Yahoo Autos EVs Are Cheaper to Own Than Gas Cars in All But 2 States. Here's Why
There's no denying that upfront costs for an electric vehicle are higher than the average new ride sold in the United States. With an average transaction price of $57,584 in the first quarter of this year, your average EV transaction costs around $13,000 more than a typical gasoline-powered purchase, according to J.D. Power. But a new study from the consumer rankings group says that most EV owners are ultimately saving some cash by going electric.
Surveying five years of EV versus ICE ownership costs across the U.S., the survey found that owning or leasing an electric car is more economical over a half-decade in all but two states. EV owners in states like Colorado, Illinois, and Nevada save more than $8,000 over that span by plugging in, but New Jersey EV owners were the biggest winners of the bunch, saving an average of $10,345 over five years. On the flip side, owning an EV in Maine and West Virginia actually costs drivers $1,619 and $1,800 more, respectively, over five years when compared to gasoline-powered car ownership.
But how exactly are EV owners walking away with so much more money in their pocket after half a decade? Tangled up in transaction prices, taxes, regional gasoline prices, electricity rates, and zero-emission vehicle incentives, J.D. Power says that the relative costs of charging sessions compared to gas fill-ups and the prevalence of the $7,500 federal tax credit, as well as state-by-state subsidies, make up the majority of gains.
"A lot of everyday shoppers view their financials through that traditional car deal lens where they're really just looking at that up-front transaction price," said Stewart Stropp, executive director of J.D. Power's EV practice in an interview with Automotive News.
Even so, the region you live in will dictate just how much money you can save. Northeastern states like Connecticut, Maine, and New York are prone to high electricity bills, making home charging a more expensive endeavor than elsewhere in America. On the West Coast, California EV owners often pay higher insurance premiums, due to the higher starting costs and premium trim of most modern EVs. On the other end of the spectrum, Colorado makes it super-enticing to own an EV, compounding the $7,500 federal tax credit with up to $5,000 in state incentives.
The same is not true for leasing, however, where customers who choose to lease EVs in typically electric-car-friendly states may actually lose money due to shorter terms. For example, an EV owner in Connecticut can save around $1,210 over five years — but will pay $6,795 more than that equivalent gas car throughout a three-year EV lease due to high electricity costs. In states like Mississippi, however, the cost analysis of a three-year EV lease actually yields $3,084 in savings, making the Magnolia State the most affordable state to lease an EV in.
While the study shows that EV ownership can save cash in the long run for you and your family, it's also worth noting that the state of the EV market isn't going to remain static — in both good and bad ways. The cost of EVs is set to go down as automakers improveproduction practices and the impetus to produce affordable EVs is growing. However, as EV ownership grows, it is likely that state incentives will drop off as revenue from gas taxes falls away.
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