Are electric cars worth it?
Last updated: January 1
If you’re considering the switch from a traditional, gas-powered vehicle to an electric vehicle (EV), there are certainly benefits you can look forward to, like not having to fuel up at the gas station. But is buying an electric car ultimately worth it? Here are the short-term and long-term factors you should consider to make an informed decision.
How much do electric cars cost?
The average sales price for an electric vehicle was $53,469 in July 2023, according to data collected by Kelley Blue Book (KBB). While upfront cost is a major consideration when car shopping, these other elements of EV ownership could also influence your purchase decision.
Generally speaking, it’s cheaper to maintain an EV than a gas-powered car, according to Energy.gov. Their research concluded the estimated scheduled maintenance cost for a fully electric vehicle is roughly 6.1 cents per mile compared to 10.1 cents per mile for a traditional gas-powered vehicle. A gas-powered car with an internal combustion engine needs oil changes, timing belt and spark plug replacements, and many other maintenance tasks that don’t apply to an EV drivetrain.
However, electric vehicles still need some routine maintenance that their gas-powered counterparts also undergo, like having air filters changed or tires rotated. In fact, electric vehicles might need more regular tire maintenance and replacements due to their extra weight, according to Car and Driver.
Another price consideration is the cost of charging an EV vs the cost of refueling a gas-powered car.
According to Energy.gov, the average American drives about 1,124 miles per month. With a common fuel economy car, you’ll need to fill up on gas about three times a month. Assuming the price of gas is around $3.60 and you have a 12-gallon tank, that translates to $129 each month.
If you drive the same mileage and your EV averages three miles per kilowatt-hour (kWh), your EV will use roughly 375 kWh in any given month. Considering the average cost of electricity for home charging, you’d spend around $60 each month to charge your electric car at home.
It’s worth noting that while a lot of EV charging is done at home, you might pay a premium if you need to recharge on the road. Also, gas prices can fluctuate dramatically throughout the year and depending on where you live.
EV batteries are generally guaranteed with a manufacture warranty of at least eight years, and some experts think current model EV batteries could last up to 20 years. In other words, hopefully you won’t be paying to replace the battery during the lifespan of your vehicle. Although, if your EV battery fails outside of its warranty, it can cost thousands of dollars to replace out of pocket.
Given that insurance premiums are an estimate of the expected value of future costs, generally speaking, electric vehicles have higher average premiums than their gas-powered counterparts, according to KBB. With electric vehicles generally costing more to purchase, they are often costlier to repair and replace, relative to gas-powered vehicles. However, insurers may offer different types of discounts, bundles, and telematics programs on electric car insurance that can help EV drivers cut their insurance costs.
Other financial considerations
Purchase price and charging expenses might be many people’s first considerations when determining if an EV purchase is right for them, but these additional factors could also help drive a decision.
Government incentives and tax credits
While the purchase price for electric vehicles is often higher, there may be government initiatives and tax credits to help offset costs and incentivize EV purchases. For example, the U.S. Department of Energy (DOE) offers a federal tax credit of up to $7,500 available to those who have purchased a new electric vehicle in 2023 or after, at the time this article was written.
The DOE has a running list of federal and state incentives on their site. Incentives could include rebates, financial help for installing a home charging station, and more.
Resale value appears to be one area where gas-powered cars currently outperform their EV counterparts. The average five-year depreciation for electric cars is 49.1% compared to 38.8% for all vehicles overall, according to a study from iSeeCars.
It is worth noting that hybrid and electric vehicles have seen the best five-year improvement in depreciation percentage – meaning electric vehicles are holding their value much better in 2023 than they were in 2019.
On average, electric vehicle insurance claims were $963 more expensive than claims for vehicles with an internal combustion engine in the U.S. in Q2 of 2023, according to Mitchell. Even though their claims were more expensive, EVs were less likely to be considered non-drivable than gas-powered cars following a claim, and as technology improves and repair shops gain more knowledge of EVs over time, repair costs may come down.
Should you buy an electric car?
Ultimately, purchasing an electric vehicle is still a personal preference. If you can get past the higher average purchase price, there are plenty of reasons to consider EV ownership. The money you could potentially save over the life of the car in maintenance and fuel costs could be significant, and technological improvements could help bring down repair expenses and insurance premiums over time.