There is a massive shift in the automotive industry taking place. More manufacturers are pledging to have all-electric lineups within a few years, and gasoline-powered cars are getting “final editions” left and right. While fossil fuel-burning vehicles aren’t going to disappear overnight, they are in their twilight.
You may be wondering about the running costs for electric cars, researching questions like, “are electric cars cheaper than gas?” The answer is a little complicated but worth exploring.
Automotive Inventions Through the Ages
Looking back through the history of automotive innovations, General Motors toyed with the idea of self-driving cars all the way back in the 1960s. Instead of computer-controlled vehicles, however, the system needed a complete overhaul of road infrastructure to work. It was simply cost-prohibitive.
But over the years, computer technology has gotten smaller, cheaper, and far more capable. Self-driving technology fits right into today’s cars themselves without so much as a driver noticing a few new sensors in the grille or above the rear-view mirror.
The Upfront Costs
At the moment, the upfront costs of an electric vehicle (EV) are higher than that of its gas forebears, mostly because EVs are simply newer. Manufacturing and design costs will likely spread out over time, but that hasn’t happened yet for EVs.
What About Tax Credits?
EVs come with some government incentives. Buyers and vehicles that meet all the criteria can receive a tax credit of up to $7,500. This applies to new EVs only, and crucially, they must be assembled in North America. By 2024, they must also not use batteries from “foreign entities of concern,” such as China or Russia.
But starting in 2023, there will be a tax credit for used EVs. Buyers won’t get the $7,500 they could get with a new vehicle, but a used EV could provide its new owner up to $4,000, though that figure is limited to 30% of the vehicle’s purchase price.
What About Depreciation?
Depreciation hits every new car the second it leaves the lot, but it’s currently hitting EVs harder. Why? Part of the problem is that people still view EVs as an experiment.
Early adopters may be willing to pay higher prices for new Teslas, Mercedes EQs, Porsche Taycans, Mustang Mach-Es, and the like. Still, people buying used vehicles generally look for something they can afford and trust.
Once prices of new EVs start coming down and battery prices are under control, they’ll most likely start experiencing depreciation on par with gas-powered cars.
What About Maintenance Costs?
This may be one of the most critical factors in the rise of the electric car. Gas-powered cars — diesel, compressed natural gas (CNG), and hydrogen — have hundreds, even thousands of moving parts that need to be lubricated and cooled constantly. EVs have a comparative handful.
Often, EVs don’t even have gearboxes, such as in Teslas, where the motors control the wheels either through a differential or even directly. Because of the relative simplicity of EVs, maintenance costs are lower.
There are no oil changes to remember, no air filters to get clogged, and no coolant lines to rupture. The running costs for electric cars, in general, are simply lower than those of internal combustion-powered cars.
How About Charging Costs?
So, are electric cars cheaper than gas when it comes to fueling vs. charging? Just like gas prices vary widely depending on location, so do energy costs.
The other issue in determining an answer to the question, “Are electric cars cheaper than gas?” is that people can and do charge their EVs wherever they can. This includes at home, at work, at the grocery store, and via actual charging stations.
The rate at which EVs charge also affects the cost of charging. If an EV owner is charging their vehicle with a station that charges by the minute instead of by the kilowatt-hour, their vehicle’s ability to charge quickly becomes a bigger factor in what they’ll pay.
Consider an example. The average price of electricity for homeowners in the US is $0.1595/kWh. With a Level 2 charger putting out 3 to 19 kW, an EV will gain 18 to 28 miles of range per hour.
Assuming the EV has an 82 kWh battery, like a Tesla Model 3 Performance, and a Level 2 charger putting out 10 kW (the battery of a Tesla Model 3 can only take 10 kW at a time, anyway), it will take 7 hours and 35 minutes to charge and will cost $13.30.
Is it worth spending a fraction of what it costs to fill a gas-powered car if it also takes all day? That depends on your travel needs. Most people only drive about 30 to 40 miles per day. And at this example’s pace, that distance would require about 45 minutes of recharging.
The Hidden Costs for EVs
While the initial purchase price may be higher for an EV, they are cheaper to own over their lifetime. Still, there are some hidden costs you’ll need to keep in mind.
Registration Fees
Since there is no gas tax for electric cars, your state will charge a higher registration fee to compensate.
Insurance Rates
While maintenance is cheaper, repairs aren’t — at least for now. This is because parts can be expensive, and the number of shops that can work on them is few. Expect to pay up to 20% more for your insurance because they’re not looking forward to paying out if you get in an accident.
Charging
While the rate for home charging may be 16 cents per kWh, a public charger could be run closer to 30 cents or higher. This can add up when you’re considering the running costs for electric cars.
Batteries
Replacing your battery out of warranty — usually 8 years/100,000 miles — will be costly. Also, the battery will become less efficient over time and in temperature extremes. Your battery will lose up to 5% capacity every year.
Emissions
There’s a threshold that EVs must cross to become more environmentally friendly than their gas counterparts. It will happen, but until then, the ecological impacts from constructing the car as well as the source of its electricity — often fossil-fuel powerplants — will be greater than old-fashioned internal combustion.
So, Are Electric Vehicles Cheaper than Gas?
Yes! And no. If you want an EV that is cheaper than a gas vehicle, make sure to buy a lightly used EV, cover it with a high-quality service contract, charge it at home, and keep it for at least 13,500 miles.
Keep in mind that costs will continue to come down as the infrastructure for EVs increases and technology advances. No one will fault you for sticking with gas for now, but one day soon, EVs will probably be the dominant technology.
The last thing you might want is to be stuck with a repair bill you are not expecting, or worse, cannot afford. These new technologies need to be in tip-top shape before we can trust our lives to them. Until they are, we have to do all we can to keep the technology running. And one can do that with a vehicle service contract.
