Electric vs. Gas: Which Cars Really Save You More Money?
When it comes to buying a new car, many people wonder whether an electric car or a gas car would save them more money in the long run. With rising fuel costs and growing concerns about the environment, more and more people are considering electric vehicles (EVs). But are they actually cheaper than traditional gas-powered cars? In this article, we’ll compare the costs associated with both types of vehicles so you can make an informed decision.
Initial Purchase Price
One of the first things people think about when buying a car is the initial purchase price. Traditionally, gas-powered cars have been cheaper than electric cars. According to Consumer Reports, the average price of a new gas car in 2021 was around $40,000, whereas the average price of a new electric car was about $55,000.
Fuel Costs
Fuel costs also play a significant role in the total cost of owning a car. Gas prices can fluctuate, but as of 2023, the average price of gas in the United States is about $3.50 per gallon. On the other hand, electricity costs roughly $0.13 per kilowatt-hour (kWh) according to the U.S. Energy Information Administration (EIA).
| Type of Car | Fuel Cost |
|---|---|
| Gas | $2,625 (assuming 25 miles per gallon) |
| Electric | $650 (assuming 0.3 kWh per mile) |
Maintenance and Repairs
Maintenance and repair costs also make a huge difference. Gas cars have complex engines with many moving parts, which often means higher repair bills. Electric cars have fewer moving parts and require less maintenance overall. AAA reports that the annual maintenance cost of a gas car averages around $1,200, while an electric car costs about $800 per year.
Tax Incentives
The government offers various tax incentives to encourage people to buy electric cars. These tax credits can significantly reduce the financial burden of the initial purchase price. Depending on the make and model of the electric vehicle, buyers can receive up to $7,500 in federal tax credits. Additionally, some states offer their own incentives, which can add up to an extra $2,500 in savings.
Depreciation
Depreciation is another factor to consider. Historically, electric cars have depreciated faster than gas cars. However, this trend is beginning to change as electric vehicles become more mainstream. According to Edmunds, gas cars depreciate at an average rate of 15% per year, whereas electric cars depreciate at roughly 18% annually.
Insurance Costs
Insurance is necessary for any car, but rates can vary depending on the type of vehicle. Because electric cars often have higher purchase prices, they can be slightly more expensive to insure. On average, the annual insurance cost for a gas car is around $1,500, while for an electric car, it is approximately $1,700 according to Insure.com.
Key Takeaways
- Initial Purchase: Gas cars are generally cheaper than electric cars.
- Fuel Costs: Electric cars are significantly cheaper to fuel.
- Maintenance: Electric cars have lower maintenance costs.
- Tax Incentives: Electric cars are eligible for various tax credits and incentives.
- Depreciation: Both types of cars depreciate, with electric cars slightly faster.
- Insurance: Electric cars can be more expensive to insure.
FAQ
- 1. How much can I save annually on fuel with an electric car?
- You can save roughly $1,975 per year on fuel with an electric car compared to a gas car.
- 2. Are electric cars cheaper to maintain?
- Yes, electric cars usually cost about $400 less per year to maintain than gas cars.
- 3. Do electric cars have tax benefits?
- Yes, you can receive up to $7,500 in federal tax credits and possibly more from state incentives.
- 4. Do electric cars depreciate faster?
- Electric cars tend to depreciate slightly faster at an average rate of 18% per year compared to 15% for gas cars.
- 5. Is insurance more expensive for electric cars?
- Yes, electric cars can cost about $200 more annually to insure than gas cars.