Electric cars vs. Gas cars: What do they cost?

Regardless of the type of vehicle you are looking to purchase, car ownership has several costs. Choosing an EV over a conventional, internal combustion engine (ICE) vehicle can result in significant long-term savings. Suppose you are considering purchasing a new car and an electric vehicle as a serious option. In that case, it is essential to understand where your costs will come from and how an electric vehicle can lead to different sources of spending and saving when compared to conventional ICEs.

An immediately apparent difference between EVs and ICEs is their fuel source and, consequently, what you, as a consumer, use to power your vehicle. ICEs run on gasoline are burned internally to power the car, while EVs run on electricity. Electricity can come from many sources, including burning coal or gas or renewable sources such as solar, wind, and hydropower.

A 2018 study from the University of Michigan's Transportation Research Institute found that electric vehicles cost less than half as much to operate as gas-powered cars. The average cost to run an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117. 

The exact price difference depends on the gas and electric rates where you live and the type of car you drive. Depending on your vehicle's fuel efficiency rating, the money you spend to fill your gas tank will translate to varying travel ranges. "Fuel-efficient" conventional cars are designed to maximize their miles per gallon (mpg) rating, thus costing the least per mile traveled. A car rated at 30 mpg will cost less fuel over time than a car rated at 20 mpg.

The cost of running an electric vehicle is slightly more complicated. Although you don't pay a gas pump-type fee every time you charge your EV battery, the electricity used to charge your battery counts towards your home electric bill. 

The fuel used to power your car is only one factor in the cost of car ownership. In particular, vehicle maintenance costs can stack up over time. With ICEs, engine maintenance can be a huge money sink, especially as cars age. Changing the engine oil, coolant, transmission fluid, and belts can add value over time. By comparison, electric cars don't have internal combustion engines, so these costs disappear. Universal vehicle expenses like tire and brake changes, insurance, and structural repair are part of owning any vehicle. Still, EV owners avoid many repeated costs associated with combustion engine upkeep.

EVs aren't without expenses, however. A replacement battery pack is an electric vehicle's most substantial maintenance expense. Unlike conventional batteries, EVs have large, complex rechargeable batteries that are drained and recharged constantly, which leads to degradation and range loss over time. In the rare case that your EV battery is defective and needs replacement, manufacturers will often cover that replacement with a battery warranty. However, replacing your EV battery is expensive if your car is not under warranty. Most EV owners won't have to replace their car's battery, but it is a risk you run when operating an electric vehicle.

A great reason to go with an electric vehicle is the wealth of federal and state incentives available. These rebates help offset the typically higher cost of an electric car to make "going electric" more financially feasible. Rebates and incentives for EVs are constantly changing, and it's important to know what kinds of incentives are available near you. You can learn more about federal and state EV incentives in EnergySage's guide to electric car tax credits.

The availability of incentives for buying electric vehicles, coupled with their continuously falling costs, has invested an EV in a smart energy and money decision. Electric cars are not for every lifestyle, but choosing an EV can be an intelligent fiscal decision compared to the costs surrounding ICE purchase and maintenance.