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Electric vehicles cost over a third more to purchase than gas-powered vehicles. But what about other driving costs?
The cost of car ownership is more than just the sticker price of the car itself. To find the true cost, you have to take into account factors like fuel, maintenance, insurance, depreciation and tax credits. When you take all of these expenses into account, electric vehicles (EVs) — priced on average at 35 percent more than gas-powered vehicles — can be cheaper to drive, especially if you qualify for the federal rebate. Let’s look closer.
While EVs may cost more upfront, they are cheaper to own on a yearly basis due to their reduced fuel and maintenance costs and tax rebates for those who qualify, according to 2022 data from AAA.1
Overall, the AAA study found that the cheapest car to drive is a small, gas-powered sedan, followed by an electric vehicle. Meanwhile, the most expensive car to drive is a 1/2-ton crew cab pickup and a medium SUV, vehicles both known as gas guzzlers.
Vehicle type | Cost with 10,000 annual mileage | Cost with 15,000 annual mileage | Cost with 20,000 annual mileage | Average |
---|---|---|---|---|
Small sedan | $6,029 | $8,184 | $10,427 | $8,213 |
Electric vehicle | $6,721 | $9,048 | $11,516 | $9,095 |
Subcompact SUV | $6,827 | $9,246 | $11,755 | $9,276 |
Compact SUV (FWD) | $6,675 | $9,325 | $12,096 | $9,365 |
Hybrid vehicle | $7,205 | $9,691 | $12,301 | $9,732 |
Medium sedan | $7,895 | $10,351 | $12,908 | $10,385 |
Midsize pickup | $6,980 | $10,537 | $14,257 | $10,591 |
Medium SUV (4WD) | $7,992 | $11,305 | $14,763 | $11,353 |
1/2-ton crew cab pickup | $8,966 | $12,932 | $17,108 | $13,002 |
2022 weighted average | $7,630 | $10,729 | $13,974 | $10,778 |
There’s no doubt that electric vehicles currently cost more to purchase than gas-powered cars, with an average price of $65,291 compared to $48,094, according to Kelley Blue Book (KBB).2 However, KBB reports that the price gap will close as nonluxury car manufacturers, such as GM, Ford and Hyundai begin to make and sell EVs as opposed to just luxury manufacturers like Tesla.
But don’t suffer from sticker shock. Overall, EVs may be cheaper to drive when you take into account tax rebates, fuel savings and more.
Electric and hybrid vehicles have the lowest fuel costs. Compared to rising gas prices, electricity costs are generally lower.
Vehicle type | Cost of fuel per mile |
---|---|
Electric vehicle | 4.04 cents |
Hybrid vehicle | 10.95 cents |
Small sedan | 12.51 cents |
Compact SUV (FWD) | 14.25 cents |
Medium sedan | 14.37 cents |
Subcompact SUV | 15.2 cents |
Medium SUV (4WD) | 18.89 cents |
Midsize pickup | 21.51 cents |
1/2-ton crew cab pickup | 24.63 cents |
2022 weighted average | 17.99 cents |
Electric vehicles are also the least expensive to maintain, with no engine and mechanical breakdowns to worry about.
Vehicle type | Cost of maintenance per mile |
---|---|
Electric vehicle | 7.94 cents |
Small sedan | 8.87 cents |
Hybrid vehicle | 8.88 cents |
1/2-ton crew cab pickup | 9.33 cents |
Subcompact SUV | 9.84 cents |
Compact SUV (FWD) | 10.13 cents |
Midsize pickup | 10.13 cents |
Medium SUV (4WD) | 10.2 cents |
Medium sedan | 10.64 cents |
2022 weighted average | 9.68 cents |
However, one area where electric vehicles rack up higher fees is with the cost of car insurance. Because EVs have higher purchase prices than gas-powered vehicles, they are generally more expensive to repair and, thus, more expensive to insure. However, the difference is pretty minimal — insuring an EV is only about $100 more than the lowest-cost vehicle type to insure, a compact SUV with front-wheel drive.
Vehicle type | Annual cost of full-coverage insurance |
---|---|
Compact SUV (FWD) | $1,515 |
Subcompact SUV | $1,527 |
Medium SUV (4WD) | $1,529 |
Midsize pickup | $1,537 |
Small sedan | $1,618 |
Hybrid vehicle | $1,619 |
Electric vehicle | $1,619 |
1/2-ton crew cab pickup | $1,630 |
Medium sedan | $1,694 |
2022 weighted average | $1,588 |
Because of their high repair costs following accidents, many new Tesla Model Ys are showing up in junkyards as they’re cheaper to replace rather than repair.
Another disadvantage of EVs is that they depreciate more, which makes sense when you consider their higher prices to begin with. For the least amount of depreciation, buy a small sedan, which loses only $1,086 of its value with an annual mileage of 10,000.
Vehicle type | Depreciation with 10,000 annual mileage | Depreciation with 15,000 annual mileage | Depreciation with 20,000 annual mileage | Average depreciation |
---|---|---|---|---|
Small sedan | -$1,086 | $2,528 | +$1,174 | $1,851 |
Midsize pickup | -$1,976 | $2,884 | +$2,138 | $2,511 |
Subcompact SUV | -$1,167 | $2,996 | +$1,258 | $2,127 |
Compact SUV (FWD) | -$1,431 | $3,084 | +$1,552 | $2,318 |
Medium sedan | -$1,205 | $3,703 | +$1,306 | $2,505 |
Hybrid vehicle | -$1,495 | $3,831 | +$1,618 | $2,725 |
Medium SUV (4WD) | -$1,858 | $4,030 | +$2,003 | $3,017 |
1/2-ton crew cab pickup | -$2,267 | $4,378 | +$2,479 | $3,429 |
Electric vehicle | -$1,728 | $5,044 | +$1,869 | $3,457 |
2022 weighted average | -$1,715 | $3,656 | +$1,862 | $2,759 |
Electric vehicles are the only type of vehicle that will save you money on your tax return in the form of federal rebates. EV owners save, on average, $119 per year on their taxes, licenses and registrations.
Vehicle type | Annual cost of license, registration and taxes |
---|---|
Electric vehicle | -$119 |
Small sedan | $440 |
Subcompact SUV | $507 |
Compact SUV (FWD) | $553 |
Medium sedan | $622 |
Hybrid vehicle | $657 |
Midsize pickup | $714 |
Medium SUV (4WD) | $717 |
1/2-ton crew cab pickup | $934 |
2022 weighted average | $675 |
However, not every EV owner qualifies for this rebate. To be eligible, you must purchase:
Here is a list of electric vehicles that qualify for a rebate of up to $7,500, according to the United States Department of Energy.
Along with the vehicle qualifications, there are restrictions on the owner and usage of the vehicle that affect rebate eligibility:3,/sup>
Note that this is not an exhaustive list of qualifications. Check the IRS website to see if you qualify.
Hybrid vehicles, otherwise known as HEVs or plug-in hybrid electric vehicles (PHEVs), use a combination of electricity and gas, so it’s no surprise that they are, on average, more expensive than electric vehicles in terms of fuel, maintenance, taxes and finance charges.
Costs | Hybrid vehicle | Electric vehicle |
---|---|---|
Fuel (cents per mile) | 10.95 | 4.04 |
Maintenance (cents per mile) | 8.88 | 7.94 |
Total cost in cents per mile | 19.83 | 11.98 |
Full-coverage insurance | $1,619 | $1,619 |
License, registration, taxes | $657 | -$119 |
Finance charges | $609 | $707 |
Cost per year | $6,717 | $7,251 |
Cost per day | $18.40 | $19.87 |
Operating cost (10,000 miles per year) | $1,983 | $1,198 |
Ownership cost (10,000 miles per year) | $6,717 | $7,251 |
Depreciation (10,000 miles per year) | -$1,495 | -$1,728 |
Total cost per year (10,000 miles per year) | $7,205 | $6,721 |
Total cost per day (10,000 miles per year) | $19.74 | $18.41 |
Total cost per mile (10,000 miles per year) | $0.72 | $0.67 |
Operating cost (15,000 miles per year) | $2,974 | $1,797 |
Ownership cost (15,000 miles per year) | $6,717 | $7,251 |
Depreciation (15,00 miles per year) | $3,831 | $5,044 |
Total cost per year (15,000 miles per year) | $9,691 | $9,048 |
Total cost per day (15,000 miles per year) | $26.55 | $24.79 |
Total cost per mile (15,000 miles per year) | $0.65 | $0.60 |
Operating cost (20,000 miles per year) | $3,966 | $2,396 |
Ownership cost (20,000 miles per year) | $6,717 | $7,251 |
Depreciation (20,000 miles per year) | +$1,618 | +$1,869 |
Total cost per year (20,000 miles per year) | $12,301 | $11,516 |
Total cost per day (20,000 miles per year) | $33.70 | $31.55 |
Total cost per mile (20,000 miles per year) | $0.62 | $0.58 |
However, hybrids have the distinct advantage of being able to depend on gas if you’re driving through an area that lacks public charging points, which is a barrier for many people considering EV purchases.
You can use this calculator from AAA to determine the cost of vehicle ownership based on your car model and usage: https://www.aaa.com/autorepair/drivingcosts.
So, which vehicle type is right for you? Let’s break it down.
Buy an electric car if:
As of September 2021, the state of California had the highest number of EV charging stations at about 34,000.5
Buy by a gas car if:
There’s no doubt that electric vehicles are here to stay, especially as their purchase prices decrease and the number of publicly available charging stations increases. However, for most people, they are simply too expensive to purchase right now, even with their reduced driving costs, particularly if you don’t qualify for the federal rebate.
In terms of fuel costs, a Tesla is cheaper than gas as electricity is cheaper than gas fuel. However, in terms of purchase price, Teslas are more expensive than gas-powered cars on average.
Tesla charging stations are not free in most cases. However, you might have 10,000 free Supercharging miles available if you participated in a referral program and had your new Tesla delivered from Dec. 15, 2022, to Dec. 31, 2022. These miles expire two years from your delivery date.
On average, it costs about $14 to charge a Tesla, although it could range from $10 to $18, according to EnergySage.
Yes, electric cars have air conditioning just like gas-powered vehicles. But keep in mind that the AC is battery-powered, so it might affect the EV’s range.
Your Driving Costs. AAA. (2023).
https://newsroom.aaa.com/wp-content/uploads/2022/08/2022-YDC-Costs-Break-Out-by-Category.pdf
Electric Car FAQ: Your Questions Answered. Kelley Blue Book. (2022, Oct 31).
https://www.kbb.com/car-advice/electric-car-faqs/
Tax Incentives. U.S. Department of Energy. (2023).
https://www.fueleconomy.gov/feg/taxcenter.shtml
Credits for New Clean Vehicles Purchased in 2023 or After. IRS. (2023).
https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after
Charging Stations By State. Evadoption. (2021, Sep 21).
https://evadoption.com/ev-charging-stations-statistics/charging-stations-by-state/