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Electric vehicles can save consumers money in the long run compared to traditional gasoline-powered cars.
While electric vehicles tend to cost more up front, recurring charges for fuel and maintenance are generally cheaper, adding up to a total lifetime cost that can be lower than a gasoline-powered vehicle, experts said.
However, research shows that whether or not electric vehicles outperform gasoline cars in terms of overall cost depends on factors such as the model of the EV, where the buyer lives and how they charge the battery.
Electric vehicles are expected to more easily reach cost parity with gasoline cars as battery prices continue to fall, experts said.
Some EV prices are starting to break even with gasoline models
The average consumer paid about $56,000 to buy a new electric vehicle in June 2024, compared with $49,000 for a gasoline-powered vehicle. according to Kelley's Blue Book.
However, that financial gap is narrowing.
Automakers have been cutting prices on electric vehicles, and the federal government is also offering a tax credit of up to $7,500 to qualifying buyers of new electric vehicles. Consumers can opt to receive that tax break as an upfront discount on the car.
States and utilities may also offer tax breaks to defray the cost of purchasing the vehicle or charging infrastructure.
“The expectation is that electric vehicles will continue to become cheaper, largely driven by [lower] “The costs of batteries,” said Maxwell Woody, a researcher at the University of Michigan's Center for Sustainable Systems who co-authored a recent study study on the costs of electric and gasoline vehicles.
Compared with gasoline-powered car prices, some smaller electric vehicles “are already starting to break even, even without the incentives,” Woody said.
But most people still pay a premium for electric vehicles, said Chris Harto, senior energy and transportation policy analyst at Consumer Reports.
For buyers, “it's really a question of what the [long-term] “How do we recover that extra cost?” Harto said.
Why electric vehicles can succeed in the long term
According to Consumer Reports, owning an electric vehicle saves the typical driver between $6,000 and $12,000 over the life of the vehicle, compared to a comparable gasoline-powered model. study published in 2023.
“In any case, the [total] “Savings could be a little better today,” Harto said.
Electric vehicles are less likely to need repair and maintenance, in part because they have fewer moving parts than cars with conventional fuel engines, according to the U.S. Department of Energy.
It's also “significantly cheaper” to fuel an electric vehicle because of its greater energy efficiency and generally lower electricity prices compared to gasoline, Woody said.
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The Consumer Reports study looked at six popular electric vehicles that qualified for a federal tax credit, Harto said. Tax breaks from states, municipalities or utility companies were not included.
Similarly, a 2024 JD Power study found that EVs outperform their gasoline-powered counterparts in total cost over a five-year ownership period in every state except Maine and West Virginia.
Electric vehicle buyers in Colorado, Illinois, Nevada and New Jersey would save more than $8,000 over that period, according to the analysispublished in Automotive News last month.
Why geography is important
JD Power's analysis highlights a key caveat: The relative financial benefits of an EV depend heavily on case-by-case factors, such as the driver's geographic location.
For example, the total lifetime cost of a midsize electric SUV with a 300-mile range can vary by $52,000 (or nearly 40%) depending on location, according to the University of Michigan study.
These disparities are largely due to regional differences in electricity and gasoline prices, Woody said.
“In places like Texas, with particularly low gas prices, it's harder for an electric vehicle to break even,” Woody said.
Plus, electric vehicles often make more economic sense for those who charge their batteries at home, Woody said. Public charging is typically more expensive, he said.
This is especially true in areas where EV owners can take advantage of lower residential electricity prices during off-peak hours, such as overnight charging, Woody said.
“If you don't have access to a home charger, it's going to be very difficult to save money on an electric vehicle,” he said.
Access to home charging reduces the lifetime cost of a 300-mile midsize SUV by about $10,000, on average, and up to $26,000, according to the University of Michigan study.
“Cities that are especially friendly to [EVs] “They have several things in common, including low electricity costs (or at least time-of-use pricing that includes a low-price option), high gasoline prices, moderate climates and direct purchase incentives,” according to the study, which analyzed costs in 14 different U.S. cities.
Overall, small, low-range electric vehicles (with about 200 miles) had a lower total cost of ownership than similarly sized gasoline vehicles across all cities, even without tax incentives, the study found.
Likewise, longer-range EVs (about 300 miles), especially smaller vehicles such as compact cars and midsize sedans, “may be comparable” without incentives. However, longer-range models (about 400 miles) are generally still not cost-competitive with gasoline vehicles, even with subsidies, the study concluded.