How long does it really take to save money on an electric car? It can take 10 years to break even on fuel with EVs — here's a quick comparison of the key costs if you're on the fence
The United States is experiencing an electric vehicle (EV) boom. Drivers across the country bought nearly 300,000 new EVs in the second quarter of this year — an almost 50% jump from the same period last year, according to Cox Automotive.
A number of factors, including price cuts, tax credits and a wider variety of available EVs, may be boosting sales — but questions remain about whether it’s financially feasible for the average American driver to buy an EV.
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Even after prices fell nearly 18% year over year in July, according to Kelley Blue Book (KBB), EVs still come at a premium when compared to their gas-powered relatives. The average EV price in July was $53,469 versus an average price of $48,334 across all vehicles.
Despite their higher purchase prices, EVs can be more cost-efficient in the long run. One way drivers can save big is on the price of charging up against gassing up. The Department of Energy has a calculator that allows you to compare the fuel economy between two different car models. For some EVs, it can take a decade of savings on fuel in order to make up for the higher upfront cost versus a comparable gas-powered model.
But fuel economy isn’t the only factor when it comes to the cost of owning a car. Drivers must also consider things such as the price of servicing, maintenance, insurance and even tax credits.
Here’s a peek at the fuel efficiency of some EVs compared to their gas-powered equivalents, plus we take a closer look at how some common vehicle costs compare between EVs and regular cars.
Fuel efficiency
One of the most popular vehicles in the U.S. is the Ford F-150 pick-up truck, which now has an electric model, the Lightning. The starting price of a 2023 Ford F-150, according to KBB, is $33,695, while the starting price of a [2023 Ford F-150 Lightning](https://www.kbb.com/ford/f150-lightning/2023/ is $49,995.
Based on the Department of Energy’s fuel economy calculator, assuming you drive 15,000 miles a year, the Ford F-150 Lightning could save $16,630 on fuel costs over 10 years compared its gas-powered equivalent — just about making up the $16,300 difference in the original purchase price over a decade.
Meanwhile, two of the most popular SUVs in the U.S. are the Toyota RAV4 and the Tesla Model Y. The starting price for a 2023 Toyota RAV4 is $27,575, according to KBB, while its all-electric competitor, the 2023 Tesla Model Y, starts at $47,490.
The calculator shows the Tesla Model Y could save $12,220 on fuel costs over 10 years, compared to the gas-powered Toyota RAV4 — meaning that it could take over 16 years to break even on the higher upfront cost of the EV.
It’s important to note that there are many variables at play here. The prices of cars and fuel may vary depending on the features you opt for and your location. The calculator’s settings allow you to adjust for actual purchase price and even the terms of your car loan. You can also tweak the number of miles driven each year, how often you drive in a city setting and even the cost of gas and electricity.
But there’s more to the cost of owning a car than the price of fuel, which we’ll dive into below.
Driving habits
As displayed above, it generally costs less per mile to charge an electric vehicle than to fill up a gas-powered car.
To calculate how much it costs to charge your EV, you need to know the total kilowatt-hours (kWh) it takes to recharge the battery and multiply that by the price you pay per kWh for electricity.
The national average price per kWh of electricity was $0.169 in July, according to the Bureau of Labor Statistics. But remember that rates can vary depending on your utility company. Some areas also offer lower rates if power is used during non-peak hours.
Using the $0.169 per kWh average, if you have a 75 kWh battery in your car — the typical battery size in a 2023 Tesla Model Y — it would cost you around $12.68 to recharge the battery if it’s been fully depleted.
Meanwhile, the national average price of gas, as of Aug. 30, was $3.827 a gallon, according to AAA. The standard capacity of a gas tank is between 13 and 16 gallons, so you may have to pay anywhere from around $49.70 to $61.17 to fill your tank from empty.
But this comparison doesn’t tell the full story. How you drive may impact your vehicle’s fuel or energy consumption. For instance, aggressive driving, including rapid acceleration and hard braking, can dramatically decrease gas mileage, according to the Department of Energy. Actions that will increase the energy demand will also impact the range an EV can travel on a single charge.
According to a Bloomberg analysis of more than a decade of EV sales, the average EV sold in the U.S. has a range of around 300 miles between charges.
Finally, it also takes significantly longer to charge an EV than it does to fill up a gas tank. If you don’t have a charger at home, you may have to go out of your way to find a location to recharge your battery. So, if you live by the motto “time is money” then maybe an EV is not currently worth it for you.
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Tax credits
EVs are increasingly accessible for Americans thanks to federal tax credits introduced in the Inflation Reduction Act (IRA).
In 2023, motorists are able to claim up to $7,500 in credits for purchasing an EV that meets certain conditions.
Some of the most popular EVs – the Tesla Model 3, Tesla Model Y, Chevrolet Bolt, Rivian R1T and Volkswagen ID.4 – qualify for at least some of the IRA tax credits. If that’s not incentive enough, you can also get a tax credit if you install an electric car charger at home. Under the IRA, you can claim a credit equal to 30% of the cost — up to a maximum benefit of $1,000.
Maintenance and repair costs
When you swap a traditional gas engine for an electric motor, you will typically see lower recurring maintenance costs because you don’t have to pay for things like oil changes or replacing timing belts and water pumps.
The life expectancy of EVs is also increasing as battery technology continues to improve, according to Robert Walden, founder of Vehicle Freak.
“While you might shell out more upfront, you're also investing in a longer-lived vehicle,” he told the Daily Mail.
The cost of repairing an EV, however, is another story. According to a 2021 report by CNET, citing data from analytics firm We Predict, repair-related costs averaged $306 for EVs and $189 for gas-powered vehicles. The discrepancy was attributed to EVs requiring additional labor hours to diagnose and fix problems due to the technology being relatively new to mechanics. Additional certifications required to service EVs may also be a factor. The price gap may decrease as more mechanics get certified and gain further experience servicing EVs.
Auto insurance
Insurance for EVs can also cost more than insurance for conventional gas-powered vehicles.
“An electric car's higher price tag and more complex equipment means it may cost more to repair or replace if it's in an accident,” according to Progressive. “That can mean higher rates for policyholders who carry comprehensive and collision coverage.”
“This additional risk has nothing to do with the driver — it's due to the technology in the car itself,” the insurer added, noting that EV insurance rates should go down as the cars become more commonplace and the availability of EV parts and qualified repair shops grows.
When it comes to car insurance, it can pay to shop around. If your policy is about to renew and the cost has jumped significantly, you should consider getting at least three quotes from other insurance companies just in case you can get a lower rate. Remember that it helps to have a clean driving record, with no at-fault accidents or moving violations.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
