What Is the True Cost of an Electric Car?

Manuel Carrillo III | Capital One

Article QuickTakes:

• How much do electric vehicles cost?
• Common costs of EV ownership

Electric vehicle (EV) ownership is on the rise. With an anticipated 35% increase in global sales during 2023, you may be wondering if switching to an electric car is worth the monetary outlay.

The overall long-term costs of owning an EV depend on a variety of factors, including maintenance, your personal driving habits, and your chosen vehicle. By breaking down the key costs and benefits of EVs, you can better decide whether an electric car is right for you.

Manuel Carrillo III | Capital One

How Much Do Electric Cars Cost?

According to Kelley Blue Book, the average transaction price for EVs is around $5,000 more than gas-powered cars. However, the cost of electric cars does vary depending on the manufacturer, with some models starting at less than $30,000.

If this price difference is a concern for you, it may be worth waiting to purchase your EV. Many EV auto manufacturers are starting to reduce their prices. Ford dropped the price of its Mustang Mach-E models by as much as $5,900 in 2023, while Tesla has made multiple price cuts this year alone on its Model 3. Federal EV incentives also offer the potential for you to reduce your purchasing costs, with the Inflation Reduction Act providing a tax break of up to $7,500 if you qualify.

Depending on your choice of EV, your initial spend could be relatively pricey. However, long-term ownership benefits may pay off over the lifetime of your car.

Manuel Carrillo III | Capital One

Common Costs of EV Ownership

Beyond the initial price of buying an EV, there are other costs that factor into your vehicle's break-even value. Consider how charging, maintenance, and infrastructure may impact the long-term value of your electric car.

Electricity

In a direct comparison of similar electrically propelled and internal-combustion-engine (ICE) cars, the overall cost of electricity per year to operate an EV is less than current fuel costs for similar mileage. This is even true in Hawaii, the state with the highest average price per kilowatt-hour. Although electricity prices vary by state, Consumer Reports found that EV owners spend 60% less to power their cars than ICE owners spend on fuel.

EVs also may be up to 100% efficient by recapturing lost energy through regenerative braking. Without factoring this energy recapture, "EVs are 60% to 73% efficient," according to the EPA. Meanwhile, combustion-powered vehicles are only able to convert about 12% to 30% of their fuel energy into motion. This means EVs use more of the energy you pay for to move the car compared with ICE vehicles.

Home Charging Ports

EV charging stations are available for public use across the country, with varying fees at each. But for those in search of more readily available charging options, a home charging port may be worth the investment. By installing a charging port, you can easily charge at home, reducing your need to locate a charging station on the go.

The average cost of a single-port Level 2 charging station runs about $500 to $700, with an average installation fee of $400 to $1,700, according to HomeAdvisor. This may be a major investment, but with federal incentives available to offset these costs, the convenience could be worth the extra spend up front.

Maintenance

Without the need for much of the routine maintenance required by ICE vehicles, such as oil changes, EVs have an operating cost advantage over their gas counterparts. However, you may want to factor what you might pay if you're in an accident in your EV.

In a study performed by claims analysts CCC Intelligent Solutions, small, non-luxury EV repairs were shown to be 26.6% more expensive on average compared with non-EV repairs. Electric SUVs cost upward of 53.5% more to repair, and they use 3.4% more labor hours than their gas counterparts. But according to AAA, EVs still have the lowest estimated costs for overall maintenance, repairs, fuel, and other ownership expenses.