The federal government’s $7,500 discount on electric vehicles has officially ended, which significantly changes the math of EV ownership. It might make you wonder: Is it more economical to buy a gas-powered car now?
This is a fair question, but the sticker price of a car (and the lack of a government rebate) is only one piece of the total cost of vehicle ownership, which also includes fuel costs, maintenance and depreciation.
When you take that all into account, EVs are still usually cheaper to own in the long run, according to auto experts. We did the math to show you how the costs break down, and how you can make an accurate comparison before making your next car purchase.
Comparing the upfront costs of an EV, hybrid and gasoline car
The sticker price is what most people think about when they compare the prices of different cars. From that perspective, the disappearance of the $7,500 federal EV tax credit puts EVs at a significant disadvantage on upfront costs when compared to gasoline or passive-hybrid cars.
When it comes to upfront costs, we’ve mapped out the winner, loser and runner-up.
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Winner 🏆 |
Internal combustion engine vehicles |
Traditional gasoline cars usually have the lowest sticker price compared to their electrified counterparts. These types of vehicles have long-established supply chains and economies of scale that make them cheaper to manufacture, according to Antuan GoodwinCNET’s EV senior writer. |
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Runner-up 🥈 |
Hybrid vehicles |
Hybrid-electric vehicles often have a slight premium over pure gas cars due to the dual gas and electric powertrain, but are usually still more affordable than most pure EVs. |
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Loser 💸 |
Electric vehicles |
Electric cars are typically at the top end for sticker price. “The battery is going to be the biggest reason that EVs are more expensive,” Goodwin says. EVs also don’t benefit as much from economies of scale. Plus, consumers are still subsidizing the research and development that legacy automakers are doing to design electric cars, according to Amelia Dalgaard, an automotive expert known online as Motorhead Mama. |
Comparing fuel and charging costs
Insurance is yet another ongoing cost that you just can’t avoid — but different types of cars can mean your policy prices vary wildly.
Insurance costs vary a lot depending on the type of car you own. Here are the general trends for different vehicles:
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Winner 🏆 |
Internal combustion engine vehicles |
These usually have the lowest insurance costs, because they’re cheaper to replace and repair after collisions. |
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Runner-up 🥈 |
Hybrid vehicles |
Generally, these cars are more expensive to insure compared to pure gasoline vehicles because they’re more expensive to begin with. |
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Loser 💸 |
Electric vehicles |
These cars are the most expensive to insure because they have the highest sticker price, and because components such as batteries are more expensive to replace, according to Goodwin and Dalgaard. |
Depreciation and resale value: The wild card
Depreciation — or how much your vehicle decreases in value over time — can have a huge impact on your total cost of ownership. That’s because when you go to sell your car, its residual value can make a big difference in how much money you lose in the transaction.
Here’s the breakdown between gasoline and electric cars:
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Winner 🏆 |
Internal combustion engine vehicles |
Because gasoline cars have been around for so long, their resale value follows a predictable and well-established depreciation curve. Currently, that usually means gas cars depreciate more slowly than electric cars. |
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Runner-up 🥈 |
Hybrid vehicles |
These cars have traditionally held their value well due to strong demand and fuel efficiency. |
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Loser 💸 |
Electric vehicles |
Historically, EVs have experienced higher and faster depreciation than gas vehicles. That’s partly because the EV technology improves so quickly (leading to better battery range and faster charging) that older models become undesirable more rapidly (very much like the old iPhone modelsDalgaard says). That said, as the EV market matures, this effect might begin to lessen, Goodwin observes, leading to better resale value for EVs. |