Electric Vehicles vs. Gas-Powered Cars: Cost Considerations

With electric vehicle (EV) prices dropping in recent months, consumers are re-evaluating whether EVs can offer overall savings compared to traditional gas-powered cars. Experts suggest that the answer isn't always straightforward.

"Comparing gas cars to EVs is like comparing oranges to a variety of apples," explains Keith Barry, a writer for Consumer Reports specializing in the automotive industry.

Several factors influence the cost comparison, including the prices of new and used EVs, electricity rates in your region, and your charging habits. Although EV prices are decreasing, they generally remain higher on average than their gas counterparts, which can deter some potential buyers.

Conversely, EVs often incur lower maintenance and fuel costs, potentially saving owners money in the long run, according to a recent report by the nonprofit organization Coltura.

"When comparing a gas sedan to an EV, our analysis consistently shows that EVs are more cost-effective," states Ron Barzilay, a data and policy associate at Coltura.

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Cost Savings with Electric Vehicles

Coltura's research indicates that the average EV driver saves approximately $100 per month on fuel and maintenance costs. Additionally, "superusers" who consume over 100 gallons of gas monthly could save around $400 each month by switching to an EV.

Below are some of the cost trade-offs between EVs and gas-powered vehicles, based on data and expert opinions.

What is the Price of a New EV?

The initial cost of new electric vehicles remains higher than that of gas-powered cars. Kelley Blue Book reports that new EV prices have decreased from $65,000 in May 2022 to $56,648 in May 2024, marking a 15% reduction. However, the average price for new gas-powered cars was still lower at $48,401 as of July 2024.

This price gap is partly due to most automakers focusing on the luxury market, where profit margins are higher. "That's where the highest margins are," Barry notes.

As production technologies advance and costs decrease, automakers are expected to introduce more affordable EV models, further driving down prices.

What About Used EVs?

The used car market presents a more affordable entry point for EVs. According to Recurrent, used EVs priced under $30,000 now constitute 60% of the inventory. As of May 2024, the average price for a used EV stood at $28,767, based on a study by iSeeCars.com.

"As new EV prices decline, used EVs become even more affordable," Barry explains.

Fuel and Maintenance Savings with an EV

Coltura's analysis reveals that the average American driver, who drives about 11,000 miles annually, saves approximately 8.1 cents per mile on fuel by using an EV. Additionally, EV owners benefit from about 3 cents per mile in maintenance savings, totaling over $1,200 in annual savings.

These savings stem from the generally lower and more predictable electricity costs compared to the fluctuating prices of gasoline, says Matthew Metz, founder and co-executive director of Coltura. Coltura plans to update this savings index quarterly.

Chart provided to CBS News by Coltura

However, a 2023 Consumer Reports study found that electric vehicles have 80% more reported problems and are less reliable than their gas-powered counterparts. As newer entrants in the automotive market, EVs are still refining certain technologies, experts say.

Source: Consumer Reports

"The reliability issues aren't necessarily due to them being electric, but rather the new generation of electronics they incorporate," Metz explains.

Despite these challenges, EVs generally have lower everyday maintenance costs. Without the need for oil changes or frequent tune-ups, and with a more streamlined engine system, EVs reduce the likelihood of parts malfunctioning.

"EVs lack many of the components found in gas-powered cars that can fail," Barry states. "When an EV operates correctly, it tends to be cheaper to maintain."

One potential downside for EV owners is increased tire wear. Due to their heavier build, EVs may cause tires to wear out faster.

Does My Location Impact Charging Costs?

Yes, your location significantly affects charging costs. Electricity and energy prices vary widely across different regions. For instance, someone in New England may pay more for electricity compared to someone on the West Coast.

"It's really hard to generalize what's going to cost less," Barry remarks.

While electricity is generally cheaper than gasoline, there are exceptions where driving a hybrid might be more economical, Barry adds.

Coltura identified the top 10 states with the highest EV fuel and maintenance savings, with Washington and Oregon leading the list on the West Coast.

Chart provided to CBS News by Coltura

Additionally, Kelley Blue Book offers a table detailing at-home charging costs by state, using data from the U.S. Energy Information Administration.

Costs of Charging an EV at Home, by State

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Table: Taylor Johnston / CBS News
Source: Kelley Blue Book

Are EV Discounts Available?

The government offers consumers a federal tax credit of up to $7,500 for new EVs and up to $4,000 for used EVs. However, these incentives come with specific income and eligibility requirements.

Over 150,000 people have utilized these discounts so far this year, according to the Department of Treasury, though some experts consider this number a modest start.

Additionally, local, state, and utility incentives are available to help offset the cost of purchasing an EV, Barry mentioned. Consumers can explore available deals in their state on the Department of Energy's Alternative Fuels Data Center website.

How Much Does It Cost to Install an At-Home Charging Station?

Installing an at-home charging station for your EV can vary in cost. According to HomeAdvisor, expenses range from $550 to $1,385. Level 1 chargers are more affordable, typically costing between $300-$600, whereas Level 2 chargers, which charge EVs more quickly, can cost between $700-$2,000, including labor.

The total cost may increase depending on factors such as your home's electrical infrastructure. For older homes requiring significant electrical upgrades, costs can escalate into the thousands. "If you live in a new construction home or have a recently upgraded electrical panel, it's very inexpensive," Barry explains. "But in a 200-year-old house, you might need to upgrade the entire electrical system."

"While the upfront cost may deter some, at-home chargers should be viewed as a long-term investment," Metz advises. "Their value will appreciate over time."