72% of Americans Think EVs Are More Expensive. Are They Right?

Electric vehicle (EV) sales have skyrocketed in the last five years. So much so that a record 1.2 million Americans bought electric vehicles last year, according to Kelley Blue Book. But there is still a lot of confusion about how much electric vehicles actually cost.

That's partly because costs like auto insurance, maintenance, and fuel vary considerably depending on where you live and your driving habits.

Pew recently surveyed almost 9,000 people to get an idea of sentiment toward EVs. It found that 72% of people think EVs are more expensive to buy upfront, while 28% thought they also cost more to fuel. They are partly right.

What's interesting is that academic studies have found that the total cost of ownership is often cheaper for an electric vehicle than a gas one.

Electric vehicles often cost more to buy

A lot of people buy EVs because of the environmental benefits, but cost matters, too. Even though prices are coming down, it still costs more to buy an EV than a regular gas vehicle. The latest data from Kelley Blue Book shows the average cost of a new vehicle in July was $48,424, where EVs came in at $56,520.

Bear in mind that certain electric vehicles qualify for tax credits of up to $7,500. That considerably reduces the upfront price gap, though not all makes and models qualify for the credit. Essentially, the government wants the subsidies to go to vehicles that are mainly made in the U.S. from materials that are mainly sourced in the U.S.

When researching what EV to buy, pay attention to the tax credit rules and use the Energy.gov tool to make sure your car will qualify.

Electric vehicles often cost less to run

Even without subsidies, a study from the University of Michigan showed that EVs can be more cost effective than their gas counterparts over the lifetime of the vehicle. It also found that the costs of running an EV vary considerably, depending on where you live. If you're trying to find the most cost-effective vehicle, you need to sit down and estimate the ongoing costs for your situation.

Here are some factors to take into account when evaluating the total cost of owning an EV:

• Charging: Cost-wise, there's a big difference between at-home and public charging. EV drivers can also bank considerable savings by charging during non-peak hours. Think about the upfront costs of installing a charging station at home.
• Fuel: The research shows that fuel was more expensive in San Francisco and Los Angeles, which pushed up the recurring costs in comparison with EVs.
• Insurance: If you've ever rate-shopped for the cheapest car insurance, you'll know how much the cost can change from one insurer to another. Generally speaking, researchers found EV insurance costs more because of the higher purchase price of the car.
• Maintenance and repairs: The AAA estimates that electric vehicles cost $330 less than gas-powered cars to maintain because they don't need things like oil changes or air-filter replacements.

The Michigan researchers also accounted for extra costs of owning an EV, such as hiring a car to travel longer distances. Not only that, but they factored in the cost of the time you may spend caring for your car. You don't have to go into that level of detail, but it is good to keep in mind.

Key takeaway

It is no wonder that Pew's survey found a lot of confusion about EV costs. The electric vehicle landscape has changed dramatically in just a few years and continues to evolve.

If you factor in the total cost of owning a car, EVs often come out less expensive. But so much depends on where you live, what car you buy, how much you drive, how you plan to charge the EV, and more.

If you're considering buying an electric vehicle, look at the costs for your situation. Weigh the lower cost of fuel/charging and maintenance against higher initial outlay and insurance. It's good to know that a car that's better for the environment can also be better for your wallet, but it's important to do the math to be sure.