Thinking About an Electric Vehicle?

April 11, 2024

Share this article

What we’ll cover:

Electric vehicles have become more popular in the last decade.
They could be a good option for people who want to help reduce harmful emissions and save some gas money.
Fuel, maintenance and insurance are just a few important operating costs to keep in mind as you’re shopping for an electric vehicle.

It’s hard not to marvel at how many electric vehicles (EVs) are on the roads these days.

According to the International Energy Agency, EV sales exceeded 10 million in 2022 and continued strongly through 2023. It’s fair to say that electric cars have developed a serious following. In fact, Goldman Sachs Research analysts expect EVs to make up 50% of global new car sales by 2035.

Unlike a decade ago, there are many electric vehicle brands and models to choose from these days. They come with different driving ranges, fuel economies, and charging options – drivers could easily find a vehicle that suits their needs and wallets.

If you’re thinking about making the switch over to EV, there are a few key ownership costs you’ll want to factor in as well. Let’s take a look at three below.

3 key electric vehicle costs to consider

When you’re shopping for a car, the sticker price is usually the first thing that jumps out at you. Generally speaking, the purchase price for electric vehicles can be higher than that of conventional gasoline vehicles – whether we’re looking at BEVs (battery electric vehicles or all-electric vehicles), PHEVs (plug-in hybrid electric vehicles) or HEVs (hybrid electric vehicles that cannot be plugged in for recharging).

But owning a car (whether electric- or gas-powered) also comes with other operating costs to consider, such as fuel, maintenance, and insurance.

Good to know: Certain federal and state tax incentives may be available to EV owners. For instance, the federal Clean Vehicle Tax Credits may be available for qualifying purchases. Visit the IRS or talk to your tax advisor to learn how these credits work.

1. Fuel costs

One potential upside to owning an electric vehicle like a plug-in hybrid is not having to go to the gas station as often (or at all if you own an all-electric car). Many electric vehicle owners can “fuel up” by simply plugging in their car and charging it at home.

Aside from the convenience, charging your electric vehicle at home might be less expensive than paying for gas. Generally speaking, the average EV driver may spend 60% less to power their vehicle than the owner of a gas-powered vehicle, according to a June 2023 report by Consumer Reports.

However, overall fuel costs will depend on a number of variables, including how you drive your electric car, its fuel economy rating, and the cost of electricity in your state. If you know the car models you’re shopping for, the US Department of Energy has a website that lets you look up and compare fuel economy ratings between cars.

While an average EV owner may not have to shell out as much money for gas, there are other fuel-related questions to take into consideration. For example:

How much would it cost to fuel up at a public charging station?
How long does it take to charge an electric vehicle?
How far would a single charge take you (that is, what’s the travel range per charge)?
Do you need to make or pay for any upgrades at home to accommodate the vehicle’s charging needs? And if so, how much would the necessary upgrades (think: equipment and labor) cost?

2. Maintenance and repair costs

Almost every car owner knows that once you’ve purchased a vehicle, you have to take care of it with regularly-scheduled maintenance. This can include oil changes, tire rotations, and other general repairs for wear and tear.

Even though it’s hard to break down the costs exactly, there’s a general agreement that EVs typically cost less than gas-powered cars to maintain. And that’s because electric vehicles have fewer moving parts and fluids to swap out or top off, which could mean fewer trips to the car shop.

Consumer Reports has found that electric vehicles cut repair and maintenance costs by 50% over similar gas cars. That said, keep in mind that this estimate can only give you a general sense of what you may expect with EVs. Actual maintenance and repair costs can vary depending on how you drive the car, vehicle warranties, and auto part costs.

Let’s take the battery unit as an example. How long do electric car batteries last?

While many EV batteries are expected to have a long lifespan (up to about 15 years under certain conditions), they’ll eventually need to be replaced. Depending on your specific model, batteries for electric vehicles can run anywhere from $4,000 to $20,000.

Reaching your goal starts with saving for it.

See your saving options

3. Auto insurance costs

Electric vehicles can cost more to insure than gas-powered vehicles. That’s because auto parts for EVs can cost more to repair or replace (versus those for gas-powered vehicles). In addition to more expensive parts, the labor costs for repairs could be potentially higher as well.

According to Progressive, a leading auto insurer: “There aren’t as many repair shops with technicians trained to fix electric vehicles versus traditional vehicles. That means those qualified facilities may charge more for repairs because of the specialized training required.”

Also, as we mentioned earlier, EVs generally come with a higher sticker price compared to gas-powered vehicles. So if you were to completely wreck your electric vehicle, your insurance company would likely have to pay a higher claim to replace it.

Vehicle cost calculator

It can be hard to keep track of the various cost considerations when thinking about buying an EV. As you do your comparative shopping, check out the Vehicle Cost Calculator provided by the US Department of Energy. The tool will ask you a few basic questions about your driving habits and then allow you to compare specific electric vehicle models to help give you an idea of their lifetime ownership costs.

The calculator can give you an estimate of the following:

Annual fuel use (excluding electricity)
Annual electricity use
Annual fuel/electric cost
Annual operating cost
Annual emissions
Cost per mile

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions.