EV vs. Gas: What Car Is Cheaper to Own?
Trying to determine which type of car—electric or gasoline—is more affordable is no easy task. Most research done in this direction refers mostly to fueling costs, even though there is a great amount of other factors that come into play, not to mention the variables for each of these. We looked at some of the numbers out there and tried to come up with a more comprehensive response. So, let’s see, for the long run, is it cheaper to own an electric or gas car?
Let’s start with the data that is most accessible, the numbers related to fueling or powering a vehicle. Even without doing an in-depth research on the topic, it is obvious that electricity is cheaper than gas, so reaching a conclusion seems pretty easy. Also, electricity prices are generally much more stable than gasoline prices, especially in troubling times like these. On a national average, it costs less than half as much to travel the same distance in an electric car rather than a conventional one, according to the Office of Energy Efficiency and Renewable Energy. Some EV owners swear by a 70 percent reduction in costs for energy consumption for 100 miles compared to pumping gas.
Currently, the national average for electric vehicle fuel in the U.S. is $0.15/kWh for light-duty EVs and $0.14/kWh for light-duty plug-in hybrids. Most states fall between $0.12/kWh and $0.16/kWh range, according to recent data from the U.S. Department of Energy (DOE). Considering that an efficient EV goes about 4 miles per kilowatt-hour, you can start and do the (very simplistic) math. If we spread the costs and variables over 15 years, estimated savings range between $3,078 and $10,445 when compared to gasoline vehicles. The more complex calculations done by DOE, which take into account other factors like location or a mix of home and public charging, show that total fuel savings for a 15-year period fall between $4,500 and $12,000.
What about maintenance costs?
In this case too, the conversation can be fragmented. First of all, the maintenance schedule for an EV is a lot simpler than the one for a conventional car, because we are dealing with fewer moving parts. Still, these fewer moving parts can be quite expensive. The most costly of all for EVs—the battery pack—can cost up to about $15,000 (for the more expensive electric vehicles) if it needs replacing. However, there are solutions in this case as well. Most car dealers provide an 8-year/100,000 miles warranty for the battery pack, which is not too bad. For Tesla, for example, warranty is 8 years for an unlimited number of miles.
Also, there is the possibility to buy reconditioned battery packs, which are cheaper. Going forward, these costs should go down as technologies evolve and battery life for EVs improves. Lithium-ion battery pack prices fell 87 percent from 2010 to 2019, with the volume-weighted average hitting $156/kWh, BloombergNEF data shows.
Another aspect to take into account is the availability of shops with specialized tools and people to service EVs. This could also impact ownership costs, even though, just like in the case of components, this is a work in progress, with improvements happening at a rapid pace. A study presented by MotorWeek a year ago showed that EVs can save an average of $263/year based on avoided maintenance costs, which adds up to $3,000 for a 12-year or a 150,000-mile ownership period.
What to expect
Since new technologies, policies and economics are all in favor of growing the EV market, you can expect projected savings numbers to increase in favor of eco-friendly vehicles. BloombergNEF predicts an 18 percent drop in electric passenger vehicle sales globally for 2020, to 1.7 million, due to the coronavirus crisis, but this is still better than the 23 percent decrease expected for conventional vehicle sales. The long-term perspective is still positive, though, as the future looks even more electric.
The same report shows that EVs will account for 58 percent of new passenger car sales globally by 2040 and 31 percent of the whole car fleet. In this context, the gap between costs of owning a conventional vehicle and an EV is only expected to widen. But then again, this is just the more predictable scenario, pandemics and world chaos aside.