70% of Car Buyers Opted for Gas in the Past Year: What Will That Cost Them in the Long Term?
According to a recent survey by GoBankingRates, people are not buying electric vehicles. In fact, over 70% of car purchases in the last 12 months were gas-powered cars according to respondents of all ages.
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While EVs have made a splash in recent years, pushing companies like Tesla to become one of the most valuable in the world, there’s still a hesitancy to fully commit to purchasing electric vehicles. Here we’ll dive into the details of our survey to see who is buying EVs, and review why most people are still opting to purchase gas-powered vehicles instead.
Who’s Buying Electric Cars Anyway?
All ages and demographics are buying electric cars, but less than 10% of new and used purchases were electric vehicles, according to our survey. Over 70% of respondents purchase gas cars, and 21% of respondents purchase a new or used hybrid vehicle.
Here’s the breakdown of who is buying electric cars (by age):
18 to 24: 20%
25 to 34: 20%
35 to 44: 18%
45 to 54: 22%
55 to 64: 11%
65 and over: 9%
Most buyers aged 55 and older are not buying electric cars. While younger generations are buying a majority of electric cars in total, Gen X buyers are buying more than any other generation.
When looking at the difference between women and men new car buyers, far more men are buying electric cars than women. Only 6% of all car purchases from women respondents were electric cars, while over 10% of men purchased electric cars.
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Gas Cars vs. Electric: Cost Comparison
With 70% of people still opting to purchase gas cars over electric, or even hybrid, vehicles, it’s important to compare the costs of each vehicle type to see which one is more expensive.
And while the purchase price of an electric vehicle might be higher up front, you should always calculate the total cost of ownership (TCO) before making a purchase.
Here’s how gas car prices compare to electric cars
Purchase Price
EVs cost more, on average, than purchasing a similar gas-powered vehicle. According to 2021 data from Cox automotive, EVs can cost up to $10,000 more to purchase. This huge jump is one of the leading factors to why most Americans are still gas cars instead of EVs.
But EVs are still fairly new, with a very small amount being produced in recent years compared to their gas-powered cousins. This means that demand is much higher compared to the supply, which can push prices up higher.
In addition, EV charging systems can add thousands to your bottom-line costs, making an EV purchase even more expensive. However, EVs can qualify for up to a $7,500 federal tax credit, and some states offer even more tax incentives to purchase an EV. This can significantly lower the cost, and help take a bite out of the $10,000 price difference.
Fuel/Charging Costs
One of the biggest selling points of EVs is their low fuel costs, as they don’t even take gasoline at all. With fuel costs rising to nearly $5 per gallon in some states, this could be a huge cost savings, especially for those who put more miles on their vehicles each month.
But EVs are subject to charging costs, and electricity isn’t free, especially when charging your car at home. With inflation pushing energy prices up nearly 40% in some states, the cost savings might not be quite as high as before.
Here’s a quick comparison of fuel costs for gas-powered vehicles and EV charging costs:
Gas-powered Compact SUV fuel costs
Fuel efficiency: 26 MPG
Gas prices (regular average): $3.84
15,000 miles per year
Total annual fuel costs = $2,215
EV Compact SUV charging costs
Energy usage: 2.7 kWh per mile
Electricity cost (residential): $0.01614 per kWh
15,000 miles per year
Total annual charging costs = $2,486
As you can see, the anticipated fuel savings isn’t actually saving anything with the recent increase in energy prices. And if you do all your charging at home, you might even pay more.
But to be fair, many EV owners use supercharging stations, some of which are free at their workplace. Tesla owners can also subscribe to the Tesla Supercharger Network for only $12.99 per month, which can drastically reduce charging costs.
So, if you want to reap the fuel savings from an EV, you need to avoid charging at home.
Maintenance Costs
Maintenance costs can be expensive, depending on the vehicle you purchase. And while many new car purchases come with a maintenance plan, if you’re looking at long term costs for owning an EV vs. a gas-powered car, you should calculate anticipated maintenance for when you need to pay out of pocket.
AAA offers a Driving Costs Analysis that compares the cost per mile for different types of vehicles. This is averaged over five years of ownership.
We can compare our two compact SUVs and see which one costs more to maintain.
Gas-powered compact SUV maintenance costs
Maintenance cost per mile: $0.1013/mile x 15,000 miles
Total annual maintenance costs = $1,520
Electric compact SUV maintenance costs
Maintenance cost per mile: $0.0794/mile x 15,000 miles
Total annual maintenance costs = $1,191
As expected, with no oil changes or other maintenance items, electric vehicles are less expensive to maintain on an annual basis. This doesn’t mean you won’t have things go wrong, but on average, you’ll spend a few hundreds less per year.
Depreciation
Depreciation is the measure of how much a car loses value during ownership. The end result is how much value your car still maintains after owning it for a while. Here’s how the depreciation number compare between both types of vehicles:
Gas-powered compact SUV depreciation:
Annual depreciation: $3,084
Total depreciation after five years: $15,420
Electric compact SUV depreciation:
Annual depreciation: $5,044
Total depreciation after five years: $25,220
As you can see, electric vehicles depreciate much faster than comparable gas-powered vehicles. This may be due to the high cost of battery replacement down the road, or simply that new electric vehicles are priced too high right now.
Either way, owning a gas-powered car can save you around $10,000 in depreciation over five years.
What Are the Ongoing Costs for Gas Powered Cars?
Gas-powered cars do have expenses that electric vehicles don’t. From fuel costs to oil changes, there may be more items to consider when owning a gas-powered car.
Here’s a list of ownership costs to consider when owning a gas-powered car. This is an example of a compact SUV costs for one year of ownership:
Full-coverage insurance: $1,515
License, registration, taxes: $553
Depreciation (15k mi/yr): $3,084
Finance charges: $514
Fuel costs: $2,486
Total annual operating costs: $7,881
While this may not be all-encompassing, owning a gas-powered vehicle will cost around $7,881 per year of ownership. Over a five-year period, this means you’ll spend around $39,405 to operate a gas-powered compact SUV.
What Are the Ongoing Costs for Electric Vehicles?
Electric cars are thought to be less expensive to operate, with less maintenance items and no fuel costs. But we’ll run the numbers to compare actual costs.
Here’s a list of ownership costs to consider when owning an electric vehicle. This is an example of EV compact SUV costs for one year of ownership:
Full-coverage insurance: $1,619
License, registration, taxes: -($119) tax credit
Depreciation (15k mi/yr): $5,044
Finance charges: $707
Charging costs: $2,215
Total annual operating costs: $9,466
Owning an EV can save money in a few areas, especially with the big tax incentives. But they depreciate faster and overall you’ll spend around $9,466 per year to operate an EV. Over a five-year period, this means you’ll spend around $47,330 to operate an eclectic vehicle.
This is over $15,000 more expensive than a comparable gas-powered compact SUV. While some areas are cheaper, the depreciation and high charging costs make EVs an expensive purchase.
Why Aren’t Electric Vehicles More Popular?
EVs are all over the news cycle, with Elon making headlines nearly every week. And Tesla vehicles always seem to be backordered, making it seem like EVs are the hottest thing since sliced bread. So why do EVs only make up 14% of total automobile market sales?
There are many reasons EVs aren’t full catching on:
Price. EVs are still too expensive, and based on our comparison above, people would have to spend $10,000 more on an EV equivalent to a gas-powered vehicle. Plus the long term costs can be expensive as well.
Lack of charging stations. While Tesla has built a solid supercharger network, it is nowhere near as available as gas stations. People don’t want to be stuck without access to charging stations.
Range. EV ranges can be up to 300 miles or more, but those cars cost a lot. For lower priced EVs, driving range can be a limiting factor and the fear of running out of charge can cause consumers to hesitate to purchase an EV.
Safety. While EVs pass most modern safety tests, stories of EVs catching on fire and self-driving mishaps have given consumers pause.
Bottom Line
Electric vehicles are booming, and many states have initiatives in place to help grow the market share and make EVs more accessible. But gas-powered cars are still less expensive overall, making them a more popular choice.
As new EV companies, such as Lucid and Rivian, enter the market and ramp up production, competition can help push prices down and make EVs more accessible (and affordable) to Americans. It’s only a matter of time before EVs take over the market.
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This article originally appeared on GOBankingRates.com: 70% of Car Buyers Opted for Gas in the Past Year: What Will That Cost Them in the Long Term?
