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What are the real costs of an electric car?

The initial investment may seem pricey, but it could help save you money—and the environment—over the longer term

Read, 4 minutes

If you’re looking to reduce your carbon footprint, purchasing an electric vehicle (EV) sounds like an easy decision, but for many would-be buyers it’s complicated by concerns about the costs. A recent Pew study found that while 67 percent of Americans say electric cars and trucks are better for the environment, 66 percent view EVs as more expensive than fuel-powered cars.

While it’s true that EVs have historically cost more than their fuel-powered equivalents, many manufacturers have released more affordable models in recent years, bringing the average price down. It’s also important to remember that the purchase price is just one part of the equation. When you look at the total costs of owning an EV over time, you could actually end up saving money. Deciding on a car is always a big decision, so if you’re wondering whether an EV is right for you, here are some important questions about the short- and long-term costs to think through.

How much does it cost to purchase an electric car?

The cost will depend on a variety of factors, including the make and model. The good news is that automakers have expanded their EV offerings, so prices for some vehicles start at around $30,000. However, the price of the car is just one part of the story.

Tax credits can help lower the costs of an EV. Certain federal and state tax incentives may be available for qualifying EVs and vehicle owners. (Tax rules continue to change, so be sure to visit the IRS website for details.) Similarly, check if your company offers partial reimbursements for EV purchases. Remember, you could also lease an EV, as certain manufacturers offer their own financial incentives.

The basics: fully electric or plug-in hybrid

There are many types of EVs—some run solely on battery power (meaning they are fully electric), whereas others, known as plug-in hybrids, run on fuel and electricity. Let’s look at a few important differences.

 Fully electric

 Plug-in hybrid



Average price of $50,6831

More than a comparable fuel-powered car but usually less than a fully electric version, with an average price of $40,1612



Relies exclusively on a battery pack

Uses fuel and a battery pack



No gas engine means oil changes not required

Upkeep is like a traditional car



Just under $5,000, or nearly 10% of the transaction price.1

Same qualifying incentives as a fully electric vehicle



No tailpipe emissions

Lower emissions than fuel-only cars



As much as $14,500 on fuel costs over 15 years, according to the U.S. Department of Energy

Not as much as a fully electric car because it still needs fuel

1 Kelley Blue Book, as of September 2023

2, as of November 2023

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Is the cost of owning an electric car cheaper than a fuel-powered car?

Though EVs have higher upfront costs, owning one is typically more cost-effective in the long run. It all boils down to fuel, maintenance and tax incentives. For starters, charging an EV costs far less than filling a traditional car with fuel. What’s more, electric vehicles typically require less maintenance and repairs overall—service costs are about 30 percent less than fuel-powered vehicles after three years on the road because EVs have fewer parts. (However, EV batteries can be expensive to fix or replace, even as their production costs have fallen over the years.) Beyond your out-of-pocket expenses, it’s also important to consider other things like the environmental cost of burning fuel and the resale value of EVs, which tend to be in the same general neighborhood as traditional cars.

How much does it cost to charge an electric car?

If you’re charging your EV on the go—at a travel station or dealership, for example—the cost can range from $10 to $30 depending on location and type of charger. (Some EV purchases or leases come with free charge ups through partnerships with local retailers.) But you’ll likely do most of your charging at home, which is cheaper than charging at a public station but requires an initial investment: an in-home charging station can cost between $1,000 and $4,500, including installation. The U.S. Department of Energy site can help you find rebates, tax deductions and electricity discounts in your state to help offset the expense. Another way to save time and money is to see if your employer offers an on-site charging station.

How much will my home electric bill go up if I install a charger?

Though there are many factors that influence this cost—how your home is wired, what type of charging station you choose, for example—typically your utility bill will go up by about $30 to $50 per month. To calculate how much it would cost to charge your EV at home using a standard outlet, multiply your vehicle’s kilowatt-per-100 miles by your local electric rate.

How much does it cost to insure an electric car?

Insurance for an EV may cost more than insurance for a fuel-powered car. However, insurance premiums are also based on factors such as the model of the car, your driving history and your location. Whichever car you buy or lease, make sure you shop around for the best insurance rates.

There are many variables to consider when evaluating if an EV is right for you. But if you take them into consideration, you can find the right outcome.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.

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