Are Electric Cars Worth It?

According to data from Cox Automotive, which owns Kelley Blue Book and AutoTrader, the average EV owner paid $52,314 in February 2024. The Cox report indicated that “EVs remain priced above mainstream non-luxury vehicles by nearly 19%.”²

Keep in mind that in addition to purchasing the vehicle itself, you’ll also need to consider the cost of:

• Home Charging
  You may need to pay to set up a home charging station if it’s not included in the purchase. Some local state and utility incentives may help to offset the cost.³
  
• Maintenance
  You’ll get to skip the oil change every few thousand miles; however, owning an EV doesn’t mean you’re off the hook with maintenance and repairs. You’ll still need to replace maintenance items including windshield wipers, brake pads, tires, and more.
  
• Battery Replacement
  As technology improves, EVs have longer battery life, many lasting from 10 to 20 years. But if you plan to drive your EV for decades, you may need to shell out $5,000 or more for a new battery.⁴

The good news for consumers is that the overall price will likely decline as technology becomes more efficient and the cost to create EVs decreases. If you’re considering an electric car but aren’t sure you can afford it, it may help to calculate your monthly auto loan payments to confirm how much the price will impact your budget.

Cost is one of the most recognized barriers to the adoption of electric cars despite the numerous advantages, including:

• May Be Cost-Effective to Run
  After you purchase an electric car, running it can be generally cost-effective. That’s because these vehicles run off electricity, which tends to be less expensive than gas. Plus, EVs may require less maintenance, and you can forget about oil changes every few thousand miles.
  
• Environmental Benefits
  EVs are often associated with being more environmentally friendly than their gas-powered counterparts. While EVs certainly eliminate fossil fuel emissions, their quiet inner workings also help reduce environmental noise pollution.
  
• Incentives
  Depending on the dealership where you plan to purchase your EV and the brand you choose, you may qualify for incentives on charging, utilities, and more. For example, some dealers may offer several years of charging or a bonus cash incentive when you buy. To confirm incentives and rebates you may be eligible for, research online and then contact the dealership where you plan to buy.
  
• Tax Credits
  Though EVs often cost more than gas-powered cars, tax credits may offset some of that. The Internal Revenue Service (IRS) currently offers a clean vehicle tax credit of up to $7,500 for qualifying EV owners who purchase a car between 2023 and 2032. Tax credit eligibility hinges on several factors, including battery capacity, vehicle weight, manufacturer, adjusted gross income (AGI), and more.⁶ To understand if you qualify for the tax credit, you’ll want to discuss it with the dealer before you buy or look up the vehicle on the U.S. Department of Energy website.
  
• A Smoother Ride 
  Since the motor operation of an EV is quiet, you’ll experience a smoother ride whether you’re a driver or passenger. EVs also have a single-speed transmission, so you won’t hear shifting gears as the car accelerates.⁷

While there are plenty of benefits to EV ownership, there are also potential downsides to consider, including:

• Higher Upfront Costs
  While the prices of EVs are becoming more competitive with their gas-powered counterparts, there are still higher upfront costs. In February 2024, EV prices were approximately 19% higher than mainstream non-luxury vehicles.⁸ However, if you can afford the initial cash outlay for an EV, you may be able to take advantage of savings on gas and engine maintenance over time.
  
• Limited Driving Range
  With gas stations every few highway exits, the range is fine if you’re driving a gas-powered vehicle. However, electric vehicles often have a limited driving range, and where you can go will also depend on the availability of charging infrastructure. If you’re driving an EV around town within range of your home charging station, the limited range might not be a concern. But if you plan to take your EV on a budget-friendly road trip, for example, you’ll want to map your route and confirm charging opportunities will be available along the way.
  
• Longer Charging Times
  When you visit the gas pump, you’re in and out within minutes, even when filling a larger vehicle’s tank. But even the smallest EVs can take a minimum of 15 to 30 minutes to charge with the fastest charger, meaning you may need to wait for the car to recharge, especially on a longer road trip where you’re draining considerable battery life along the way.⁹ As long as you’re willing to take longer breaks on the road, the longer charging time might not be a concern.
  
• Battery Degradation Over Time
  Batteries lose power over time until they eventually need replacing. Unfortunately, replacing batteries in an EV can be costly. However, many electric cars boast a battery life warranty of eight years or 100,000 miles. If, during this period, a battery loses more than 30% of its capacity, the manufacturer will typically replace it.¹⁰ However, once the warranty is up, you will be responsible for covering the replacement cost.
  
• Potentially Higher Insurance Costs
  It may cost more to insure an EV than a gas-powered car, thanks to higher replacement costs and a higher likelihood of the car being deemed a total loss following an accident.¹¹ If you’re concerned about the cost to insure your future EV, you can contact your car insurance company and get a quote for coverage before you switch.
  

As you weigh the pros and cons of EV ownership, it’s important to assess a few key factors.

• Typical Daily Mileage
  Gas-powered vehicles can take several minutes to warm up to peak efficiency. However, an EV is at its peak efficiency when you start the car, which may make it a more efficient option for short trips around town of 15 minutes or less.
  
• Access to Charging Infrastructure
  If you plan to install a charging station at home and mostly drive around town, you may not worry about charging away from home. But if you plan to use your EV as the family vehicle for road trips, you’ll need to check the route to your planned destinations to ensure you can charge on the road.
  
• Total Cost of Ownership
  If you’re considering an EV, you’ll also want to factor in the total cost of ownership, including the car purchase, the cost of setting up a charging station at your home, the increase in your electricity bill, and maintenance over time.
  
• Environmental Considerations
  If you’re environmentally conscious and looking to reduce your carbon emissions, then driving an EV might appeal to you. EVs have zero tailpipe emissions, which is good for the environment. However, you’ll also want to consider how energy is sourced in your area and ensure your electricity isn’t offsetting those emission savings.¹²
  
• Available Incentives and Subsidies
  If you qualify for incentives or tax credits that offset some of the price of ownership, you may decide an EV is worth it. Look for dealer rebates and federal, state, and local government incentives before you buy.