With gas prices reaching record highs, many commuters and car shoppers start thinking that buying an electric car will be the magic cure-all for those triple-digit debit card swipes at the fuel pump.
Electric vehicles (EVs) don’t use any gas. However, there’s more to consider than just the price of gas. We’ll tell you why.
Why an EV Does Not Save You Money
Remember, the price of gasoline fluctuates, But your new or used car payment will stay the same for the duration of your loan. Plus, if you’re selling or trading in another car to get the low operating cost of an EV, you might lose money on the depreciation of that vehicle you traded-in. The bottom line is that buying an EV isn’t a sure path toward saving money.
According to Kelley Blue Book’s 5-year cost to own data, here are some numbers to consider.
First, the most inexpensive type of vehicle to own and operate, on average, is a subcompact car. Think of something like a Hyundai Accent or Honda Fit. The average total Cost To Own (CTO) a subcompact car for five years is just under $32,000. A close second would be a compact car. Here, think of something like a Kia Forte or Toyota Corolla.
Kelley Blue Book’s average total cost to own includes things like financing, fuel costs, depreciation, car insurance, maintenance, repairs, and state fees (like vehicle registration).
The most expensive vehicle type to own is a luxury high-performance car, costing $124,870 over five years. The biggest cost of owning one of these cars is depreciation, at $74,144, in the first five years. Fuel follows as the second biggest expense at nearly $12,000 over five years. High-performance cars are an extreme example, but depreciation is the most significant factor in figuring the cost to own over five years for all vehicle types.
By comparison, an electric car costs nearly $62,000 to own and operate over that same period. According to Kelley Blue Book, the average for all vehicle types is $58,241.
Why is an Electric Car Expensive to Operate?
The short answer is the initial purchase price is higher than most other types of cars. Right now, an electric car is a luxury car. The majority of EV sales in the United States are Tesla vehicles, and those start at $40,000 and can be purchased for more than $100,000, depending on model and options. At this point, an electric car, on average, is more expensive to operate over five years than a full-size pickup, full-size car, minivan, mid-size crossover, and mid-size pickup.
On the other hand, luxury and performance cars, on average, are more expensive to own and operate than electric cars.
More Expensive to Own and Operate Than an EV for Five Years
- Luxury Full-size SUV/Crossover – $111,754
- Luxury High Performance Car – $124, 870
- Luxury Midsize SUV/Crossover – $83,343
- High Performance Car – $83,889
- Luxury Car – $80,907
- Full-size SUV/Crossover – $73,525
- Luxury Sports Car – $72,970
Less Expensive to Own and Operate Than an EV for Five Years
- Subcompact Car – $31,407
- Compact Car – $35,847
- Van – $36,842
- Hybrid/Alt fuel Car – $38,065
- Subcompact SUV/Crossover – $40,043
- Mid-size Car – $41,808
- Sporty Compact Car – $44,081
- Compact SUV/Crossover – $43,257
- Mid-size pickup – $44,065
- Minvan – $48,238
- Sports Car – $48,390
- Mid-size SUV/Crossover – $52,480
- Full-size Pickup – $54,353
- Entry Luxury Car – $56,999
- Full-size Car – $55,775
How to Factor in Financing Costs
Since electric cars, as a whole, are more expensive than other vehicles, buyers will pay more in finance charges. An EV loan might be for a longer term to keep the payment low. Or, the high price of the EV means a larger loan to finance the vehicle for five years or more. For example, 5% of $50,000 is more money than 5% of $30,000.
Now, this assumes all electric cars are “expensive.” Most do cost more. But some are closer to the price of a nicely equipped gasoline-powered SUV in the $45,000 range. And the Nissan Leaf S is exceptionally affordable at less than $30,000. Soon, manufacturers and consumers won’t view electric cars as a separate category. Electricity will be how certain cars get their power with various segments of vehicles. Today, electric cars are certainly considered, by most consumers, as being in a league of their own.
If you have a long commute or need to lower your fuel costs dramatically, the best thing to do is buy a hybrid or a small gasoline-powered car, drive less, and drive more modestly. Another option is purchasing a used or certified pre-owned (CPO) electric car. EVs will be less expensive to own and operate in the future if the initial purchase price is low.
In other words, if you receive an electric car for free, it would undoubtedly be less expensive to own over time because of the lower cost of fuel (electricity) and lower cost of maintenance.
So you’re going to lump a $100,000 model X in the same average as a $30,000 Nissan Leaf, but at the same time separating compact IC cars from sub compact IC cars? Not really very useful is it?