With many car manufacturers and countries vowing to end the sale of combustion engine cars by 2035, drivers around the world will soon become all too familiar with electric vehicles (EV). While owning and maintaining a car seems like common knowledge, drivers might discover several major differences over the next few decades with the true cost of owning an electric vehicle.
Currently, EVs are more expensive to own and operate than your traditional car. The retail prices are higher, repairs cost more, and things like emergency services for EVs are not readily available as they are for regular gas-powered cars. However, there are long-term considerations that bring the overall cost down. EVs can fuel up for less money, repairs are less common, and purchasing incentives such as tax breaks have convinced many people that they are good financial decisions.
With all these items considered and more, the reality for consumers is that calculating the true cost of an EV can be quite challenging. With the transition to EVs and (EV charging) almost a certainty for most drivers, many are left wondering how to understand these costs and which EV is right for them. Depending on where you live and what EV you purchase, your overall costs can vary. Here is a quick breakdown of the major costs that every EV customer should consider.
Vehicle Purchase Price
When it comes to the retail prices of EVs, they are considerably higher than the average car which is obviously a major factor in the true cost of owning an electric vehicle. According to Kelly Blue Book data, EVs are about $10,000 costlier with a price of $56,437 on average. With this price, most EVs are considered equivalent to an entry-level luxury car.
While this price tag will cause sticker shock for the majority of consumers, this is still an average, and prices are expected to decrease over time. Below is a shortlist of the most popular EVs sold in the US.
Tesla Model 3
Price: $46,990 (as of October 2022)
In recent years, the Tesla brand has become synonymous with EVs. Therefore, it is no surprise the cheapest Tesla model has become the most popular EV on the market. With over 501k units sold in 2021 alone (approx. 121k in the U.S.), there are few EV models that come close in sales. What benefits the Tesla Model 3 is that it is currently sold worldwide and is supported by a Tesla supercharger network that is prevalent across North America, Europe, and China.
Tesla is able to offer such a low price for its Tesla Model 3 because the $47,000 price tag includes none of the bells and whistles that add so much value to the car. For starters, if you want a Tesla that doesn’t come in the standard black paint, that will cost an extra $1,000. Many buyers will also splurge for the long-range battery, an extra $9,000. Maybe people are drawn to Tesla because of the auto-pilot features, but that can cost an extra $15,000 depending on which version you want. And finally, if you want the best wheels and luxe interior, you can add $1,500 and $5,000 costs respectively to your bill.
While none of these upgrades are essential, the total cost of a fully upgraded Tesla Model 3 shoots up from $47,000 to $81,000. It’s important to keep this in mind when considering what you will be using your EV for on a day-to-day basis.
Tesla Model Y
Price: $65,990 (as of October 2022)
The Tesla Model Y is the 3rd most popular EV sold in the U.S. with over 190k units sold in 2021. The Tesla Y is the SUV version of Tesla’s Model 3 and offers additional features like a 7-seat configuration and a tow hitch. While the Tesla Model 3 can go farther than the Tesla Model Y when the long-range batteries are added, it is considerably smaller.
Similar to the Tesla Model 3, the Model Y has a wide variety of upgrades that drastically increase the price. With all the upgrades made to the battery and software, the price of a Tesla Model Y will exceed $80,000. This makes it in the same price range as the Rivians (which also have branded wall chargers and their own “adventure” charging network.)
Ford Mustang Mach-E
Price: $45,895 (as of October 2022)
The Ford Mustang Mach-E is another SUV style EV but with a considerably lower price point than Tesla’s Model Y SUV. The lower price point is due to the lack of fancy features like the auto-pilot software, but it still holds up when looking at the standard specs.
The Mach-E can reach a range of 314 miles on a full charge and can reach 60mph in 5.2 seconds, albeit slower than the Tesla Model Y which clocks in at 3.5 seconds. Further, the Mach-E can only seat 5, but again, is almost $20,000 less than the Tesla Model Y.
Chevy Bolt EUV
The Chevy Bolt EUV is going to be one of the cheapest options for buying an EV. Since the Bolt EUV is the low-cost option, there are some considerable downgrades compared to other top models. For starters, the Bolt EUV only has a 200-horsepower engine, which is quite low compared to the Ford Mach-E at 459-horsepower. Further, the Bolt EUV only comes in FWD, whereas the Mach-E and Tesla Models come in AWD.
Where the Bolt EUV lacks in features, it makes up in price. The Bolt EUV still seats 5 people comfortably and has a range of 250 miles. Additionally, the Bolt EUV comes with semi-autonomous drive modes that can manage the car’s acceleration, braking, and steering in certain highway conditions.
In 2021, Volkswagen sold over 16k units of the ID.4 in the U.S., making it the 2nd best-selling newly launched EVs on the market. The ID.4 has a range of around 250 miles and is known for being one of the roomiest cabins among current EV models. Like the Tesla models, the ID.4 is one of the few EVs that has a fully digital touch screen to operate cabin controls, giving a futuristic feel.
EV Purchase Incentives
While you may want to buy a new Tesla for its auto-pilot capabilities or cool looks, the government wants you to buy one as well. Depending on what state you live in, you can receive hundreds or thousands of dollars in tax incentives when purchasing any EV and there may be some incentives for EV chargers if you own a commercial property and are willing to list some micro-properties.
For instance, in California, owners of Fuel-Cell EVs can apply for a rebate of up to $4,500. Additionally, anyone living in the U.S. can apply for a tax credit of $7,500 when purchasing most EVs (some models are exempt).
There are a few instances when these incentives do not apply. Some EV models do not make the cut if they are not fully electric vehicles such as plug-in hybrids. Further, if the cost of your vehicle exceeds $60,000, you are less likely to enjoy these incentives since you may be considered a high-income earner.
While fueling EVs is better for the environment, it is also better for your wallet and is a major benefit in the true cost of owning an electric vehicle. Although energy prices are steadily rising, EV owners will undoubtedly save money at the charger compared to the pump. Researchers have shown that EV owners can expect to spend $485 per year on charging compared to $1,117 on gas.
While various factors like where you charge, where you live, and how often you drive will affect your yearly fuel costs, it is no question that EV owners save money compared to combustion-vehicle owners.
One of the major benefits of owning an EV is that your maintenance costs will be considerably lower, another benefit factored into the true cost of owning an electric vehicle. The driving force behind this is that EVs have fewer moving parts in them. Compared to a standard combustion engine which has more than 2,000 moving parts, a standard electrical motor has around only 20 moving parts.
The significantly fewer number of moving parts in electric motors means that there are fewer places for the system to fail. Electric motors don’t go through the same wear and tear as combustion engines do and with fewer parts that can malfunction over time, the cost of overall maintenance goes down considerably.
However, there are still plenty of instances where EVs need regular maintenance. EV owners still need to change and rotate their tires regularly, replace wiper blades, check air filters, maintain their breaks, and do other standard auto repairs that don’t involve the drive train.
The other problem with maintaining EVs, particularly Tesla, is that since the technology is new, the costs per repair are comparatively high. For instance, many Tesla owners have discovered that fixing a windshield can cost anywhere from $1,000 to $2,000. When compared to the average price of $100 – $400, that can surprise and anger many new EV owners.
Additionally, emergency situations can become more costly and time-consuming. If a regular car needs to be towed, it is a relatively simple procedure that comes with a standard price. However, when a Tesla needs to be towed it is a whole different operation. A special tow truck needs to come that can charge the Tesla just enough to get put on a trailer bed since EVs don’t have a neutral function where the tires can spin freely.
While maintenance costs and emergency situations will become less costly over time, these are important factors to consider when buying an EV in today’s market. EV owners can expect their annual maintenance costs to be lower than the average driver, but when it is time to repair your EV, the bill can be bigger than expected. And don’t forget about maintaining your home EV charger or business EV charger.
Cost of Home Charging
When looking to purchase an EV, many consumers make the mistake that their home is ready to charge an EV. While most EVs claim that they can be charged from a standard 120V outlet with an adapter, the charge times become unreasonable. With a 120V outlet charging at Tesla Model 3 can take up to 40 hours, whereas a 240V outlet only needs 10-14 hours to fully charge depending on other factors. Since charging at home doesn’t work for everyone, if you own a commercial property it’s a good idea to install an EV charger on it to generate some additional revenue.
Installing a Level 2 charger in your home can cost homeowners around $2,000 on average, but it may be possible to install an EV charger on the cheap. If you’re lucky enough to live in an apartment building or complex with an EV charger, this won’t apply to you unless you happen to move.
Another thing to consider about installing an EV charger at home is that there have been many reports of EVs spontaneously combusting while charging. While many of these models have been recalled, some EV manufacturers still recommend that EVs be charged outside of the home rather than in a garage. A set of security cameras can help you keep an eye on the EV charging process or come in handy for insurance claims.
When it comes to buying insurance for your EV, there is some unfortunate news. On average, EV owners can expect their insurance to be 15% higher when compared to traditional car insurance prices. Not only are the insurance costs higher, but premiums can be anywhere from 6% to 40% higher as well.
There are a few reasons that justify the higher insurance prices. For starters, EVs are more expensive than their combustion vehicle counterparts, meaning that insuring them is a greater risk to the insurance companies.
Due to the high value of many EVs, when they’re in an accident, things work a little differently. When parts are damaged on an EV, they tend to be replaced rather than repaired, increasing the cost of the bill. Further, because the parts are still comparatively expensive, it is more likely for EVs to be considered totaled because the replacement parts are so expensive.
The good news is that all EVs are not alike, and some are cheaper to insure than others. For instance, the average insurance cost of a Volkswagen ID.4 is around $1,679 compared to the Porsche Taycan which can cost upwards of $3,567.
The Total Cost of Owning an Electric Vehicle
If you’re looking to purchase an EV, you shouldn’t expect that your costs will be any lower. Due to high maintenance costs, insurance prices, and retail prices for EVs, there is definitely a premium to owning an EV.
However, with the technology being so new, there is still plenty of debate on whether EV ownership is more or less expensive and what the future holds. As EVs become more popular and EV infrastructure expands, many of these costs are destined to decline. Regardless, as the world shifts towards EVs, there will eventually be a breaking point when EV ownership will objectively be cheaper than keeping with the old technology. And if you’re entrepreneurial, there is ample opportunity to locate or install EV charger spots, or invest in (micro) real estate with small amounts of money.