Gas vs. Electric Vehicles: Which is Cheaper to Own?

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According to AAA, the average cost of maintaining and using a car in 2023 will be $12,182 per year, about $1,500 higher than the 2022 figure. Electric cars are quickly becoming a popular choice among drivers who want to save money and reduce their carbon footprint. But are electric cars cheaper than gas-powered cars? Bankrate’s insurance editorial team carefully compared the cost of EVs to the cost of gas-powered cars to determine the true cost of owning and using each type of car. Our guide to the cost of electric cars vs. gas-powered cars may help you make the best decision for your own automotive needs.

The cost of green cars: the price of EVs vs. gasoline cars

As you begin to search for your first electric vehicle, you’ll need to understand some new concepts. Instead of miles per gallon, you’ll want to look at how far an electric vehicle can go on a single charge. One commonly used statistic is miles per gallon of gasoline equivalent, or MPGe. Another way to determine efficiency is cost per kilowatt-hour (kWh). Public charging stations can be more expensive than charging at home.

Another cost you’ll want to consider is auto insurance, which you’ll need to have coverage for in most parts of the U.S., regardless of the type of car you drive. Right now, auto insurance for electric vehicles tends to be a bit more expensive than gas-powered cars, but that may change as EVs become more popular and repair costs come down.

The table below is designed to help you understand the costs of owning and using an EV versus a gasoline vehicle. It also includes the range or mileage for each vehicle, and the average cost of car insurance. Keep in mind that car insurance is a highly individualized product, and premiums may vary from the average.

electricity	Chevrolet Bolt	$26,500	120 MPGe / 259 miles total	$2,007
	Nissan Leaf	$28,040	111 MPGe / 149 miles total	$2,024
	Tesla Model S	$74,990	120 MPGe / 405 miles total	$2,804
	Tesla Model X	$79,990	102 MPGe / 348 total miles	$4,364
	Tesla Model 3	$40,240	132 MPGe / 272 miles total	$2,577
	Toyota Prius	$28,545	52 / 52 MPG	$2,117
Gasoline powered	Ford F-150	$34,585	25/25 MPG	$1,753
	Honda Civic	$23,750	44 / 51 MPG	$1,963
	Nissan Altima	$25,630	27 / 39 MPG	$2,208
	Toyota Camry	$26,230	22 / 33 MPG	$1,819

Incentives and Rebates

The main incentive that automakers promote when buying a new electric or plug-in hybrid vehicle is a federal tax credit. The credit is capped at $7,500, but the actual amount depends on the battery capacity and other factors. For example, if you lease a qualifying vehicle, this credit goes to the leasing company, not you.

Please note that each automaker places a cap on these tax credits, and the amounts are constantly changing. You can find the latest list of eligible vehicles and the maximum credit amount at the U.S. Department of Energy. There are some restrictions on the tax credits; for example, applicants must have annual income below a certain amount and the final assembly of the vehicle must take place in North America.

State and local incentives for purchasing an electric vehicle also exist. The National Conference of State Legislatures provides details on the various incentives available to electric vehicle buyers in each state. Benefits and additional incentives include discounts on home energy costs, assistance with the installation costs of a home charger, and HOV lane exemptions with the proper vehicle tag. Some electric utilities also offer discounts and incentives for owning and charging an electric vehicle at home.

There are also unique financing options available for those buying a new electric vehicle. Green auto loans that specialize in electric and fuel-efficient vehicles take into account the higher purchase price of these vehicles and offer buyers extra perks, such as lower interest rates and longer repayment terms, making monthly payments more affordable.

Are EVs cheaper than gasoline?

When considering purchasing an electric vehicle, an important factor to consider is the cost of charging an electric vehicle compared to filling up with gasoline. Charging an electric vehicle at home with a Level 2 charger will cost between $0.12 and $0.24 per kWh. This equates to about $6 to $18 for a full charge that typically provides 200+ miles of range, depending on the size of the battery.

This is significantly cheaper than gasoline for most drivers. Using public fast chargers comes at a higher cost, averaging around $0.30+ per kWh, with a total of $20-40 for a full charge. While more expensive than charging at home, it is likely cheaper than filling up with an equivalent tank of gas for a driving range of 200+ miles. Overall, EV drivers will pay less for electricity than gasoline, which will save them money in the long run, especially when charging at home.

$3.77 per gallon of gas	200 miles @ 24.9 MPG	8 gallons of gasoline = $30.16
$6-18 for regular charging	Over 200 miles	1 charge = $6-18
Fast charging costs $20-40	Over 200 miles	1 charge = $20-40

The hidden costs of electric cars

You may have made plans to buy or finance your new electric vehicle and even gotten quotes for car insurance, but that’s not all that an electric car costs. Here are some hidden costs you may incur by owning an electric vehicle.

Depreciation of electric vehicles

A new car can lose up to 20 percent or more in value within the first year of purchase. For electric vehicles, this loss can be even greater, depending on how quickly the technology advances. Newer cars have longer ranges and improved battery life, which can make older models obsolete.

The make and model of your car also matters: A comparison by CarEdge found that after five years, a Tesla Model 3 retained about 48% of its resale value, while a Nissan Leaf only retained 34%. Meanwhile, a Toyota Camry retained 65% of its resale value.

Battery degradation in electric vehicles

With electric vehicles, there’s another issue owners can face as their car ages: battery degradation. Unlike a gasoline car’s tank, which doesn’t get smaller as it ages, an electric car’s battery loses range as it ages, reducing the maximum distance it can travel before needing to be recharged. While there are many factors that can affect a battery’s lifespan, from improper charging to cold weather conditions, it’s inevitable that an electric car battery won’t always maintain the same range it did when it was new. And, like a gasoline car battery, it will eventually need to be replaced – more on the costs of that shortly.

Electric vehicle maintenance

Because electric cars have fewer moving parts than their gas-powered counterparts, you might think they’d be cheaper to maintain. In some ways, that’s true: electric cars don’t need oil changes or regular tune-ups, and their braking systems last longer thanks to regenerative braking. Plus, a AAA study estimates that annual maintenance costs for an electric car are just $949, compared to $1,279 for a gas-powered car.

Instead, one of the biggest costs associated with electric vehicles may eventually be battery replacement. People buying new EVs may not have to worry about this for a few years, but those looking to buy a used car could find this cost popping up quickly. Green Cars estimates that the average cost of a battery replacement, excluding labor, is between $5,000 and $15,000.

But it’s good to know that modern batteries can last up to 10 years or more, depending on the car itself, how you drive it, how you charge it, etc. Additionally, Green Cars reports that many automakers are backing electric vehicle batteries with warranties of 8 to 10 years or 100,000 miles.

Electric vehicle charging

How to charge an electric vehicle may be a primary concern for anyone considering buying one. It can take anywhere from 30 minutes to several hours to fully charge an electric vehicle, and rates can be high during peak hours, whether you charge at home or at a public charging station. For those who rent or live in townhouses or condominiums where it is difficult to install a charger at home, owning an electric vehicle can present more challenges for this reason.

However, while installing an EV charger is convenient if you can charge at home, it adds another cost to owning an EV. Typically, you will need to purchase a separate charger and hire an electrician to retrofit your home. Additionally, you will need to accurately calculate the total cost of an electric vehicle to see if it can offset the fuel costs of your current car. The first step is to know the price of electricity per kilowatt during peak and off-peak times. As mentioned above, some utility companies offer incentives and rebates to EV owners who charge their vehicles at home, so it is a good idea to check with your utility company to see if you can save money.

A tool to help you calculate the cost of owning an electric vehicle

When buying an electric vehicle, you should take the time to understand if it fits your needs and lifestyle. Here are some resources to help you calculate the costs of owning an electric vehicle before you decide to make the switch.

FuelEconomy.gov: Created by the Environmental Protection Agency, this website allows you to compare up to four vehicles based on EPA fuel economy, annual fuel cost, tank cost, tank size, and more.
Alternative Fuel Vehicle Cost Calculator: The tool, created by the U.S. Department of Energy, helps drivers compare up to eight vehicles and takes into account how the vehicle is used, including the average daily miles driven and the types of roads the vehicle is most often driven on.
Carbon Counter: MIT’s Carbon Counter is useful for drivers who want to see how much carbon emissions are being generated by the car they drive.

Should I buy an electric car?

There are many reasons to buy or lease an EV: reducing carbon emissions, potential savings, and more. In some parts of the US, for example, California, there are even moves to restrict the sale of gasoline-powered cars, and electric vehicles may become the only option in the future. However, whether it is the right time to buy an EV is a personal decision that should be made based on your own circumstances. For example, if you live in a rural area with little access to public charging stations, it may be best to wait. Many EVs have high upfront costs that may put them out of reach.

Of course, if you don’t choose an EV, you still have options — gas-powered and hybrid cars are relatively cheap to insure and maintain — but as they become more widely accepted in the US, it’s a good idea to learn the truth about electric vehicles and how you can seamlessly integrate them into your life.

Methodology

Bankrate uses Quadrant Information Services to analyze 2023 rates for every zip code and insurer in all 50 states and Washington, D.C. Estimated rates are based on a 40-year-old male and female driver with an accident-free driving record, good credit, and the following full coverage limits:

$100,000 bodily injury liability per person
Bodily injury liability of $300,000 per accident
Property damage liability of $50,000 per accident
$100,000 per person in bodily injury claims caused by uninsured motorists
Uninsured motorist bodily injury compensation of $300,000 per accident
$500 collision deductible
$500 comprehensive deductible

To determine the minimum coverage limits, Bankrate used the minimum coverage that meets each state’s requirements: Our base profile driver commutes to work five days a week, drives 12,000 miles per year, and owns a 2021 model of one of the following vehicles: