As of 2020, electric cars are comparably more expensive than their conventional, internal combustion engine equivalents.

If you compare the full price of the basic version of Hyundai Kona (~$24,000) with its electric counterparts (Kona Electric at ~$36,000), you’ll get more or less $12,000 price difference between the two. The situation isn’t too far from other car manufacturers out there, including Tesla and GM. You need to prepare more upfront cash for electric vehicles (EVs). But, how about the long-term costs?

Many indicators suggest that the long-term costs of EVs are more manageable compared to traditional cars. You can save more money annually in fuel and maintenance costs, thanks to their electric engines. Let’s break this down to give you a clearer picture.

Electric vs. Gas Cars Fuel Costs

According to a report published in 2018 by The University of Michigan, the average annual cost of fuel for gasoline vehicles in the US is $1,117, while the average for EVs is $485 per year. In other words, you can potentially save more than half the fuel costs if you own an electric car.

Michael Sivak and Brandon Schoettle — the author of that report — got these results by using various estimations to combat the complexity of calculating EVs fuel costs.

Sources

Gas-powered cars run on gasoline you can refill at your nearest gas station. On the other hand, electrical energy comes from many sources, from coal-powered power plants to renewable sources like solar and wind power. You can recharge your electric vehicle at a charging station or at home, assuming you have the proper equipment.

Efficiency

The car’s performance rating also plays a part. A car with high miles per gallon (mpg) rating is more efficient compared to ones with lower mpg. For example, the 2019 Ford Fusion Hybrid 2WD with 42 mpg requires less fuel’s money compared to Chevrolet Colorado Diesel 2WD with 23 mpg.

Location

Last but not least, the price difference also largely depends on where you live. Electric and gas rates may differ from state to state. Sivak and Schoettle noted that the annual price of gasoline in Hawaii is the most expensive in the US, reaching $1,509.

On the other hand, you can save more money on gas if you live in Alabama, costing a measly $993 per year. For EVs, again, you need to pay a premium if you live in Hawaii, requiring you to shell $1106 per year. Differently, Louisiana is the ideal place for electric car owners, $367 is how much you need to set aside yearly.

The Department of Energy provides a tool called eGallon useful for comparing the price of electricity vs gasoline for all states. The result is calculated based on how much money you need to pay for gas or electricity to travel the same distance. It’s a handy tool for those wishing to know how efficient electric cars are almost in real-time.

Additional Cost-Benefits for Electric Vehicles

Aside from fuel, but you can also save money through owning EVs with other aspects, specifically maintenance and possible incentives or tax credits.

Lower Maintenance Costs

Regular maintenance is important to keep your vehicle in tip-top condition. But there are a lot of things to watch out for. For gasoline-powered ICE cars, you need to take into account oils, transmission build, coolant, and more.

Electric car owners don’t need to stress about any of these since the vehicle doesn’t use combustion. For EV owners, apart from the basic ones like changing tires, brakes, and repairs if necessary, you don’t have to worry too much about the car’s engine.

There’s no solid number for determining how much you can actually save from EVs. However, the calculations found on Car and Driver suggests that EVs maintenance costs are 15-35% cheaper than conventional gas cars.

Possible Tax Credit

To battle the much heftier price tag of EV, federal, state, and local governments sometimes give electric vehicle or hybrid EV owners tax credits or other incentives. This helps to make the eco-friendlier vehicles EVs a more appealing option.

For federal tax credit, EV buyers can get as much as $7,500, depending on the brand of the car. Sadly, Tesla owners won’t receive federal tax credit anymore, as of 2020. On the other hand, Nissan, Toyota, and most other manufacturers are still eligible for the incentive. Unlike Tesla, these manufacturers still haven’t reached the 200,000 EV sales cap. You can learn more about the tax credit from Us News.

Bottom Line

Currently, electric vehicles are more expensive than conventional gas-powered cars. Even though the average EVs’ price is decreasing over time, we won’t see them at the same price range as their gas-powered counterparts for at least a few years.

Despite this, owning an EV might still be a nice deal financially for you due to its cheaper long-term costs — fuel included. In fact, you could even save more money going for an EV if you take the possible tax credit incentive into account.