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8 min read published August 15, 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the ways and pitfalls of taking out loans to buy cars. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances through providing precise, well-researched and well-studied information that breaks down complicated topics into bite-sized pieces. The Bankrate guarantee
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So, this compensation can influence the manner, place and in what order products appear within listing categories and categories, unless it is prohibited by law. This is the case for our mortgage or home equity products, as well as other products for home loans. Other factors, like our own website rules and whether or not a product is available within your region or within your personal credit score can also impact how and where products appear on this site. We strive to offer an array of offers, Bankrate does not include the details of every credit or financial product or service. One-in-four consumers who are considering buying a new car is buying a hybrid or electric car similar to gasoline-powered vehicles According to (KBB). Making the switch to electric vehicles -- or any alternative fuel vehicle -- can prove to be worthwhile for your pocket as well as the environment. Before you head to the dealership it is wise to electric vehicle options and know the difference in cost of ownership. What is an electric car? The EV market has been growing in popularity in recent years and especially as the understanding of the environmental issues continues to grow. This, combined with and the high cost of gas has led to drivers looking to save money by driving electric. Unlike the typical gas-powered vehicles on the roads and in parking lots, EVs have a motor which is powered by batteries. There are three kinds of electric vehicle. Electric hybrid vehicles (HEVs) are powered by an electric motor and an internal combustion engine HEVs boast the strength of a traditional gas-powered vehicle and the benefits of improved performance and fuel efficiency. There is no charge for an HEV as you would with its EV counterparts but rather it charges the battery through the engine. There are many varieties of brands and models of HEVs for sale. The top-rated models according to KBB are 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 it is a hybrid vehicle you plug in to charge. It is powered through a battery pack inside the vehicle that is charged through the external cables. PHEVs also use other fuels, typically gasoline, to power the internal combustion engine (ICE). This kind of vehicle utilizes an electric battery until it's consumed and then taps it's ICE capabilities. The options for PHEVs are a bit slimmer, but KBB's top choices include those of the Ford Escape SE Plug-in Hybrid, the Hyundai Tucson Plug-in Hybrid as well as the Kia Niro Plug-in Hybrid. Fully electric vehicles (EVs) Fully electric vehicle ups the ante and is entirely powered by an electric motor -there is no ICE or alternative fuel sources involved. These vehicles have a battery pack that powers the vehicle and is charged in the same method to PHEVs. They are charged via a specialized outlet. Although charging stations can be found locally, it is crucial to consider the additional cost of a charging station, if you are considering a full EV. KBB's top fully-electric choices include those like the Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. Price of electric vs. gas cars Before diving deep into the world of electric and hybrid cars it is important to understand the cost differences between gas and electric. While driving an EV will have lower overall costs but the initial price is a roadblock for many. In recent times, purchasing a 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 . But the average price for an EV is higher than a gas-powered option. According to the KBB estimates for an EV is over $60,000 -- which aligns with an average luxury vehicle price tag. However, it is predicted that by the EV market will grow to 40 percent by 2031 according to . This prediction is supported by the increased number of vehicles that are entering the market. And, fortunately, this increase in EV availability acts as a potential equalizer. As more drivers consider buying electric cars their costs will decrease. This growth is already clear by the increasing number of new models entering the market. For the quarter that began in early 2022, 4.64 percent of new vehicle registrations were EVs, and 7.18 per cent were hybrid vehicles, according to Experian's report on the automotive market trends. This made for a 60.4 percent growth in EVs over the first quarter of 2022, and a 10.7 percent increase for hybrids. Cost of owning electric vehicles as compared to. gas-powered cars Although the upfront cost of your next vehicle is vital, it is also important to consider the cost to maintain and keep the car for the life of ownership. Consider the five-year cost-to-own comparison for two popular sedans , as per Edmunds. The first is a 2022 Chevrolet Bolt EV, comes in at $31,955 MSRP and offers a wide range, spacious cabin and well-rated handling. The other, a 2022 Mazda 3, is a popular choice for gas powered vehicles with a lower MSRP of $24,115. It comes with an elegant interior, a smooth ride and an engine that is turbocharged. Take into consideration how the costs accrued over five years of ownership affect which model you'd prefer. 2022 Chevrolet Bolt EV
2022 Mazda 3
Vehicle depreciation
$8,767
$6,700
Taxes and fees
$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 At the most basic scale, driving an electric vehicle will mean the end of having to fill up at the gas station. In a study for 2020, discovered that EV owners will spend, on average, 60% less to fuel their cars. The price difference for fuel between the Chevy as well as the Mazda is much higher than the average. However, getting power to charge your electric vehicle isn't as simple as choosing regular high-end, mid-range or premium. Electric vehicle charging can be broken down into three different options that come with different costs and advantages. One charging. It is by far the most commonly used method of charging and is available through the same outlet that you charge your smartphone using. They are the least efficient charging options and offer between two and five miles of charging per hour. Level two charging. These chargers, typically installed and located in your garage are powered by the same electricity that your washing machine would. You could get up to 20 miles charge in just one hour. Level 3 charging. Also known as DC charging These are accessible in public spaces. They're the most efficient option and drivers can receive an 80 percent charge in just 20 minutes. Just as washing your machine multiple times in a row can add to your electric bill, the additional cost incurred from charging at home can be significant. This ongoing cost is in addition to the cost to set up an at-home charging station that could range between $300 and $50,000, according to the size of charge. But keep in mind that many communities are now equipped with chargers, meaning you might not have to shell out for installation right away. Visit a free map of EV stations to see chargers in your region. Financing Although you can -- electric or gas powered -- simply by applying online or in person with some lenders before settling on the , financing a green car may come with some added perks. serve drivers looking to finance an electric car. These types of loans are typically offered by a credit union and tend to offer lower rates of interest than conventional auto loans. You may also qualify for , a financial incentive offered in certain states in the U.S. You can benefit from a credit amounting up to $7500, based on the state in which you reside. Insurance Insuring your vehicle is an essential part of owning a vehicle that safeguards you along with your passengers. It follows the same method you would take to cover a conventional vehicle option. It will include collision, bodily injury, responsibility and comprehensive insurance. As with all vehicles, your exact price will be based on various factors. However, coverage for EV generally costs more than gas-powered options. One reason could be the price of the vehicle's parts. A minor accident could cause, for instance, in the need to replace a battery pack -- something that can be priced at over $15,000. Bankrate analyzed 12 vehicle models supplied by Quadrant Information Serves and discovered that on average, premiums will be higher for electric cars. This is evident by the higher insurance rates projected for Bolt over the Mazda 3. Bolt in comparison to the Mazda 3. The pros and cons of electric vehicles electric vehicles may provide a drive that is better for the environment as well as your wallet in the long haul, but they're not without downsides. The advantages of electric vehicles Some advantages to driving an electric vehicle include less maintenance. Electric vehicles require less visits to the mechanic, and that can result in lower costs for expenses for oil change and brake system inspections. A lower cost for the life of the vehicle. Car ownership can be costly, but EVs have a lower life cost. More sustainable environmentally. They do not release tailpipe air pollutants which is why they are better for local air quality as well as overall emission of greenhouse gases. Advanced technology can be found. Many newer electric car models include advanced control panels and mobile apps that allow you to control and monitor the car. There are cons to electric cars. Some negatives associated with driving an EV are: Higher cost to purchase. On average, buying an EV comes with a higher initial cost, which is close to $12,000 more, based on KBB's July 20, 2022 average transaction prices. Range anxiety. Charging stations can be few and far between in some areas, leaving some drivers feeling stressed when searching for a location to charge their energy. Faster vehicle depreciation. Battery deterioration and vehicle incentives result in a rapid loss of value when it comes to electric vehicles. Cost of installing the charging station. If you prefer the convenience of charging at home, installation could cost as much as $50,000. Are electric cars the right choice for you? if your next set of wheels will be electric, it must be thought of similar to how you'd pick which model or model of a classic car is the best fit for you- focus on your lifestyle and needs. If your commute works with the available range an EV offers or if you prefer the sleek style and environmental benefits, then an EV may be a great option. However, if committing to a full EV is too big of a financial investment, you might want to look into an alternative, such as a hybrid or plug-in in the event that you're considering buying. Hybrids and PHEVs typically cost less upfront and still offer the same money-saving benefits that a fully electric car can offer. Consider these main factors when shopping to ensure that an EV is worth your investment. The range of the vehicle If you have a long commute to work , and do not have access to charging stations on the route or at your destination, take into consideration the range of the vehicle that the car you are considering buying. The battery's range of use can differ significantly based on the type of car. Make sure that you don't purchase a car you cannot easily keep charged to go on your daily excursions. Chargers available before heading to the dealership to shop make sure you have access to chargers in your neighborhood or look into the cost of installing and maintaining an in-home charging station. This involves weighing the level one, two, and three options according to your needs. Your lifestyle It is not only important to consider your life style in terms of appearance but also in terms of its function. Electric vehicles tend to function differently from what you are accustomed to. Because they rely on regenerative braking, for instance, you could expect slower brakes, but a more comfortable overall driving experience. The final result The cost of owning an EV can be less expensive than a gas-powered option. Even with higher depreciation rates for vehicles and possibly higher insurance and financing, the less maintenance cost and the five-year period to own an EV is a good choice. As a car buyer, it is important to determine which costs matter most to you, and whether EV will fit into your lifestyle. FAQs What is the time it takes to take to charge an electric car? Depending depending on the dimensions of your vehicle's battery, charging could take as little as 30 minutes, or up to 12 hours. The best way to go is to recharge your electric car by smaller portions rather than all at once in order to decrease the time to charge. What is the cost to charge an electric car? While the exact price for charging will vary based on region due to the different electric costs, the charge is determined by the available range and price per Kilowatt (kWh). In California for example the average electricity price is 18 cents per unit which means that an electric car with a range of 150 miles would cost between $7 and $7 for a full charge. How long will battery packs for electric vehicles last? Batteries found in an EV will last between 10 to 20 years before 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 with the ins and outs of securely borrowing money to buy a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to control their finances through providing clear, well-researched information that breaks down complex topics into manageable bites.
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