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8 minutes read. Published August 15, 2022
Authored by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ins and outs of securely borrowing money to purchase a car. Written 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 the confidence to control their finances through providing precise, well-researched and well-studied information that breaks down otherwise complex topics into manageable bites. The Bankrate promises
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If you have questions about money. Bankrate can help. Our experts have been helping you master your money for over four decades. We strive to continuously give our customers the right advice and tools needed to make it through life's financial journey. Bankrate follows a strict policy, which means you can be sure that our content is honest and accurate. Our award-winning editors, reporters and editors provide honest and trustworthy content to help you make the best financial decisions. The content created by our editorial staff is factual, objective and uninfluenced from our advertising. We're open about how we are capable of bringing high-quality content, competitive rates and helpful tools to you , by describing how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products andservices or through you clicking certain hyperlinks on our website. Therefore, this compensation may affect the way, location and in what order products are displayed within the categories of listing and categories, unless it is prohibited by law. This is the case for our mortgage home equity, mortgage and other home loan products. Other elements, such as our own proprietary website rules and whether the product is offered in the area you reside in or is within your self-selected credit score range can also impact how and where products appear on this site. We strive to offer the most diverse selection of products, Bankrate does not include the details of each credit or financial products or services. One-in-four consumers who are considering buying a new car is buying a hybrid or electric vehicle like they would the traditional gas-powered vehicle, according to (KBB). And choosing electric -- or an alternative fuel vehicle -- can prove to be worthwhile both for your pocket as well as the environment. Before you head to the dealership , it's sensible to consider electric vehicles and be aware of the differences in the cost of ownership. What exactly is an electric vehicle? The EV market has been growing in popularity in recent years and especially as the understanding of climate-related issues continues to grow. This, along with rising gas prices, has caused drivers to save money 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 of electric vehicles. Hybrid electric vehicles (HEVs) are powered by an electric motor and an internal combustion engine HEVs have the power of traditional gas-powered vehicles with the benefit of improved efficiency in fuel consumption. It is not possible to charge an HEV as you would with its EV-powered counterparts, but instead it charges the battery via the engine. There is a wide range of brands and models of HEVs available in the marketplace. Some highly rated options as per KBB include the Honda Accord Hybrid, the Toyota RAV4 Hybrid and the Hyundai Elantra Hybrid. Plug-in hybrid electric vehicles (PHEVs) A plug-in hybrid is, as the name suggests it's a hybrid car that can be charged by plugging it into. It is powered through a battery pack inside the vehicle and charged through the external cables. They also make use of another fuel, usually gasoline to power the internal combustion engine (ICE). This type of vehicle uses the electric charge until spent and then taps into its ICE capabilities. The options for PHEVs are a bit slimmer, but KBB's top choices include that of Ford Escape SE Plug-in Hybrid, the Hyundai Tucson Plug-in Hybrid and the Kia Niro Plug-in Hybrid. Fully electric vehicles (EVs) The fully electric vehicle ups the ante and is powered completely with an electric motorwithout ICE or an alternative fuel source involved. These have a battery pack that powers the vehicle and is charged in the same method to PHEVs. Electric vehicles are charged using an outlet designed specifically for them. While charging stations are found locally, it is essential to be aware of the extra expense for a station to charge when you are considering an all-electric. KBB's top fully electric options include the Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. The cost of electric vehicles in comparison to. gas vehicles Before you dive in the deep end of hybrid and electric cars, it is important to understand the cost differences between electric and gasoline. Although driving an EV can come with lower costs overall, the upfront price tag could be a roadblock for many. Lately, buying a new car can be expensive regardless of its source of power. July 2022 was a record month for average transaction prices for new cars of more than $48,000, as per . However, the cost for an EV is still more expensive than a gas-powered option. According to the KBB estimate for an EV is more than $60,000which is in line with the average luxury car price. But it is forecasted the EV market will reach 40 % by the year 2031 according to . This prediction is supported by the increasing number of vehicles entering the market. It is a good thing that this rise in EV availability serves as a potential equalizer. When more consumers are looking into purchasing electric vehicles their costs will drop. This growth is already clear in the number of new models coming onto the market. In the first quarter of 2022 4.64 percent of new car registrations were EVs, and 7.18 percent of them were hybrids as per Experian's report on automotive market trends. This resulted in 60.4 percent increase for EVs over one quarter in 2022 and a 10.7 percent increase for hybrids. Cost of owning electric vehicles in comparison to. gas-powered cars Although the upfront cost of your next vehicle is vital, you should also consider the cost to maintain and maintain the car over the lifetime of ownership. Look at the five-year cost-to-own comparision for two top sedans according to Edmunds. The first model, a 2022 Chevrolet Bolt EV, comes in at $31,955 MSRP . It offers a wide capacity, spacious cabin, and well-rated handling. The other, 2022's Mazda 3, is a popular gas-powered option with a price tag of $24,115 that offers an elegant interior, a smooth ride and a turbocharged engine. Take into consideration how the costs accumulated over five years of vehicle ownership influence which vehicle you would prefer. 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
Cost of ownership for the real thing
$25,522
$31,277 Fuel At the most basic level, driving a fully electric vehicle will mean the end of having to petrol stations. In a study for 2020, found that EV owners will pay, on average, 60% less to fuel their cars. The difference in cost of gasoline between Chevy as well as the Mazda is much higher than the typical. But getting power for your EV is not easy as simply choosing standard, midgrade or high-end. The charging process for EVs can be divided into three different options that have different benefits and costs. The first option is charging at a level one. The most popular type of charging that is accessible via the same outlet you charge your smartphone with. They are the most slow charging options that provide between two and five miles of charge per hour. Level two charging. These chargers, typically installed and located in your garage utilize the same power that your washing machine would. You could get between 10 and 20 miles of charging in just an hour. Level three charging. Also called DC charging These are accessible in public spaces. They're the fastest method and motorists can receive an 80 per cent charge in just 20 minutes. Similar to how washing your washer several times in a row will increase your electricity bill and the extra cost when charging at home can add up. The ongoing expense is on top of the one-time average price for installing an at-home charger -- which can range from $300 to $50,000, dependent on the capacity of the charger. Keep in mind that many communities have access to chargers, meaning you might not need to pay for installation right away. Check out , a free EV station map, to locate chargers within your area. You can finance your car- electric or gas powered -- simply by applying on the internet or in person with several lenders prior to deciding on the best option, financing a green car may come with additional benefits. For those who want to finance their electric vehicle. These kinds of loans are usually offered through a credit union and tend to have lower interest rates than traditional auto loans. There is also the possibility of qualifying for a financial incentive that is available in certain states of the U.S. You can benefit from a credit worth up to $7,500, depending on your home state. Insurance Insurance is an essential aspect of owning a vehicle that safeguards you along with your passengers. This policy follows the same route you would take to cover the traditional vehicle option. It will include the bodily injury, collision, liability and comprehensive coverage. And as with any vehicle, your exact price will be based on a variety of aspects. However coverage for EV is typically more expensive than traditional gas-powered options. The reason for this is due to the cost of the vehicle's parts. An accident of a minor nature could result, for example, in the need for a replacement battery which could cost upwards of $15,000. Bankrate examined 12 car models supplied by Quadrant Information Services and concluded that, on average the cost of insurance will be higher for electric cars. This is evident in the higher insurance rates projected for the Bolt as compared to Mazda 3. Pros and disadvantages of electrical cars electric vehicles may provide a drive which is healthier for the planet and your pocket in the long term, but they're not without negatives. The advantages of electric vehicles Some benefits to driving an electric vehicle include less maintenance. Electric cars need fewer visits to the mechanic, which means lower costs for expenses for oil change and brake system checks. Costs are lower over the lifetime of the car. Car ownership can be costly, but EVs have a lower life cost. Better for the environment. Electric vehicles do not emit pollutants from the tailpipe which is why they are more suitable for local air quality as well as general emission of greenhouse gases. The latest technology is readily available. Many newer electric car models include advanced control panels and mobile applications to manage and monitor the vehicle. There are cons to electric cars. Some drawbacks that come with driving an electric car include: higher cost of purchase. In the average, purchasing an EV carries a steeper initial cost, which is close to $12,000, as per the average KBB July 2022 transaction prices. The fear of range. Charging stations are often few and far in certain locations, leaving motorists feeling anxious when looking for a spot to recharge their electricity. 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 being able to charge at your own home, installing a charging station could cost you up to $50,000. Is an electric car right for you? if your next set of wheels will be electric, it must be considered in the same way that you'd pick which model or style of a traditional car is right for you -- focus on your lifestyle and preferences. If your commute is compatible with the available range an EV offers or if you are a fan of the sleek look and environmental benefits, then an EV might be the best option. But if jumping into an all-electric EV is too big of a financial investment, you may want to consider the option of the hybrid or plug-in option in the event that you're considering buying. Hybrids and PHEVs typically cost less upfront and still carry some of the money-saving benefits that a fully electric car can offer. Consider these main aspects when you are shopping to make sure that an EV is worth your investment. The range of the vehicle If you're accustomed to a lengthy commute and don't have access to charging stations along the route as well at the destination you are heading to, take into consideration the range of the car you are considering buying. The battery's range of use can differ greatly based on the type of car. Be careful not to purchase a car can't be easily charged for your daily outings. Access to chargers Before going to the dealership to shop look for chargers in your neighborhood or think about the expense of the installation and maintenance of an at-home charger. This is a way of weighing the levels one, two, and three options with your needs. Your lifestyle Not only is it crucial to think about your lifestyle in terms of form but also as a terms of its function. Electric vehicles tend to function differently than what you may be used to. Due to its reliance on regenerative brakes, for example, you can expect a slower brake but a more smoother overall experience. The bottom line The true price of owning an EV is less than a gasoline-powered vehicle. Even with a higher rate of depreciation and potentially higher insurance and financing, the less maintenance cost and the five-year period for owning an EV can make it a viable choice. For a potential car buyer, it is important to decide which expenses matter most to you, and whether EV fits the rest of your life. FAQs How long does it take to charge an electric vehicle? Depending on the size of your vehicle's battery, charging could take as few as 30 minutes or as long as 12 hours. It is recommended to charge your electric vehicle in smaller amounts instead of all at once in order to decrease the time to charge. What's the price to recharge an electric vehicle? While the exact price for charging will vary based on region due to the different prices for electricity, the cost is based on the range available and cost per kilowatt (kWh). In California for instance the average electricity price is 18 cents per unit, therefore an electric vehicle with a range of 150 miles would fall somewhere between $7 and $7 for a full charge. How long will the batteries in electric cars last? Batteries found in an EV can last between 10 to 20 years before they need a full replacement.
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The article was 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 borrowing money to purchase a car. 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 manage their finances with precise, well-studied information that breaks down otherwise complex subjects into bite-sized pieces.
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