be more data to support this argument.
The Consumer Reports study crunched tons of numbers to determine if EVs or gas cars have better resale value after five years of ownership. The study used data to calculate the true average price paid for an EV (after the aforementioned tax credits were taken into account) to more accurately calculate the cost of depreciation. (It’s worth mentioning that plug-in hybrids were also evaluated, but Consumer Reports notes that state tax credits were not factored into the true cost because state tax incentives are much more complicated for this class of car.)
After accounting for factors like range, vehicle size and vehicle brand (namely, luxury or non-luxury), the study determined that “…like ICE vehicles, not all EVs are expected to hold their value the same, and that other vehicle- and manufacturer-specific factors, such as style, features, reliability, and manufacturer reputation, still affect the relative depreciation of different vehicles.” In other words, the right EV might hold its value better than a gas car, saving you money when it’s time to trade in or sell.
Luxury for Less (Relatively Speaking)
If you’re shopping for a luxury vehicle, an EV’s lower overall cost of ownership works even more in your favor. That’s because there tends to be less of a difference in sticker price between EV and ICE cars in the luxury segment than in the mainstream market. In other words, if you’re shopping for a mainstream compact hatchback, the EV options are likely to be considerably more expensive than the gas alternatives. However, an EV luxury sedan is typically closer in price to its gas counterparts. Note that we’re not suggesting you step up from a mainstream car to a luxury car to save money — but if you’re already shopping for a luxury car, the price premium for an EV evens out much more quickly.
Even when charging an EV is at its most expensive price, which tend to be at public charging stations, it’s still almost always cheaper to bring the battery up to full range than it would be to buy a full tank of gas. Even better, some car manufacturers offer free charging as a perk for buying one of their cars.
Manufacturer deals that include free charging tend to vary — some measure by kilowatt hour, some by session length, and some are simply credits for a certain dollar amount — and are usually good for just one charging network of the several nationwide charging networks available. Some brands offer a discount or credit for installation of a home charging unit. These offers vary by make and model (sometimes even by trim level) and can change or expire at any time. Still, if your EV purchase includes some free charging, that’s definitely money back in your pocket.
One electric car isn’t going to change the way anyone thinks about energy usage, but as EV use becomes more widespread, there’s much more incentive to make electricity cheaper and more efficient.
Automakers are already thinking about ways to help owners save money, such as educating consumers on efficiency and developing smartphone apps that automatically charge the car overnight when rates are at their lowest. Engineers who work on electric cars even collaborate with utility companies to figure out ways to make the electric grid smarter, like sending “excess” power to EVs hooked up to chargers instead of using energy to store that energy. These changes won’t save you money tomorrow if you buy an EV today, but they make EV ownership friendlier and more accessible, which is better, and ultimately cheaper, for everyone.