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Jul 28, 2023

Are Electric Cars Worth It?

Choosing between an electric car or a gas car can be a complicated decision with one of the primary factors often being cost. We break down a 3-year analysis of the cost of owning an EV so you can

Choosing between an electric car or a gas car can be a complicated decision with one of the primary factors often being cost. We break down a 3-year analysis of the cost of owning an EV so you can understand what it could cost you over time.

EV aficionados will tell you that electric vehicles are cheaper to fuel and maintain, so that means they must be cheaper to own and operate. EV skeptics will counter with the premium pricing of many EVs. So, are electric cars cheaper than gas cars over the long haul of ownership? Sort of. Sometimes. As they say, it's complicated.

To investigate whether the cost per mile of an electric car is truly cheaper than its gas-powered counterpart, we chose two models in the US market that are available with both powertrains to compare.

From Hyundai, we looked at the Hyundai Kona and the Kona Electric. From the BMW Group, we chose the Mini Cooper Hardtop two-door and the Mini Electric.

To determine whether electric cars are really more financially efficient than gas cars, we decided to run an examination of the first three years of overall ownership cost.

For the purposes of the clearest comparison possible, we stuck with the numbers we could pin down. For this reason, we are not including either financing costs or insurance premiums, as the choices you make around both can have a significant impact on your total costs.

Our journey starts with the straight base price of the most basic model of each subject vehicle. Any applicable Federal tax credits for the two EVs are figured in later in the calculations. The cars' purchase prices (including destination charges) are as follows:

As you can see, the gas vehicles are about $6,000 or $7,000 dollars cheaper than their electric counterparts. This is unlikely to come as a surprise to anyone. The real question is, do the savings electric vehicles earn down the road make the initial sticker shock worth it?

In order to do some important cost calculations, it's important to know how many miles we're talking about.

To keep things fair, we went with a theoretical annual mileage 15,000 for all our contenders. This has been the de facto average mileage stat for U.S. drivers for decades. The result of our calculations is a three-year mileage count of 45,000 miles for all four cars.

If you're wondering whether maintenance on electric cars is expensive or what routine maintenance they need, you're certainly thinking about this comparison the right way.

Maintenance costs are a major factor in the total cost of a vehicle, so it's important to consider the maintenance requirements and expenses for both types of vehicle.

To calculate maintenance costs, we used AAA's 2019 Your Driving Costs analysis. It determines how much you pay per mile in maintenance to drive a vehicle by reviewing costs like those for tires, brakes, oil changes, and repairs over a five-year period.

Yes, that's longer than our three-year timeline, so it's helpful to note that the report might offer a slightly inflated version of the data. Regardless, AAA's data gives us a solid baseline to build from, and all the subject cars are treated equally.

Maintenance costs per mile and over the full 45,000 miles are as follows:

As expected, the EVs are cheaper to maintain. This makes sense, as they avoid costs from oil changes and other related other engine maintenance.

Both Mini and Hyundai also offer free maintenance for three years or 36,000 miles, whichever comes first. As the deals are the same, we've chosen to disregard them for the sake of a simplified analysis.

To calculate the energy usage of both types of cars we used the EPA's gallons and kWs used per 100 miles. For both of these units, the lower the number, the more efficient the vehicle. Here's what we found:

As you can see, the Mini Hardtop gets better gas mileage than the Kona, but the Kona Electric is more efficient than the Mini Electric.

To understand how this data impacts the overall cost, we'll have to determine how much it costs to charge an electric car compared to gas vehicles.

For gasoline costs, we used the national average price of gas in February, 2020: $2.44 for regular and $3.11 for premium (the Mini requires the higher- grade fuel). We avoided more recent national average data because they may be higher than future gas prices due to the pandemic and trade issues.

Here is the cost to drive the gasoline-powered Kona and Mini for 45,000 miles.

This means the Mini costs $855 more in gas to drive for 45,000 miles than the Hyundai.

The costs of charging an electric car are tougher to determine than the cost of filling a car with gas, but we've managed to do so by considering factors like the average price of energy per minute and how many kW of energy that entails per EV.

Many charging stations charge per minute instead of per kW—the latter equating to gallons of gas. To account for this, we used the average charging per minute rate sans membership of Electrify America's up to 75-kW stations which is $0.22/min. We then averaged the charge rate to 50 kW to account for slow stations and lowered rate of charge once a battery hits 80 percent.

To determine at-home charging costs, we took the average kW rate of $0.1282/kW in the United States for February, 2020. There are a few factors this strategy doesn't account for.

For example, electric utility rates in the United States vary wildly. Louisiana pays only $0.0897 per kW while Hawaii electric rates are a wallet-busting $0.3244 per kW. However, the national average should give us a pretty good idea.

Here's how much it would take to keep the two EVs charged up enough to cover 45,000 miles:

The Mini costs slightly more than the Kona to charge up, but the differences aren't as drastic as with gas-powered cars.

Our analysis shows that both EVs are significantly cheaper to power up than their gas counterparts, suggesting it's much cheaper to fill a car with electricity than with gas. In fact, you can save about $2,539/45,000 miles driving the Mini Electric rather than the Mini Hardtop, and $1,900/45,000 miles driving the Kona Electric rather than the Hyundai Kona.

A quick look at the numbers and it's clear that EVs depreciate quicker than their gas counterparts. We landed on the following numbers for three years-worth of depreciation using the source of AAA's depreciation metrics, Vincentric.

Based on purchase price, fuel, maintenance costs, and depreciation over a three-year period, here's what we've found for the cost-of-ownership of our subject vehicles:

As you can see, the gas cars in both cases come out cheaper than the EVs. Owning a Mini Hardtop rather than the Mini Electric might save you about $7,858 over the course of three years, or approximately $2,619 per year. Likewise, owning a Hyundai Kona rather than its electric counterpart might save you as much as $15,494 over three years, or $5,165 per year.

Now, before you jump on the phone with your EV-driving friend, there are still additional variables. There's the $7,500 tax credit that's available for both of the electric cars. That brings the purchase prices of the electric vehicles down by that much. And that drops their ownership costs to:

Incorporating the EV tax credits, our calculations show that the gas-powered Mini is a mere $358 cheaper to own and operate over the first three years than its electric counterpart—essentially a wash.

Then you get to factor in state and local incentives if those are available. Plus, as the years progress, the lower cost of operating an electric vehicle (fuel and maintenance) continue to accrue. In the case of the Mini, it might just tip the advantage to the electric model.

The Kona Electric, on the other hand, is more costly than the gas version by $7,994 per year. If you're going by cost alone, it's hard to justify the EV in this situation. What this really shows us, of course, is that the final answer to the question "which is cheaper, gas or electric cars?" is that it depends... on the type of car and a million other factors besides.

If you're interested in figuring out the cost difference between an EV and a gas vehicle, there's a handy tool on the US Department of Energy's site that compares the overall cost of multiple vehicles at once based on your yearly driving habits, EPA data, and even loan information. It even takes into account your state so that it can adjust the fuel-cost data to fit the gas and electricity prices of your area.

Some electric cars are the same or less money than their gas counterparts, but others are much more expensive. It all depends on the car, the price of electricity, the rate of depreciation, if you're eligible for any incentives, and much more.

A Tesla Model 3 costs about 5 cents per mile to charge. Unfortunately, there's no gas-powered Tesla Model 3, so it's difficult to make a direct comparison. The best you can do is find a similar gas vehicle with which to compare.

While it may be cheaper to buy and own a gas car in some situations, whether that's really better depends entirely on your needs and views. You'll have to consider elements like convenience and the impact of fossil fuel emission to determine which is really the better option.

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