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8 min read Published August 15, 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers with the ways and pitfalls of borrowing money to buy an automobile. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to take control of their finances with concise, well-studied facts that break down complicated topics into bite-sized pieces. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your money for over four years. We strive to continuously provide our readers with the professional guidance and the tools necessary to succeed throughout life’s financial journey. Bankrate follows a strict policy, so you can trust that our content is honest and precise. Our award-winning editors and reporters produce honest and reliable content to help you make the right financial choices. The content we create by our editorial team is factual, objective and uninfluenced through our sponsors. We’re honest about the ways we’re capable of bringing high-quality information, competitive rates and useful tools to our customers by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods or services, or by you clicking on specific links on our site. This compensation could affect the way, location and when products appear within listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other home lending products. Other factors, like our own rules for our website and whether a product is offered in your region or within your self-selected credit score range can also impact how and where products appear on this website. While we strive to provide a wide range offers, Bankrate does not include information about every credit or financial item or product. One in four consumers who are considering buying a new car is buying a hybrid or electric car like they would gasoline-powered vehicles as per (KBB). And choosing electric vehicles — or any alternative fuel vehicle — could prove worthwhile for both your wallet and the environment. However, before you go to the dealership it is sensible to consider electric vehicles and know the difference in cost of ownership. What exactly is an electric vehicle? The EV market has been growing in popularity in recent times particularly as awareness of climate issues continues to grow. This, in conjunction with the high cost of gas has led to drivers looking to save money by driving electric. In contrast to the gas-powered cars that are commonly on the roads and in parking lots, EVs have a motor that is powered by a battery. There are three kinds that are electric cars. Hybrid electric vehicles (HEVs) Powered by both an electric motor as well as an internal combustion engine, HEVs have the power of a gas-powered traditional vehicle but with the added benefit of better efficiency in fuel consumption. There is no charge for an HEV as you would with its EV-powered counterparts, but instead batteries are charged through the engine. There are a large variety of makes and models of HEVs that are available in the marketplace. Some highly rated options according to KBB include that of the Honda Accord Hybrid, the Toyota RAV4 Hybrid and the Hyundai Elantra Hybrid. Plug-in hybrid electric vehicle (PHEVs) Plug-in hybrids is just as it sounds, a hybrid vehicle that is charged through a plug. It’s powered by an internal battery within the vehicle that is charged through another cable. They also make use of other fuels, typically gasoline to power their internal combustion engines (ICE). This type of vehicle uses the electric charge until it’s spent and then taps into its ICE capabilities. The options for PHEVs are smaller, but KBB’s top choices are the Ford Escape SE Plug-in Hybrid and the Hyundai Tucson Plug-in Hybrid as well as the Kia Niro Plug-in Hybrid. Fully electric vehicles (EVs) Fully electric vehicle increases the quality and is powered completely with an electric motorwithout ICE or an alternative fuel source involved. These vehicles have a battery pack which powers the vehicle. It is charged in the same way to a PHEV. Electric vehicles are charged using an outlet that is specifically designed for them. Although charging stations can be located in the local area, it is essential to be aware of the extra costs for a station to charge, if you are considering a full EV. KBB’s top fully-electric choices include The Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. Cost of electric in comparison to. gas cars Before diving in the deep end of electric and hybrid cars it is essential to know the cost differences between electric and gasoline. While it is true that driving an EV can come with lower overall costs however, the initial cost is a roadblock for many. Recently, purchasing a brand new vehicle is expensive regardless of its power source. July 2022 saw record high average transaction prices for new vehicles of over $48,000, as per . However, the cost for an EV is higher than the gas-powered alternative. According to the KBB estimates for an EV is more than $60,000- which aligns with an average luxury vehicle price tag. However, it is predicted that the EV market to reach 40 % by the year 2031 according to . This estimation is supported by more vehicles hitting the market. And, fortunately, this growth in EV availability serves as an opportunity to equalize. If more people are considering purchasing electric vehicles, the average cost will go down. This growth is already clear in the variety of new models entering the market. For the quarter that began in early 2022, 4.64 percent of new vehicle registrations were electric vehicles, while 7.18 per cent were hybrid vehicles, as per Experian’s report on automotive market trends. This resulted in a 60.4 percent growth for EVs in one quarter in 2022 and the same for hybrids, with a 10.7 percent increase for hybrids. Cost to own electric in comparison to. gas-powered cars Although the initial cost of purchasing the next car is crucial, it is also important to consider the expense of maintaining and own the vehicle over the course of its ownership. Look at the five-year cost-to-own comparision for two popular cars, according to Edmunds. The first model, a 2022 Chevrolet Bolt EV, comes in at $31,955 MSRP . It comes with a huge space, a spacious cabin and a well-rated handling. The second, 2022’s Mazda 3, is a well-known gas-powered model with a lower MSRP of $24,115 that offers an elegant interior, a smooth ride and turbocharged engines. Take into consideration how the costs accumulated over five years of car ownership affect which model you’d like to purchase. 2022 Chevrolet Bolt EV
2022 Mazda 3
Vehicle depreciation
$8,767
$6,700
Fees and taxes
$2,603
$1,814
Financing
$2,921
$2,309
Fuel
$2,283
$11,255
Insurance
$5,411
$3,941
Repairs
$731
$666
Maintenance
$2,806
$4,592
True cost to own
$25,522
$31,277 Fuel On the most basic scale, driving an electric vehicle means no more trips to gasoline stations. A study conducted in 2020 found that EV owners spend on average 60 percent less money to fuel their cars. The cost difference of gas between Chevy and the Mazda is much higher than that average. But getting power for your EV is not so simple as picking regular middle-priced or premium. EV charging can be divided into three options that all have different benefits and costs. One charging. This is the most commonly used form of charging and is accessible through the same outlet you charge your phone using. They are the least efficient charging options that provide up to five and two miles charging per hour. Level two charging. These chargers, usually installed in garages utilize the same power as your washing machine. You could get between 10 and 20 miles of charging in just an hour. Level three charging. Also known as DC charging, these are available in public settings. They’re the fastest option and drivers can receive the full charge of 80 percent in only 20 minutes. Similar to how washing your machine multiple times in succession will cost you more electricity, the additional cost incurred by charging at home could increase. This cost per month is added to the cost for installing an at-home charger that can vary from $300 to $50,000, according to the size of charge. Keep in mind that many communities have access to chargers, meaning you might not have to shell out to install it right away. Visit a free EV station map, to find chargers in your area. Finance Although you are able to finance a cargasoline or electric powered — by applying on the internet or in person with several lenders prior to deciding on the , financing a green car may come with some added perks. These loans are available to those looking to finance electric cars. These kinds of loans are usually offered through a credit union and generally offer lower rates of interest than conventional auto loans. You may also qualify for , a financial incentive which is offered in certain states in the U.S. You can benefit from a credit worth up to $7500, based on the state you reside in. Insurance Insuring your vehicle is an essential part of owning a vehicle that safeguards you along with your passengers. carries the same approach you’d use to cover the standard vehicle options. It will cover the bodily injury, collision, liability and comprehensive coverage. Like any other vehicle, your exact price will depend on a variety of aspects. However coverage for EV is typically more expensive than traditional gas-powered options. One reason is the price of the vehicle parts. A minor accident could result, for example in the requirement for a replacement battery — which can be priced at upwards of $15,000. Bankrate looked at 12 models of vehicles that were provided by Quadrant Information Services and concluded that, on average, premiums will be higher for electric vehicles. This is evident by the higher insurance rates expected for Bolt over the Mazda 3. Bolt as compared to Mazda 3. Pros and disadvantages of electrical cars electric vehicles may provide a drive that’s better for the environment and your wallet over the long term However, they do have negatives. Advantages of electric cars A few advantages of driving an electric car are the following: less maintenance. Electric cars need fewer trips to the mechanic which means savings on expenses, such as oil changes and brake system checks. Costs are lower over the lifetime of the car. Vehicle ownership can be expensive however EVs carry a lower lifetime cost. Better environmentally. They do not release pollutants from the tailpipe and are therefore more suitable for local air quality and overall emission of greenhouse gases. Advanced technology can be found. A lot of the latest electric cars come with advanced control panels and mobile applications to manage and monitor the vehicle. The cons of electric cars A few disadvantages of driving an EV are: Higher cost to purchase. On average, buying an EV carries a steeper price upfront, averaging $12,000, as per KBB’s July 20, 2022 average transaction prices. The fear of range. Charging stations can be few and far between in some areas, leaving some drivers stressed while searching for a location to charge their power. Faster vehicle depreciation. The deterioration of batteries and incentives for vehicles result in a rapid loss of value in the case of electric vehicles. The cost of installing an electric charging station. If you prefer the convenience of charging in your home installation could cost as much as $50,000. Is an electric car right for you? If your next set of wheels should be electric should be thought of similar to how you’d pick which model or style of traditional vehicle is best for you.take into consideration your lifestyle and preferences. If your commute works using the options the EV provides or you prefer the sleek style and environmental benefits, then an EV may be a great option. If however, jumping into an all-electric EV is too much of a financial commitment you might want to look into , or opt for a hybrid or plug-in if you’re set on buying. Hybrids and PHEVs typically be less expensive upfront and provide the savings advantages that an electric vehicle does. Consider these main aspects when shopping for a car to make sure that an EV is worth investing in. The range of your vehicle If you’re on a long commute to work and do not have access to charging stations on the way or at your destination, take into consideration the vehicle range that the car you are considering buying. The typical battery’s range will differ significantly based on the model. Make sure that you don’t buy a vehicle that can’t be easily charged for your daily outings. Chargers available before heading to the dealership to browse, check for access to charging stations in your region or consider the cost of the installation and maintenance of an in-home charging station. This involves weighing the level one, two and three options based on your requirements. Your lifestyle Not only is it important to consider your lifestyle in terms of form but also as a function. EVs tend to operate differently from what you are familiar with. Because of its dependence on regenerative braking, as an instance, you could expect slower brakes, but a more smoother overall experience. The final word: the cost to own an EV can be less expensive than a gas-powered option. Even with steeper vehicle depreciation as well as higher insurance costs and financing costs, the lower maintenance costs and the five-year time frame for owning an EV makes it a promising choice. As a car buyer, it is important to consider which costs are important most to you, and whether EV fits the rest of your lifestyle. Questions about how long it will take to charge an electric vehicle? Based depending on the dimensions of your car’s battery, charging could be as short as 30 minutes, or up to 12 hours. The best way to go is to recharge your electric car in smaller amounts instead of all at one time in order to decrease the charge time. How much does it cost for charging an electric car? The exact cost to charge will vary by location due to varying electricity costs, the price is based on the range available and cost per kilowatt (kWh). In California for instance electric power is typically 18 cents per unit which means that an electric car that has a range of 150 miles will fall somewhere about $7 for a complete charge. How long will battery packs for electric vehicles last? The batteries in an EV can last between 10 to 20 years, until they require a complete replacement.
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers in navigating the ways and pitfalls of borrowing money to purchase cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances through providing clear, well-researched details that cut otherwise complicated topics into digestible pieces.
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