The US is in the midst of an electric car revolution. This week, Tesla announced a record increase in sales for the second quarter of the year: 446,140 cars were delivered worldwide in the three months to June, beating its own forecast of 445,000.
Business in the US has been boosted by government tax credits for electric vehicles, making them more accessible than ever to Americans.
Electric cars are significantly more expensive to buy, but usually cheaper to run – since maintenance and fuel costs can drop significantly with an eco car.
However, experts warn that it takes an average of six years for a purchase to break even – and it can take up to a decade to recoup the premium.
Customers are also using social media to express their regret about buying an electric vehicle due to difficulties in finding charging stations and unexpected costs. So how long does it really take to save money on an electric car – and is it worth the price?
Electric cars are more expensive to buy up front than petrol cars (Pictured: Tesla Y-model)
Looking beyond the point of purchase, EVs are likely to be cheaper to operate as maintenance and fuel costs can drop significantly with an eco-friendly car (Chevrolet Bolt pictured).
costs in advance
The starting point for calculating the numbers is how much you spend on the car itself when you visit the dealer.
In terms of initial cost, electric vehicles are more expensive than petrol cars.
According to Edmunds, the average cost of a new gasoline car as of May this year was $47,892, while the typical electric car would cost $65,381.
At the cheaper end of the scale, for example, there’s Volvo’s XC40 EV, which lease prices start at $53,550, or $629 per month, while the XC40 petrol model starts at $36,350, or $499 per month.
tax credits
If the vehicle is eligible for state or federal tax credits, it can give you a significant head start on the road to break-even.
Motorists can reclaim up to $7,500 in credits when they buy one in 10 new electric or plug-in hybrid cars.
Drivers can reclaim up to $7,500 in tax credits when they purchase one of these ten electric vehicles
The Tesla Model 3 Performance is eligible for full credit, but the Standard Range version is only eligible for half of it
Of the ten vehicles that qualify for the credits, almost all are made by General Motors, Tesla and Ford. These include the Chevrolet Bolt, the Ford F-150 and the Tesla Model Y.
Seven vehicles manufactured by Tesla, Ford and Stellantis qualify for a $3,750 tax break — half the credits — because they meet the requirement that a percentage of battery components be manufactured or assembled in North America.
operating cost
This is where the calculations get a bit more complex, as running costs take into account various factors including the efficiency of the car, the gas and electricity prices in your area, your driving habits and how often you use the car.
gas vs electricity
When it comes to fuel, electricity is generally cheaper than gas. On July 7th, the average cost of gasoline in the United States was $3.53 per gallon.
According to the Natural Resources Defense Council, the cost of charging an electric vehicle is equivalent to filling up a tank of gas and is about $1 per gallon.
Gas prices also tend to be more volatile than electricity prices, which have historically been more stable.
A useful tool for comparing vehicles and estimating potential fuel cost savings is the US Department of Energy calculator.
The calculator assumes a 55 percent stop-and-go driving mix and a US average of 15,000 miles per year — but drivers can adjust the formula with their own state’s gas prices and typical mileage to be more accurate to get picture.
For example, comparing the 2023 Volkswagen ID 4 EV, which costs around $38,995, to the similarly sized 2023 Volkswagen Tiguan, which starts at around $26,950, the electric car is $12,045 more expensive to start with.
The calculator estimates that the Volkswagen ID 4 EV saves $1,404 annually in fuel compared to the Volkswagen Tiguan
Comparing the Hyundai Kona electric and petrol models, it would take an EV driver over a decade to break even
The calculator estimates that an electric car owner saves $1,404 annually by charging their vehicle instead of using gas.
Dividing the EV price premium by the estimated annual fuel savings, it would take over eight years for the purchase to break even.
However, if you compare the Chevrolet Bolt EUV 2023 with the Chevrolet Trailblazer, for example, the customer could break even much faster.
The Bolt costs around $29,700, while the Trailblazer starts at $22,100, making the electric car $7,600 more expensive to start with.
The calculator shows that Bolt owners save $1,200 a year in fuel — so it would take just over six years for the car to break even.
However, the Bolt is also eligible for the $7,500 tax credit. If the customer was able to claim the full amount – buyers are subject to income limits to qualify for the credits – it could mean the car is squarely in line against the petrol model.
However, without the government stimulus, it could take up to a decade for lower fuel costs on some models to offset the electric premium.
The 2023 Hyundai Kona Electric costs $11,410 more than the petrol-powered Kona. With an expected energy saving of $1,101 per year but no tax credit, the driver of an EV would expect to break even in just over ten years.
Load
One of the main concerns with electric vehicles is whether the driver will have trouble finding places to charge.
As the US expands its charging network, it could be difficult to plan your trip with sufficient charging stops in more rural areas.
Some motorists have even taken to social media to describe their difficulties in finding charging stations – or have given up the car altogether as a result.
In a video titled “Why I Ditched My Tesla,” TikTok user Madison Hafen said, “Knowing that I could potentially run out of charge if I’m not careful has been really stressful.”
Lauren Fix, analyst at Car Coach, said: “A lack of charging infrastructure is a big negative factor and consumers are increasingly frustrated.”
“The number of charging stations is limited, very few fast chargers are available and many of the accessible chargers are not working.”
“Very hot and very cold temperatures also reduce battery life – especially when using the air conditioning – and can shorten the service life by a third.”
One way to mitigate this problem is to install a charging station at home — but that can be a costly decision.
According to Barrons, the popular JuiceBox 40 is around $650 and the ChargePoint Home Flex is around $750.
Installation costs vary from around $1,000 to $6,000, depending on how close the charger is to your home’s electrical panel and whether you need a new panel and electrical upgrade.
Insurance
According to Bankrate, premiums for electric cars are typically 5 to 15 percent higher than petrol models, partly due to the newness and scarcity of parts when things go wrong.
“Higher costs are to be expected, especially in areas where parts or specialists for repairing electric vehicles are not readily available,” said Cate Deventer, insurance analyst at Bankrate.
maintenance and service life
According to Robert Walden, founder of Vehicle Freak, electric cars often have lower recurring maintenance costs compared to gasoline vehicles.
“When you swap out a traditional motor for an electric motor, you also say goodbye to a lot of costly maintenance,” he said.
“Oil changes, timing belts, water pumps – the list goes on and none of it applies to electric vehicles.” Less maintenance also means more money in your pocket.”
The life expectancy of an electric car is also longer, he said, and battery technology continues to improve, meaning cars last longer before the battery needs replacing.
“While you may be paying more upfront, you’re also investing in a more durable vehicle,” he added.