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Electric vehicles can save consumers money in the long run compared to traditional gasoline-powered cars.
While electric vehicles still tend to be more expensive to purchase, ongoing fuel and maintenance costs are generally lower, resulting in total lifetime costs that experts say can be lower than a gasoline vehicle.
However, whether electric vehicles are cheaper than gasoline vehicles in terms of overall costs depends on factors such as the model of the electric vehicle, where the buyer lives and how they charge the battery, research shows.
Experts say electric vehicles will have an easier time reaching cost parity with gasoline vehicles over time as battery prices continue to fall.
Some electric car prices reach break-even with petrol models
According to Kelley Blue Book, the average consumer paid about $56,000 to purchase a new electric vehicle in June 2024, compared to $49,000 for a gasoline-powered vehicle.
However, this financial gap is shrinking.
Automakers have been cutting prices on electric cars, and the federal government is offering a tax credit of up to $7,500 to qualified buyers of new electric cars. Consumers can opt to receive this tax break as a rebate on the purchase of the car.
States and utilities may also offer tax incentives to reduce the cost of purchasing vehicles or charging infrastructure.
“Electric vehicles are expected to continue to become cheaper, mainly due to [lower] Battery costs,” said Maxwell Woody, a researcher at the University of Michigan's Center for Sustainable Systems and co-author of a recent study on the costs of electric and gasoline cars.
Compared to gasoline car prices, “some smaller electric vehicles are already breaking even, even without incentives,” Woody said.
But most people still pay a premium for their electric vehicle, says Chris Harto, senior transportation and energy policy analyst at Consumer Reports.
For buyers it is really a question, what is the [long-term] “How can these additional costs be amortised?” said Harto.
Why electric vehicles could have the edge in the long run
According to a 2023 Consumer Reports study, owning an electric vehicle saves the average driver $6,000 to $12,000 over the lifetime of the vehicle compared to a comparable gasoline-powered model.
“If any, [total] Today the savings could be a little better,” said Harto.
According to the U.S. Department of Energy, electric vehicles require less repair and maintenance, in part because they have fewer moving parts than vehicles with conventional fuel engines.
In addition, it is “significantly cheaper” to fuel an electric vehicle due to the higher 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 were eligible for a federal tax credit, Harto said. Tax breaks from states, municipalities or utilities were not taken into account.
Similarly, a 2024 JD Power study found that electric vehicles are cheaper than their gasoline-powered counterparts in terms of total cost of ownership over five years 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 analysis published last month in Automotive News.
Why geography is important
JD Power's analysis points to an important caveat: The relative financial benefits of an electric vehicle 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.
Such differences are largely due to regional differences in electricity and gasoline prices, Woody said.
“In places like Texas, where gas prices are particularly low, it’s harder for an electric vehicle to break even,” Woody said.
In addition, electric vehicles generally make more financial sense for those who charge their batteries at home, Woody said. Public charging stations are generally more expensive, he said.
This is especially true in areas where electric vehicle owners can take advantage of lower off-peak residential electricity prices, for example by charging overnight, 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 stations reduces the life cycle costs of a midsize SUV with a 300-mile range by an average of about $10,000, and by as much as $26,000, according to the University of Michigan study.
“Cities that are particularly friendly to [EVs] have several things in common, including low electricity costs (or at least time-based pricing that includes a low-price option), high gasoline prices, temperate climates, and direct purchasing incentives,” says the study, which analyzed costs in 14 different U.S. cities.
Overall, the total cost of ownership of small electric vehicles and short-range vehicles (about 320 kilometers) was lower than that of similarly sized gasoline vehicles in all cities, even without tax incentives, the study found.
Even electric vehicles with a range of around 300 miles, especially for smaller vehicles such as compact cars and midsize sedans, “can be comparable without incentives.” However, the models with the longest range – around 400 miles – are generally not yet price-competitive with gasoline vehicles even with subsidies, the findings found.