4/3/2024
Want to know the cost of owning an EV vs a gas-powered car? We compare fuel costs, maintenance expenses, upfront prices, and tax incentives to find out.
Tyler Bullen
As gas prices continue their volatile trajectory and climate concerns push more drivers towards eco-friendly transportation, the question of whether to go electric or stick with gasoline is on many drivers' minds.
While electric vehicles (EVs) offer the promise of lower fuel and maintenance costs, the upfront sticker prices are often higher, and so are insurance costs. So, which option truly provides the better overall value? Well, we did the math. Let's take a closer look at how gas and EV ownership expenses stack up.
When we talk about saving money by going electric, this is the first thing that pops into most people’s minds. It’s one of the electric car industry’s biggest selling points—and for good reason. Everyone has seen over the last few years how expensive and volatile gas prices can get when compared to electricity costs. But let’s look at the numbers to find out how much you can save on fuel costs by going electric.
The staggering average price of filling up a gas tank is all too familiar and painful for most drivers. High gas prices have persisted in recent years, with the national average currently hovering around $3.50 per gallon. Prices tend to be even higher on the coasts and in other densely populated areas (California still sits at a whopping five bucks per gallon!).
Constantly fluctuating gas costs make it difficult to budget and predict operating expenses for drivers of gas-powered vehicles. Prices can spike with little warning due to factors like crude oil supply disruptions, seasonal demand increases, geo-political conflicts impacting oil production, and more.
In stark contrast, electricity prices are far more stable and affordable. As of March 2024, the national average cost of electricity is about 15 cents per kilowatt-hour (kWh), according to the U.S. Department of Energy.
To compare efficiency between EVs and gas vehicles in an apples-to-apples way, the Department of Energy developed the miles per gallon equivalent (MPGe) rating system. This translates an EV's electricity consumption into mpg-like numbers.
For example, the 2024 Tesla Model 3 has an MPGe rating of 132. This means the electric Tesla Model 3 has the equivalent efficiency of a gas-powered car getting 132 mpg. Pretty incredible when you consider the average gas vehicle gets around 25 mpg!
The average electric vehicle gets around 3-4 miles of range per kWh, which equates to a "fuel" cost of just around 3-5 cents per mile at the 15 cent/kWh national average. For a gas vehicle getting 25 mpg, the cost per mile is around 15 cents at the current $3.50/gallon price. That's about 3-4 times higher than the cost of driving an electric car! These kinds of fuel savings really start to add up, especially for EV drivers with longer commutes.
Of course, electricity rates can vary by region and utility provider. Prices also tend to be higher if you live in an area that sources more power from fossil fuels compared to renewable sources like solar, wind, hydro or nuclear. The map below offers a sense of how many miles per gallon a gas-powered car would need to get in order to be cheaper than an EV.
To find out how much you personally would save, check the EV Life Savings Calculator.
One of the biggest hurdles and criticisms surrounding most EVs is the higher initial purchase price compared to similar gas-powered models. Battery packs are extremely expensive, which drives up sticker prices. However, the upfront cost gap should continue shrinking as EV battery technology improves and production scales up to meet higher demand.
In the meantime, there are a number of incentive programs in place that can help offset the upfront cost of an electric vehicle.
To help offset the price difference of most EVs, the federal government offers a Federal EV Tax Credit of up to $7,500 for new EVs and $4,000 for used EVs through the Inflation Reduction Act. Some utilities also offer rebates, and there are a number of state and local incentives. These savings can make a serious dent in the price premium over gas vehicles.
It's worth noting that qualification rules do shift frequently for these incentives, and there are caps on vehicle pricing and income limits. But for many drivers, thousands of dollars in tax credits are currently available.
Another key area where EV ownership offers cost savings is maintenance and repair expenses. With fewer moving parts, fluids, and complex systems compared to gas vehicles, electric cars require far less routine service and replacement parts over their lifetimes of daily driving.
You'll never need to worry about oil changes, air filter replacements, spark plug swaps, timing belt replacements, or any other maintenance related to an internal combustion engine. Electric vehicle "mechanics" are generally much simpler, from basic tire rotations to brake and windshield wiper replacements. This can lead to serious maintenance savings over 5-10 years of ownership.
One caveat is that electric vehicle battery packs will eventually need to be replaced after 8-10 years or around 100,000-200,000 miles for most models (though Tesla claims their batteries will last between 300,000-500,000 miles). Battery replacements can cost anywhere from $5,000 to $20,000, depending on the vehicle. While this is a significant expense, it's still likely you'll come out ahead on total maintenance costs compared to a gas vehicle's lifetime service needs.
So, which type of vehicle truly provides the better overall value when you account for all the costs of purchasing, operating, maintaining, insuring, and financing? To dig deeper, let's look at a detailed cost of ownership analysis from Consumer Reports in 2020 comparing the operating costs of electric vehicles vs. gas counterparts. The study found:
If you're considering making the jump to an electric vehicle for your next car purchase, be sure to run the numbers first using one of these helpful cost calculators:
With gasoline prices bound to remain volatile and environmental pressures mounting, the future of sustainable transportation—and savings—is electric. Are you ready to make the switch? EV Life can help get you behind the wheel of a new or used electric vehicle with attractive finance rates and affordable loan payments that meet your budget.
EV Life offers competitive financing terms and makes sure you get every EV tax credit, rebate, and incentive you qualify for to maximize your savings.
At EV Life, we’re on a mission to make it easier and more affordable for anyone to save on driving electric–including you!
With a free EV Life account we help you:
Open a free account today and start saving on your EV.
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