Electric vehicle affordability: Five things you need to know

Affordability is one of the top reasons drivers consider switching to electric vehicles (EVs). Nearly 75% of customers said fuel savings, specifically, was their No. 1 reason for considering an EV. Here are five things you should know about EV fuel savings and affordability.

1. Electricity is cheaper than gas

Overall, EVs are estimated to save consumers around 60% on fuel costs when compared to an average gas-powered vehicle. Even when gas and electricity prices fluctuate by region, owners of EVs will still save money on fuel. In fact, the average cost to fuel an EV is $485 per year, compared to $1,117 for a traditional gas powered vehicle.

In addition, electricity costs are typically more stable than gas prices, which can fluctuate. That makes it easier for EV owners to budget the cost of fuel. Over the past decade, average gasoline prices in the U.S. have ranged from $1.50 to $5/gallon, while electricity costs have remained much more consistent.

That said, it’s still important to look at variable costs, such as electricity rates in your region. For example, while EV owners in Washington state can save as much as $14,480 across the lifetime of their vehicle, owners in Hawaii may end up saving about $3,000 less than that.

Another way EV owners can save money on fuel is by installing a charging station at home. Installation costs around $2,000, but will save customers money in the long run as charging at a public charging station typically costs more than using your home’s electricity to charge your electric vehicle.

2. EVs cost more up-front, but less in the long run

While new EVs typically cost more than comparable gas-powered cars at the onset, they end up being less expensive over time. Overall, owners of the nine most popular EVs under $50,000 are saving $6,000 to $10,000 over their vehicles’ lifetime, compared to the top-selling and top-rated gas-powered cars.

The long-term savings are partly due to lower maintenance costs. Owners of both EVs and plug-in hybrid electric vehicles (PHEVs) save 50% on repair and maintenance costs over the vehicle’s lifetime, compared to the average costs for a typical gas-powered vehicle.

3. The purchase price for EVs is declining

Historically, the purchase price of EVs has been higher than that of equivalent gas-powered vehicles – but now those up-front costs are going down. The average price for a new EV fell significantly last year — decreasing by $14,300 from 2022 – which makes the purchase price just $2,800 more than the average new gas-powered vehicle. And EVs are expected to be even cheaper in 2024, due to new vehicles being introduced at a lower price point and more supply than demand that may cause companies to cut prices.

4. EV incentives can further reduce costs

The federal government also rolled out a tax credit that offers buyers up to $7,500 for purchasing new EVs for the first time, or $4,000 for used EVs. Many states are also offering tax credits on top of the federal incentive, from $1,000 in Alaska to $7,500 in California. Finally, some EV owners can also access electricity discounts from their local electric utility if they charge their EV during “off-peak” hours – usually at night, when there’s less demand for electricity.

5. EVs can travel longer on less energy

The average EV travels 4.4 times farther on a given amount of energy than the average gas-powered vehicle. When calculating costs, it’s important to consider the variability of EV efficiency, as one model may save more money than another.

In summary

Even though new EVs typically cost more up front than gas-powered vehicles, the lifetime savings make EVs cheaper over time. EVs are less expensive to fuel and maintain, and can travel farther on less fuel.