Analysis finds annual running cost of EVs less than ICE; but with purchase price factored in, it flips
Self Financial, a fintech company, has compared the running costs of electric and non-electric vehicles in each state. Across the US the average annual cost of running an electric vehicle is $2,721.96, while gasoline vehicles cost an average of $3,355.90 per year to run—a difference of $633.94 annually.
However, these annual costs don’t take into account the purchase cost of the vehicle itself and are purely the ‘running’ costs annually. When the purchase cost of each type of vehicle is factored in, average gasoline vehicles are $1,454 per year cheaper to run. EVs cost an average of $9,406 per year (including the purchase price) to run compared to $7,952 annually for gas vehicles (including the purchase price).
To remedy this purchase cost issue, many states across the US have introduced various incentive programs. In 21 of the 50 States there are cash, parking and rebate incentives to buy an electric vehicle.
While many of these incentives come with stipulations and clauses, the Self Financial study found that buyers could knock off as much as $700 from their annual purchase and running costs by using local and State incentives.
In terms of individual costs of running, on average Self Financial found that nationally it costs as little as $0.03 per mile to fuel an electric vehicle; by comparison, the national average cost to fuel a gas vehicle is double at $0.06 per mile.
Annually, the average costs to charge an electric vehicle is $460.32, while the national average cost to refill a gas tank is $837.92 per year, a difference of more than $377 per year in favor of the electric vehicle.
Although fuel costs are the most ‘present’ cost on peoples’ minds, insurance and tax and also see running costs creep up.
Without taking into account incentives and subsidies, taxes on electric vehicles are typically more expensive than gas cars—an average of $183 more per year. Across the states, the average cost of taxes for a gas car is $321 a year, compared to $504 for electric vehicles.
The study found that insurance of electric vehicles is on average $442 more expensive than their gasoline equivalents. As part of the study, Self Financial found that the average annual insurance cost for a non-electric vehicle is $1,232, compared to $1,674 per year for their greener counterparts.
As electric vehicles become more popular, people will be looking into whether they’re worth it; our data suggests they are in terms of running costs, but it’s typically going to be more expensive in the first instance when buying the car. If you’re looking to buy, remember, the longer your auto loan term, the more it will typically cost you. This is because interest costs on longer loans (more than 5 years) are much higher, even if you’ve got a healthy credit score.
Longer loans may also mean you’re “upside-down” on your loan - meaning you owe more on the loan than the vehicle is worth - which could come with even more costs, such as GAP insurance. The risk of upside-down car loans is that if the car gets totalled or you sell it, you may still have to pay money on the vehicle.—Lauren Bringle, Accredited Financial Counselor at Self Financial
Other findings of the study:
Oregon is the cheapest state to run an electric vehicle at an average of $1,810 each year.
Michigan is the most expensive state to run an electric vehicle with an average annual cost of $4,276.
North Carolina is the cheapest state to run a gasoline car at $2,621 average each year, and second-cheapest for EV running costs at $1,836.
California has the highest adoption of EVs in the US, but is the 7th highest state for the cost of EVs.
Data was collected from the United States Department of Transportation - Federal Highway Administration, The Alternative Fuels Data Center (AFDC), The National Conference of State Legislatures, FuelEconomy.gov, Department of Motor Vehicles, Finder.com, Statista, Edmunds, Tesla, Quote Inspector, and other state-specific governing bodies and consumer reports.
Data was analyzed based on a range of criteria to provide insights into the annual running costs (at a State and national level) of the average and most popular electric and gas-fueled vehicles in the US.