Kelley Blue Book says more electric vehicles (EVs) were sold in 2023 than in the past 12 years. This shows a big change in what people want to buy. Cox Automotive's team also found that EVs will make up 10% of the U.S. car market by 2024.

Now, people wonder: Are electric cars really cheaper over time? A study by the University of Michigan's Center for Sustainable Systems gives us some answers.

Key Takeaways

• Small, low-range EVs are less expensive to own than gas-powered cars, while larger, long-range EVs can be more costly.
• Midsize SUV EVs reach cost parity with gas-powered models only when government incentives are applied.
• The federal EV tax credit significantly impacts the affordability of EVs, with eligible buyers receiving up to $7,500 for new EVs and $4,000 for used EVs.
• EVs with home charging access are more economical, reducing lifetime costs by up to $26,000 on average.
• Future cost dynamics of battery replacements, gasoline, and electricity prices could influence the cost comparison between EVs and gas vehicles in the long term.

The study shows that owning an EV is complex. Many things affect the cost. As car makers improve EVs and governments give more help, electric cars are becoming more affordable. People need to consider the initial cost, how much they'll save on fuel, and maintenance to decide if an EV is right for them.

Sticker Prices for Electric vs. Gas Cars

Comparing Upfront Costs and Incentives

Electric vehicles (EVs) are getting closer in price to gas cars. The average cost for a new EV dropped by $14,300 in September 2023. Now, it's only $2,800 more than a new gas car.

The federal government offers a tax credit of up to $7,500 for EVs. Many states and local governments also offer rebates or tax credits. This helps lower the cost of buying an EV. There's a federal tax credit of up to $4,000 for used EVs.

Installing a home charging station costs about $2,000. But, you might get incentives or rebates to help cover this cost. This makes buying an EV more affordable.

Some car makers can give you the federal tax credit right when you buy. This saves you money upfront and makes buying an EV easier.

"The average consumer paid about $56,000 for a new EV in June 2024, compared to $49,000 for a gas-powered vehicle, according to Kelley Blue Book."

As EV technology improves and production grows, the price difference will keep shrinking. This will make EVs more affordable for more people.

Cost of Electricity vs. Gasoline

The cost of fueling your car can greatly affect your expenses. Electric vehicles (EVs) are much more efficient, saving drivers about 60% less per year on fuel costs. This is compared to those driving gas-powered cars.

EVs are 2.6 to 4.8 times more efficient per mile than gas cars. But, the cost of electricity varies by region. In the U.S., rates range from $0.15 to $0.16 per kilowatt-hour (kWh). This means charging an EV can cost differently in different places.

Charging an EV during off-peak hours can save even more money. This makes EVs a more cost-effective choice than gas cars. By using off-peak hours, EV owners can cut their fuel costs even more.

Are Electric Cars Really Cheaper in the Long Run? A Comprehensive Cost Analysis

The debate on total cost of ownership between electric cars (EVs) and gas cars is complex. EVs often cost more upfront but can save money in the long run. This is due to lower fuel and maintenance costs.

A 2024 study by Atlas Public Policy for NRDC showed EVs are cheaper than gas cars. They found savings of $7,000 to $11,000 over 7 years. This highlights the long-term cost benefits of electric cars.

But, cost savings depend on many factors. These include local electricity and gas prices, driving habits, and home charging access. The ratio of gasoline-to-electricity prices is key in comparing EV and gas car costs.

In states like Washington, with low electricity and high gas prices, EVs are 5 times cheaper for 100 miles. In places like California, with high prices for both, EVs offer more modest savings.

Having access to home charging is also important. Home charging is much cheaper than public fast-charging. This can greatly affect fuel costs over time.

"The availability of direct sales channels for electric cars can influence EV sales, with all leading states in electric car adoption having access to direct sales."

Even with higher upfront costs, EVs offer significant long-term savings. As technology improves and infrastructure grows, EVs will become even more appealing to eco-conscious drivers.

Maintenance Costs for Electric vs. Gas Cars

Electric vehicles (EVs) cost about half as much to maintain as gas cars. This is because EVs have fewer moving parts. They also don't need regular oil changes, unlike gas cars.

Comparing Routine and Repair Expenses

EVs have a regenerative braking system. This system helps brake pads and rotors last longer. EVs also need less maintenance, like tune-ups and filter changes.

While EVs do need basic care, like tire rotations, their maintenance costs are much lower. This is compared to gas cars.

A study by the Department of Energy found EV owners save almost $15,000 in fuel costs over 15 years. This adds to the long-term savings of EVs over gas cars.

"Electric vehicles usually have higher sticker prices than gas vehicles, but as the market grows, price margins are expected to shrink."

Even though EVs may cost more upfront, their lower maintenance and fuel costs make them more affordable over time. This is as the technology improves and prices drop.

Lifetime Costs for Electric vs. Gas Cars

Looking at the total cost of owning electric vehicles (EVs) versus gas cars is complex. EVs often cost more upfront, but they save money on energy and maintenance over time. This makes them a better deal over 5-7 years.

A 2024 study by Vincentric found that 20 out of 49 EV models in the U.S. are cheaper to own than similar gas cars. EVs cost about $8,000 more to buy, but owners save $1,300 over five years. This is because EVs have lower energy and maintenance costs.

The initial cost difference is a big factor, but the long-term savings of EVs are clear. EVs offer big savings over 5-7 years. This is true when you consider energy costs, incentives, and how you charge your car.

Factors Affecting EV Cost Savings

Regional Differences and Charging Habits

The cost of owning an electric vehicle (EV) changes a lot based on where you live and how you charge it. A 2024 study by the University of Michigan found big differences in costs. For example, the cost of a midsize electric SUV with a 300-mile range can vary by up to $52,000 (or 40%) depending on the region.

Things like electricity and gasoline prices and access to home charging affect how much you save with an EV. Charging your EV during off-peak hours can save a lot of money.

The study highlighted big differences in EV cost savings across regions. Important factors include the impact of home vs. public charging on ownership costs and the importance of off-peak electricity rates for EV charging. These are key things to think about if you're considering buying an EV.

"The total lifetime cost of owning an electric vehicle (EV) can vary significantly depending on the buyer's geographic location and charging habits."

Plug-in Hybrid Vehicles: A Balanced Approach

Plug-in hybrid electric vehicles (PHEVs) are a smart choice. They use both electricity and gasoline. This means drivers can go electric for short trips and use gas for longer ones.

This balance helps PHEV owners save money and avoid some of the costs of electric cars. They get the benefits of electric driving without the high upfront costs.

PHEVs are cheaper than gas cars and all-electric vehicles (EVs) at first. They also cost less to fuel and might get tax breaks. Plus, they save money on fuel, which is great for daily driving.

PHEVs might cost more upfront than gas cars. But, they offer big savings over time. They're a great choice for those who drive both in the city and on highways.

"PHEVs offer the best of both worlds, providing the efficiency and cost savings of electric driving for daily commutes while maintaining the flexibility of a gas-powered engine for longer trips."

Environmental Considerations

Electric vehicles (EVs) offer more than just cost savings for owners. They also bring big benefits to society. EVs are a key part of reducing climate pollution in the U.S. They produce much less greenhouse gas than gas cars over time.

A study by the U.S. Environmental Protection Agency found that cutting down on greenhouse gas emissions saves money. EVs can help lower carbon emissions and improve air quality. This leads to savings for everyone.

The Broader Impacts of Electric Vehicles

Electric cars have many environmental benefits. Their electric motors are very efficient, using more than 77% of energy. Gas cars, on the other hand, only use 12% to 30% of fuel energy.

This means EVs produce less pollution and better air quality. This is good for the planet and our health.

• General Motors plans to sell only electric cars and light trucks by 2035, highlighting the industry's commitment to sustainable transportation.
• Volvo aims to transition to electric-only new car sales by 2030, further accelerating the shift towards zero-emission vehicles.
• Electric vehicles have around 20 moving parts in the motor compared to almost 2,000 in internal combustion engine vehicles, contributing to lower maintenance costs and reduced environmental impact.

"The widespread adoption of electric vehicles can play a critical role in lowering carbon emissions and improving air quality, ultimately leading to cost savings for society as a whole."

As the market grows and battery tech improves, EVs will become even more beneficial. They will be a top choice for those who care about the environment. This will help create a greener future.

Future Outlook for EV Costs

Experts say EV prices will keep falling as battery tech improves and more EVs are made. A 2024 study by the University of Michigan shows smaller EVs are now as affordable as gas cars, even without government help.

The study found that owning an EV for five years costs about $63,000. But, with tax credits of up to $7,500, the price drops, making EVs a better deal.

Leasing an EV is also cheaper than leasing a gas car. For example, in Mississippi, EV leases are $3,100 less over three years than gas car leases.

With EV sales going up, switching to electric is good for the planet and your wallet. It's changing the car market.

The outlook for EV costs looks bright. The expected drop in EV prices, improvements in battery tech, and more EVs on the market will make them more affordable for many people.

Conclusion

In conclusion, electric vehicles (EVs) are often more cost-effective than traditional cars. The study showed that EVs can save owners between $3,000 and over $10,000 over seven years. This is mainly because EVs cost less to fuel and maintain, even though they might be pricier upfront.

The savings can change based on where you live, how easy it is to charge your car at home, and government incentives. Yet, the study found that EVs are getting more affordable and appealing to many. It's important to think about the total cost of owning a car, not just the initial price, when choosing between electric and gas cars.

The study highlights the need to spread the word about EVs' long-term financial benefits. As EV technology improves and battery prices fall, more people will likely switch to electric cars. This shift is expected to change the car industry in the future.