Hidden Costs of Owning an Electric Car
If you dream of saving up to thousands of dollars per year avoiding the gas pump, you may need to wake up to the hidden costs of owning an electric car.
Capital One
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It's common to believe that electric vehicles (EVs) are less expensive in the long run than gas-powered cars, but that's not always the case. In fact, one of the first hidden costs of owning an electric car you'll encounter is within the sticker price.
While the manufacturer's suggested retail price (MSRP) of a car may not sound like a hidden cost, you may have noticed that the electric versions of some cars cost more than their gas-powered counterparts. The 2022 Mini Hardtop, for example, costs about $24,000 with a gasoline engine. Its electric sister starts at about $31,000.
While those higher initial expenditures are often offset by the reduced need for pricey gasoline, you may soon uncover hidden costs in the form of elevated insurance payments and maintenance bills when compared with gas-powered vehicles. Oh, and let's not forget the cost to charge your EV.
In this article, we'll walk you through those extra costs, indicating where you can save along the way. Additionally, we'll overview the electric vehicles that can give you the best bang for your buck, while also looking at some of the least expensive EVs on the market.
EV Hidden Costs
Owning an EV comes with some hidden costs as we've mentioned. Here are a few things to consider and tips to help you save along the way.
Tax Credits
Most EVs in the U.S. are eligible for
You've likely heard tax credits framed as a "discount" on your overall sale price, but that's not how credits work. Let's refer to the electric Mini, for example. It's eligible for a $7,500 tax credit. That doesn't mean you pay around $23,500 (from the $31,000 list price) at the dealership. You'll still be paying the car's listed price.
Instead, you'll be able to deduct that $7,500 from your overall tax bill the next time you file your taxes, so if you owe Uncle Sam $10,000, for example, that bill will be reduced to $2,500.
This is an important distinction, as it helps with establishing a proper budget. If you expect an immediate discount on your MSRP thanks to a tax credit, you'll be unpleasantly surprised by the size of your monthly car payment. Laws around the federal EV tax credit are changing, so stay up to date during tax season by reading more on the
Batteries
Right now, one of the biggest hidden costs of owning an electric car comes via the battery. Batteries are currently large, heavy, expensive, and challenging to make—plus, they're relatively inefficient.
Current EVs use larger versions of the lithium-ion batteries that power mobile phones, and they require the mining of rare, expensive metals like cobalt, nickel, lithium, and manganese. One Bloomberg study estimated that the average battery for an EV costs $6,300.
Technology
You may have noticed that many new EVs are laden with technology—often more tech than you'd find in your gas-powered vehicle. That means more multimedia system screens, more phone-to-car connectivity, and fewer of the physical comforts you may have enjoyed, like a volume knob. Those new forms of technology add to an EV's sticker price.
Why so high-tech? We still associate EVs with the future, which means we pack them full of futuristic forms of technology.
Insurance
EVs cost more than gasoline vehicles for a reason. They're heavier, harder to manufacture and repair, and are loaded with expensive technology. As you can imagine, a higher price tag also means insurance companies may view you as a higher liability, and that means it could cost more for you to insure.
Basically, if you need to repair an EV's battery, it can cost a lot of money, which predominantly dictates those higher insurance premiums. Also, those fewer parts mean each individual component may serve more purposes, making it more desirable and more expensive.
Insurance companies also take into account factors like your age and driving history. Furthermore, premiums often differ between companies, so it's important to shop around before making a decision. These higher costs can be offset by the $7,500 tax credit that certain EVs are eligible for, but it's important to make sure the tax incentive can even out the higher premium.
Maintenance
EVs are prized for their reliability, as they lack all the extra moving parts of a combustion engine—but when they need repair, they're not easily fixed. Repair work requires mechanics who specialize in highly technological vehicles and batteries, both of which can present their own unique dangers. That specialization results in technicians who charge more for labor.
Analytics firm We Predict found that, in the first three months of ownership, EV average service costs were 132% higher than those of gasoline vehicles. In the first year, EV service costs were still 62% higher. After three years, maintenance costs fell to 30% less than gas vehicles, but the repairs that do happen can still be expensive.
Wear
Electric cars wear differently than gasoline-powered vehicles. Because they're typically heavier and because torque is applied immediately, you may find your EV wears through tires or brakes more quickly than a combustion vehicle. Brake wear can be reduced in vehicles that use regenerative braking, but tires have remained an issue. Some manufacturers have created a harder tire compound specifically for EVs that helps prevent rapid wear, but you may still find you need to adapt your driving style to get the most out of your tires.
Pay-As-You-Go Public Charging
Pay-as-you-go charging often varies in cost between providers and state, but a major concern with public charging is membership fees. Think of these chargers like you do a gym membership: You may be able to get a few free-trial sessions or use a guest pass, but when you want to commit, you have to pay for a subscription. That subscription often reduces the cost of your charge price.
For example, Electrify America allows anyone to use its chargers for $0.43 per kilowatt-hour (kWh). Pay for Pass+, a $4 monthly subscription, and your session costs will be reduced to $0.31 per kWh.
Installing Home-Charging Systems
If you live in an area with few public chargers, installing a home system may be tempting, but it does come with an upfront cost. HomeAdvisor estimates that a Level 2 home charger, which normally adds 12 to 60 miles of range per hour, generally costs between $1,700 and $5,500 to install.
Be warned, though: If you live in an older home, you may be unable to install a Level 2 charger without upgrading your house's entire electrical system, which Forbes has estimated can run over $5,000. If that's the case, simply consider plugging into your standard 110 volt outlet. It's less powerful, and you may not charge your battery fully overnight, but many EV owners find it provides enough power for daily driving.
Electricity Costs
Charging your electric vehicle at home will come with a cost, though it's much cheaper than public charging. Still, both can be inexpensive in comparison with fueling gas-powered vehicles. You can calculate your rough annual charging costs by inputting your vehicle and average weekly driving mileage on the
That said, it's important to be aware that your charging expenses will vary depending where you live. In New England, electricity costs are almost double that of other places, such as Utah or Texas. But it can also be harder to find charging ports in Utah or Texas than in New England.
Tips for Buying a Great EV for Easy Charging
Charging doesn't have to be tricky. Here are a few tips that will help you shop for an EV that can be easily—and cheaply—charged to avoid some of the hidden costs of owning an electric car.
Buy an EV that can Use Public Plugs
Not all EVs can be charged at every public charger. Most automakers use the same connection plug throughout the U.S. and Canada—but Teslas have their own unique charging ports that can only be used for Tesla vehicles.
You can use this
Shop for Deals on Home Chargers
Home charging installations are generally provided by the manufacturer of the car you buy, but you can also shop around for other options available in your area. You may be able to find holiday sales or discounts for days like Black Friday.
Also, note that some automakers, like General Motors, provide subsidies for installing electric home chargers, which will provide an immediate discount.
Shop for Automakers with Charging Discounts
If a home charger isn't a possibility for you, consider shopping for EVs that include discounts on public charging. Hyundai and Ford, for example, offer 250 kWh of free charging at Electrify America stations if you buy one of their EVs. Lucid, a new startup automaker, offers three years of free charging at Electrify America stations with the purchase of a vehicle.
Buy a Small-Battery EV
If you're buying an EV for short jaunts, consider a vehicle with a smaller battery and shorter range. A car like the 2022 Mini SE Electric with an EPA-estimated 114 mile range, for example, will cost less to charge and can be juiced relatively easily off a standard 110V outlet.
Don't Let Hidden Costs Trip You Up
Owning an EV is much the same as owning a gas-powered vehicle, but you need to keep a few distinctions in mind to ensure you're making the best decision for your budget—and the biggest one is the price of the car itself. Also don't forget that charging is an important consideration you'll need to navigate, as well as heftier insurance and maintenance bills. That said, if you're familiar with all the tax credits available to you, and have calculated how much you can potentially save with an EV, you'll know exactly where every dollar you spend goes.
