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, something that's quantifiable when a brand sells both a gas-powered and full EV versions of the same vehicle. So are EVs really less expensive over the long haul of ownership? Sort of. Sometimes. As they say, it’s complicated.
To investigate whether an electric vehicle truly is cheaper than its gas counterpart to own and use as daily transportation we chose two models in the US market that are available with both powertrains: The Hyundai Kona and Kona Electric, and the Mini Cooper Hardtop two-door and Mini Electric. We compared as much about their running costs as we could dig out from credible sources. And we ignored insurance costs, which can vary widely by state, the coverage you choose, and the owner's driving record.
Three-Year Cost Analysis
We decided on an examination of the first three years of overall ownership cost. Our journey starts with the base price of the most basic model of each subject vehicle. Our theoretical cars would be purchased using a five-year loan with a 5-percent APR and 10-percent down. We then added up three years (36 months) of payments plus the downpayment for the vehicle to get the financing costs for each of the vehicles. That number is the purchase cost over the first three years of ownership. (Federal tax credits for the two EVs are figured in later in the calculations.) The cars' purchase costs for three years broke out as follows.
Mini Cooper Hardtop: $19,676
Mini Electric: $24,951
Hyundai Kona: $17,397
Hyundai Kona Electric: $31,088
As for annual miles driven, we went with 15,000—the de facto average mileage stat for U.S. drivers for decades. Even the Mini Electric, with its EPA-rated 110 miles of range, would hit that mark if someone’s daily commute was 30 miles each way. The result was a three-year mileage count of 45,000 miles.
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. The costs are placed into market segment silos (sedan, SUV, Pickup, EV) for service items like tires, brakes, oil changes, and repairs over a five-year period. Yes, that’s longer than our three-year timeline, but AAA’s data gives us a solid baseline to build from, and all the subject cars are treated equally. As expected, without oil changes or other engine maintenance, the EVs are cheaper to maintain. Maintenance costs per mile and over the full 45,000 miles are as follows:
Mini: $0.0853 per mile/ $3,839
Mini Electric: $0.066 per mile/ $2,970
Hyundai Kona: $0.0909 per mile /$4,091
Hyundai Kona Electric: $0.066 per mile / $2,970
This is where things get weird. Both Mini and Hyundai offer free maintenance for three years or 36,000 miles (whichever comes first). We’ve chosen to disregard those deals for this comparison because our goal is to find the true (as true as we can pull together) three-year cost of owning these and other vehicles. So we’re going to pretend like this isn’t a feature and we ask you to do the same for the sake of math.
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. As you can see below, the Mini Hardtop 2-door gets better gas mileage than the Kona, but the Kona Electric is more efficient than the Mini Electric.
Mini: 3.2-gal/100 miles
Mini Electric: 31-kWh/100 miles
Hyundai Kona: 3.3 gal/100 miles
Hyundai Kona Electric: 27-kWH/100 miles
For gasoline costs, we used the national average price of gas in 2019: $2.60. Because of the pandemic and trade issues surrounding oil prices right now, 2020 gas prices are an outlier. This is our way of saying, we won’t be stuck at home forever, and when we’re allowed out into the world, gas prices will likely go up. Here is the cost to drive the gasoline-powered Kona and Mini for 45,000 miles.
Mini Hardtop: $3744
Hyundai Kona: $3861
Charging costs are a tougher to determine. First off, most charging stations charge per minute instead of per kW—the latter equating to gallons of gas. This way of charging can be frustrating for EV owners. Fortunately, there are changes coming. Beginning in 2023, all California-based charging stations will charge drivers on a per-kW basis. But for now, we’re using the average charging per min 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. 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. So the price of charging at home is dictated by where you live.
Another piece of the EV charging puzzle is the split between at-home and on-the-go charging. A 2017 GM study of Chevy Bolt EV owners found that a whopping 92 percent charged at home or at work. We’re pooling all of that into home charging because tracking down every employer to see if and what they charge their employees for re-charging their EVs would be impossible. And we have no way of knowing how many of those EV commuters only charged up each evening at home.
We threw all those calculations on charging into a bucket to determine the amount of it would take to keep the two EVs charged up enough to cover 45,000 miles.
Mini Electric: $1939.00
Kona Electric: $1722.63
The final piece of data affecting the cost of ownership of any vehicle is a big one: depreciation. It's a knotty subject, as predicting depreciation is an educated guess based on past experience, customer demand, vehicle availability, brand reputation and, for all we know, the phases of the moon. A quick look at the numbers and its clear that EVs depreciate quicker than their gas counterparts. Cari Crane, Director of Insights at ALG (which used to be known as Auto Lease Guide), told us that the high cost of electric vehicles contributes to their steeper depreciation. "Dollar wise, we do see a premium on top of a compatible ICE (Internal Combustion Engine) vehicle comparably equipped in age. It's just that price point that's really causing that steeper depreciation." We landed on the following numbers for three years-worth of depreciation using the source of AAA's depreciation metrics, Vincentric.
Mini Hardtop: $8,887
Mini Electric: $13,653
Kona Electric: $12,288.00
Three-Year Ownership Cost Comparison
After three years the grand totals give some insight into the question, "are EVs cheaper?" 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:
Mini Hardtop: $33,720.26
Mini Electric: $40,438.36
Hyundai Kona: $33,867.14
Hyundai Kona Electric: $44,235.38
EV Tax Credits
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 these cars. That brings the purchase prices of the electric vehicles down by that much. And that drops their ownership costs to:
Mini Electric: $32,938.36
Hyundai Kona Electric: $36,735.38
Which is Cheaper to Own?
So, by our calculations that makes the Mini Electric cheaper to own and operate over the first three years than its gas counterpart by $781.90. The Kona Electric, on the other hand, is $2868.24 more. 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.
The current hitch is that not all new EVs are eligible for the $7500 incentive. Both Tesla and GM have hit their 200,000 vehicle cap. It’s also unlikely that the current administration will increase that number any time soon. Eventually, other automakers will also lose the ability to dangle that federal incentive in front of buyers.
The other issue is that comparing EVs and gas vehicles isn't a straight comparison for most electric cars on the road. There are no Tesla Model 3s or Ford Mustang Mach-Es that run on gas. Buyers have to pit them against approximately similar gas cars. When you do that, the calculations to see which gives you the best bang for your buck can be headache inducing. But there's a better way.
Do Your Own Comparison
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.
So is owning an EV cheaper in the long run? All signs point to possibly. But it’s complicated.
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