More people are seeing the high gas prices at the pump and wondering how we can cut car costs and whether an electric car may ultimately be a better option .
Tesla represents almost 55% of electric cars sold in the United States, down from 62% in 2022. Other manufacturers are cutting into Tesla’s market share as companies like Nissan, Ford, and GM start to sell their electric vehicles (EVs).
So, is an EV right for you? Before you make the leap to electric, consider these upfront and ongoing costs.
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Higher purchase price
Before getting the keys (or key fob) for an electric vehicle, you may notice that some EVs cost more than their internal combustion engine counterparts.
According to Kelley Blue Book, the average price of an EV as of July 2024 is $56,520. That’s about $12,000 more than the $48,401 industry average for gas vehicles.
Some reasons why electric vehicles are more expensive include increased demand and the extra technology involved in an EV.
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States sometimes add a tax gas to help pay for road repairs and other issues that need to be addressed due to the wear and tear on the nation’s roads. But since electric vehicles don’t need gas, EV owners may not be paying their fair share in infrastructure taxes.
Some states are adding an additional registration fee for electric vehicles to make up for this lost revenue. Fees vary from state to state but can range from $50 to $200 per year.
Check with the state your vehicle is registered in to find out how much extra you’ll need to factor into your budget.
Charging on the road
You may see your electric bill go up after you get an EV and start charging it at home. But the real surprise could be when you try to charge up on the road.
Prices for public charging stations vary widely by provider. Additionally, some states allow pricing based on the kWh of electricity used, while others only let providers charge on a per-minute basis.
For instance, Blink charges between four and six cents per minute or 39 to 79 cents per kWh, depending on where you charge your car. Tesla charges 28 cents per kWh where allowed and between 13 and 26 cents per minute otherwise.
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Higher premiums
Insurance premiums for EVs may be higher than your typical gas-powered vehicles. On average, insurance premiums for EVs are about 25% higher than for a gas car.
One reason is that electric vehicles can cost more to repair and replace, which bumps up insurance costs. It’s important that you do some research on the best car insurance to find the best deal on EV insurance.
Here's how you can potentially save up to $500 on auto insurance .
Battery replacement
Many EV drivers may experience range anxiety, worrying they may not have enough charge to get where they want to go. The good news is that battery technology is improving, allowing drivers to get farther on one charge.
However, you’ll likely need to replace your EV battery every eight years or 100,000 miles. While this seems a long way off, you could spend anywhere from $5,600 to $20,000 to replace your battery.
Unlocking add-ons
EV manufacturers like Tesla may brag about features like self-driving or acceleration boost, but those add-ons come at a cost.
Drivers may have to pay up to several thousand dollars to unlock these electronic features and get more out of their vehicles. For example, Tesla’s full self-driving feature $8,000 to purchase and $99 per month to subscribe to.
Pro tip: If you’re wondering if Teslas are worth it if you have to pay to unlock additional features, check out other EV models to see if they may offer these locked Tesla features as standard on their models.
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Fast chargers are a great way to quickly charge your vehicle. However, getting a charger set up in your home isn’t cheap. The average cost to have an EV charger installed is about $1,500 for home use, and it can vary depending on labor costs, permits, and other requirements.
You may also need to buy a charger specifically for your car’s make, leaving little room to compare costs. Additional costs include finding a trained electrician who knows how to install car chargers and possibly upgrading the electrical grid in your home to handle fast charging.
Temperature issues
Climates with more dramatic seasonal swings between cold and hot weather could reduce your battery’s ability to hold the full charge.
This could mean more money out of your wallet to pay for charging costs that can keep up with the varied climate.
Charging time
Time is money, and while it may not be a tangible cost, it’s something to consider as you think about getting an EV.
While a fast charger can fully charge your EV in less than 30 minutes, that’s still a lot longer than it takes to fill a traditional car at the pump. If you’re not using a fast charger, that time can increase to seven, eight, or even 12 hours.
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Depreciation
Electric vehicles are no exception, as they generally depreciate from the moment of purchase.
The most significant impact occurs within the first three years of ownership. Some reports show that EVs can lose up to 52% of their value just after three years, compared to 39.1% for ICE vehicles.
Mileage, age, maintenance, brand reputation, demand, and even government incentives are factors contributing to electric car depreciation.
Loss of range
According to Kelley Blue Book's study, all cars lose range in the cold, but range loss is a significant concern for electric vehicle owners.
Refueling an EV takes longer, and public charging stations can be hard to find in many parts of the country.
That scarcity requires EV owners to plan longer trips around recharging points — and to know they’ll need to stop more frequently when the mercury drops.
Fast charging rates
Many electric vehicles include free charging and you might even find manufacturers that include a few years of complimentary fast charging. But charging on the road using DC fast chargers is still a cost that prospective EV owners must budget for.
Even though you can skip the gas station, you'll eventually find yourself parked at an EV charging station and fast charging rates vary by location.
In some states, you'll be charged per kWh of electricity used, which is a very convenient metric to use. However, it's much cheaper to charge your EV at home.
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Tire lifespam
It's simple physics, and EV owners who've had their vehicles for more than a couple of years can attest to it: The heavier weight of an EV plus increased takeoff torque shortens tire life. Expect $200 to $300 per tire replaced every 25,000 miles.
Higher repair costs
Repair costs could be higher since some repairs are usually more expensive on an electric car than on a gas-powered vehicle. EVs can also sometimes be less reliable than gas vehicles.
There could also be an issue with who can repair your vehicle. Electric vehicle auto mechanics may not be as easy to find as combustion engine mechanics, and your car manufacturer may also have restrictions on who can repair your particular type of vehicle.
For example, Tesla's annual repair cost average is $832, compared to $652 for all car models. A scarcity of parts can also drive up prices when replacing them.
Bottom line
If you’re considering an electric vehicle, consider potential hidden costs that may affect your decision.
However, there are also some advantages to buying an EV, especially the possibility of getting ahead financially because of high gas prices.
Check your budget and weigh the risks and benefits. You may be surprised to find that an electric car is right for you or decide it’s better to stay unplugged.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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