Do electric cars save money?
Last updated 8/25/2021
For the average American household, transportation is the second largest expense after housing. Swapping a gasoline-powered vehicle for an all-electric vehicle (AEV) or plug-in hybrid electric vehicle (PHEV) can help you save money on day-to-day expenses in five different ways.
Fuel savings from driving electric cars
One of the biggest day-to-day savings is the cost of fuel. A 2018 study from the University of Michigan found that electric vehicles cost less than half as much to operate as gas-powered cars. The average cost to operate an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117.
On top of the cost savings, electricity rates are much more stable than gasoline prices. Over the past 10 years, the cost of fuel ranged from $1.50 to $4.00 per gallon. By comparison, over that same amount of time, electric car drivers paid about $1.20 for electricity to go the same distance. A consistent electricity rate means that fueling an electric car is both more budget-friendly and more predictable.
As battery technology continues to improve, the equivalent cost per mile for driving electric vehicles is significantly less expensive than driving gasoline-based vehicles. Your average electric car can go approximately 100 miles per 30 kilowatt-hours (kWh) of electricity. Assuming that you can buy 1 kWh of electricity for $0.12, this means that you can travel about 36 miles for $1.00. In terms of gasoline-powered vehicles, your average car with a fuel efficiency of 22 miles per gallon will only be able to travel about 18 miles for that same $1.00 in costs. Essentially, by driving an electric car you can get double the mileage for your dollar.
Plug-in hybrid EVs are more efficient than standard gas-powered vehicles
Unlike all-electric vehicles, which use no gasoline, plug-in hybrid cars have a fuel backup to power the car in the event that the battery’s charge runs out. While this means there is cost for both charging the vehicle and refueling, PHEVs use fuel more efficiently than conventional gasoline-based vehicles and function more like hybrid vehicles when switched from battery power to fuel. In fact, plug-in hybrids use anywhere from 30 to 60 percent less gasoline than conventional gasoline-powered engines. Their internal combustion engine is used to recharge the car’s battery, saving on electricity costs and reducing the need for hours of charging.
Some utilities offer lower cost electricity for electric car owners
Using electricity instead of gas to power your car is cheaper and more efficient. Some utilities even offer lower prices for vehicle charging during off-peak hours. Programs vary by state and electricity provider, but can include:
- Reduced time-of-use (TOU) rate options for vehicle charging
- Per kilowatt-hour discounts used to charge electric cars
- Reduced rates for electric car charging during off-peak hours
All of these options result in lower-cost electricity used for charging your electric car. These rates and discounts can help reduce the day-to-day costs of charging an electric vehicle even further. You can find more information on state and local incentives in EnergySage's guide to electric car rebates & incentives.
Electric cars have fewer maintenance requirements and lower maintenance costs
All-electric cars don’t have much of the equipment specific to internal combustion engines like spark plugs, transmissions, radiators, oil and fuel filters, exhausts, and other gasoline-specific components. As a result, the cost of maintaining an electric vehicle is lower than gasoline-powered vehicles. Most electric cars also have regenerative braking, which uses the electric motor to do much of the braking. This also helps save the brake pads and rotors in electric vehicles, further reducing maintenance costs.
Even if you choose a plug-in hybrid electric vehicle with an internal combustion engine, your maintenance costs will be lower. PHEV engines run less often than a gasoline-powered engine, so there is less wear and tear on the engine and less need for oil and coolant.
You can generate your own electricity to maximize your electric car savings
Using rooftop solar panels can help reduce the costs of charging an electric vehicle even further while simultaneously reducing fossil fuel consumption. In fact, investing in solar panels for electric car charging can pay off more quickly than using your solar panels for home electricity alone, because the solar power replaces more expensive gasoline in addition to grid electricity.
Solar panel systems for electric car charging also have a strong return on investment. These systems are capable of generating returns of 10 to 30 percent annually, and the average EnergySage Solar Marketplace user breaks even on the cost of panel installation in seven to eight years. Once the initial installation cost is paid off, you will have free electricity for the remainder of the solar panel system's lifespan.
Even more, the average lifespan for solar panel systems is 25 to 30 years. That means that, in addition to offering a high return on investment, installing a solar panel system represents 25+ years of free electric generation. The solar panel system will likely outlast the lifetime of a vehicle and can continue fueling additional electric vehicles for years to come.
Finally, installing solar has the additional benefit of increasing your property value. Studies have shown that homes with solar panel systems are valued and sold at values higher than similar homes in the area in addition to selling faster. This increase in property value is about 3-4% and the largest value increases are in areas with high electricity rates and strong solar incentive programs.
Overall, combining the purchase of an electric car with the installation of a solar panel system allows for even more savings throughout the lifetime of both the vehicle and the solar panel system. In addition to reducing reliance on fossil fuels for charging, a solar panel system can offset electricity costs and generate free energy for 25+ years. As a way to reduce environmental impact, save money, and increase value, the combination of solar panel systems and electric cars has numerous benefits that can be maintained for years to come.