The final cost you have is what tells which one is cheaper: EV vs. Gasoline Car! Find out what makes one more cost effective than the other!
When it comes to havbing a car, you have probably asked yourself which one is cheaper: EV vs. Gasoline Car. Well, whether electric vehicles (EVs) are more cost-effective overall depends on various factors, including the car model, where the buyer lives, and how the battery is charged. In June 2024, a new EV cost about $56,000, while a new gas-powered car averaged $49,000, according to Kelley Blue Book. However, this price gap is shrinking.
EVs have the potential to save consumers money in the long run. According to experts, although EVs usually have a higher upfront purchase cost, they generally have lower ongoing expenses for fuel and maintenance, leading to a total lifetime cost that could be lower than that of gas vehicles. And as battery prices continue to drop, experts predict that EVs will more easily match the cost of gasoline cars.
Carmakers are reducing EV prices, and the federal government offers a tax credit of up to $7,500 for eligible new EV buyers, which can be taken as an upfront discount. Additionally, some states and utilities provide tax incentives to lower the cost of purchasing an EV or installing charging infrastructure.
Maxwell Woody, a researcher at the University of Michigan’s Center for Sustainable Systems who co-authored a recent study on EV and gasoline car costs, noted that EVs are becoming cheaper primarily due to declining battery costs. Some smaller EVs are already matching the prices of gas vehicles, even without incentives.
However, many consumers still pay an EV premium, according to Chris Harto, a senior transportation and energy policy analyst at Consumer Reports. He emphasized that buyers need to consider the long-term savings to justify the higher initial cost.
According to a 2023 Consumer Reports study, owning an EV can save drivers between $6,000 and $12,000 over the vehicle’s lifetime compared to a similar gas-powered model. These savings might be even better today.
EVs typically require less repair and maintenance since they have fewer moving parts than conventional fuel engines. Additionally, EVs are cheaper to refuel due to their higher energy efficiency and generally lower electricity prices compared to gasoline.
Why Location Matters
A 2024 J.D. Power study also found that EVs were more cost-effective than gas vehicles over a five-year ownership period in all states except Maine and West Virginia. The study highlights that the costs of owning an EV can vary significantly based on where you live. For example, the total lifetime cost of a midsize electric SUV with a 300-mile range can differ by up to $52,000 – or nearly 40% – depending on the location.
EV owners in Colorado, Illinois, Nevada, and New Jersey could save over $8,000 during that time. These differences are mainly due to regional variations in electricity and gasoline prices. In states like Texas, where gas prices are particularly low, it’s harder for an EV to be cost-competitive.
EVs generally offer the most savings for those who can charge their batteries at home, as public charging tends to be more expensive. This is especially true in areas where residential electricity is cheaper during off-peak hours, such as overnight, Woody noted. According to the University of Michigan study, home charging access can reduce the lifetime cost of a 300-mile midsize SUV by an average of $10,000, and up to $26,000 in some cases.
“Cities that are particularly friendly for [EVs] have several things in common, including a low cost of electricity (or at least time-of-use pricing that includes an option with low prices), high gasoline prices, moderate climates, and direct purchase incentives”, according to the study.
The study analyzed costs in 14 different U.S. cities and found that small and low-range EVs (around 200 miles) were less expensive to own than comparable gas vehicles across all cities, even without tax incentives. Longer-range EVs (about 300 miles) for smaller vehicles like compact cars and midsize sedans can also be cost-competitive without incentives, but the longest-range models (around 400 miles) generally aren’t yet as affordable as gasoline vehicles, even with subsidies.