Affordability is a major factor driving interest in electric vehicles (EVs). Nearly 75% of customers cite fuel savings as their primary reason for considering an EV. Here are five key points to understand about EV fuel savings and affordability.
1. Electricity is cheaper than gas
Electric vehicles (EVs) are estimated to save consumers around 60% on fuel costs compared to average gas-powered vehicles. Despite regional fluctuations in gas and electricity prices, EV owners still save significantly on fuel. On average, fueling an EV costs about $485 per year, compared to $1,117 for a traditional gas-powered vehicle.
Electricity costs tend to be more stable than gas prices, which can vary widely, making it easier for EV owners to budget for fuel. Over the past decade, average gasoline prices in the U.S. have ranged from $1.50 to $5 per gallon, while electricity costs have remained more consistent.
However, regional variations in electricity rates can impact overall savings. For instance, EV owners in Washington state can save up to $14,480 over the lifetime of their vehicle, while those in Hawaii may save about $3,000 less.
Another cost-saving measure for EV owners is installing a home charging station. Though installation costs around $2,000, it can save money in the long run, as charging at home is typically cheaper than using public charging stations.
2. EVs cost more up-front, but less in the long run
While new EVs often have a higher upfront cost compared to gas-powered cars, they prove to be less expensive over time. Owners of the nine most popular EVs priced under $50,000 save between $6,000 and $10,000 over their vehicles’ lifetimes compared to top-selling gas-powered cars.
These long-term savings are largely due to lower maintenance costs. Owners of EVs and plug-in hybrid electric vehicles (PHEVs) save about 50% on repair and maintenance costs over the vehicle’s lifetime compared to typical gas-powered vehicles.
3. The purchase price for EVs is declining
Historically, EVs have been more expensive to purchase than their gas-powered counterparts, but those upfront costs are now decreasing. Last year, the average price for a new EV dropped significantly by $14,300 from 2022, making it only $2,800 more than the average new gas-powered vehicle. In 2024, EVs are expected to become even more affordable due to the introduction of lower-priced models and a supply surplus that may lead companies to reduce prices further.
4. EV incentives can further reduce costs
The federal government introduced a tax credit providing buyers with up to $7,500 for new EV purchases or $4,000 for used EVs. Additionally, many states offer their own tax credits, ranging from $1,000 in Alaska to $7,500 in California. Finally, some EV owners can receive electricity discounts from their local utility by charging during “off-peak” hours, typically at night when electricity demand is lower.
5. EVs can travel longer on less energy
On average, an EV travels 4.4 times farther on a given amount of energy compared to the average gas-powered vehicle. When assessing costs, it’s crucial to account for the varying efficiency of EV models, as some may yield greater savings than others.
In Conclusion
While new EVs generally have a higher initial cost compared to gas-powered vehicles, their lifetime savings make them more economical in the long run. EVs are cheaper to fuel and maintain, and they can travel longer distances on less fuel.