Cost of Electric Cars: Affordable Electric Cars and How EVs Can Save You Money

Electric cars (EVs) tend to be more expensive than comparable gas-powered cars. However, the sticker price doesn't account for tax credits, rebates, and the lower cost of fuel and maintenance.

Over the lifetime of a vehicle, EVs can compete with and even be less expensive than comparable gas-powered vehicles.

Making Electric Vehicles More Affordable

Rebates and tax credits can significantly reduce the purchase price of an electric vehicle. The current federal electric vehicle tax credit is $7,500 on electric vehicles.

However, the credit no longer applies to EVs from General Motors and Tesla since they've sold too many vehicles. Proposed legislation would boost the tax credit amounts for model years 2022 and extend it to all EVs.

After the federal tax credit, the median base purchase price of an electric vehicle in 2021 is $47,485.

Some U.S. states offer additional tax credits, which lower the cost of electric vehicles.

Fueling Costs

There's no denying that the outright cost of an electric vehicle can be high, even with rebates. But driving and fueling costs can influence the true price of the vehicle.

Electric vehicle charging costs depend on where you live and where you charge your car. Four-fifths of EV charging is done at home, so local electric utility rates determine fuel costs most of the time.

Over the course of a year, the average American travels almost 40 miles per day. This makes the average annual fuel cost for a 2021-model EV only $667.50.

Electric vehicles can be charged simply from a standard 120-volt household outlet, just like charging a phone. However, many electric vehicle owners who can charge at home choose to install a higher-speed Level 2 charging station, which runs on 240 volts, the kind that a clothes dryer plugs into. Level 2 charging stations can cost anywhere from $300 to $700 to purchase, plus installation (and potentially permitting) costs. These can add another $1,000 or more to the total cost. Fortunately, federal, state, and utility credits can apply to the installation of EV charging stations.

Like home charging, rates for public charging depend on local electricity rates, but they also depend on the charging speed. Level 2 charging at a public charging station can cost roughly 50% more than local utility rates.

High-speed charging usually costs more, from $0.13 at Tesla's Superchargers to $0.99 at Electrify America's direct current (DC) Fast Charge stations. Some charging stations offer monthly subscription plans, which can range from $4.00 to $8.00/month, with reduced-rate charging ranging from $0.30 to $0.35 per minute.

Electric Vehicle Maintenance Costs

Electric vehicles have many fewer parts than gas-powered vehicles. This means that EVs require less maintenance.

Consumer Reports estimates that, on average, maintenance on an electric vehicle costs roughly $0.03 per mile. The average car is driven 11,467 miles per year, putting the average annual maintenance cost of an EV at $344.01, or $1,720.05 over a five-year period.

Battery replacement costs may or may not be a consideration. The battery is the most expensive part of an EV: excluding labor, replacing the battery in a Nissan Leaf can cost up to $5,500, while a new Tesla battery can cost $13,500. Yet the battery itself is likely to outlive the useful life of the vehicle.

Comparing EV Costs With Gas-Powered Cars 

How do these costs stack up against those of an internal combustion engine vehicle? By the fifth year of ownership, savings can be in the thousands of dollars. And the savings continue to increase over time.

Consumer Reports, AAA, and the U.S. Department of Transportation calculate total ownership costs based on a five-year/75,000-mile ownership period—an industry standard. Given the higher upfront costs of an electric vehicle, it takes longer than three years to reach the price parity point with a comparable gas-powered car.

A five- to seven-year-old used EV saved owners two to three times more in fuel costs than the owner of a new EV owner saved compared to a comparable, new gas-powered vehicle. Over the entire life of a vehicle, Consumer Reports concluded that electric vehicle owners could save between $6,000 to $10,000.

A vehicle is usually a long-term investment. Thinking long and hard means doing a bit of math and having a bit of patience. In the long run, an EV will save you money. But the savings to the environment are priceless.