Is buying an electric car worth it?

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

Managing Editor & Certified Financial Planner™

Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

Published October 11, 2019 | 4 min read

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Gas prices cost more than double what they did 20 years ago. Fuel is one of the most expensive parts of owning a car.

While there are ways to reduce car costs, some Americans are turning to electric cars to get from point A to B. Almost 900,000 electric vehicles were on the road in 2018, and sales were up 40% last year, according to the Edison Electric Institute. But is buying one worth it?

What is an electric vehicle?

An electric vehicle is any type of car that can be powered by electricity. There are two types: all-electric vehicles and hybrids. Purely electric cars run completely from a battery or fuel cell. Drivers can plug them into an external electric power source. Hybrids take both gas and electricity, and don’t need to be plugged in.

Examples of electric vehicles include the Nissan Leaf, Chevrolet Bolt and Tesla. Tesla is one of the more popular (and talked about) electric car companies. Most Tesla models are expensive, but require less maintenance than other luxury vehicles. Learn how how much it actually costs to own a Tesla here.

Should you get an electric car? The financial benefits often outweigh the drawbacks, said Kelsey Mays, senior consumer affairs editor for, an automotive marketplace. Whether an electric car is right for you depends on how much you use it.

“For a lot of electric vehicles the primary usage is going to be commuting,” said Mays.

Some drivers use their electric cars for road trips. Elaine Borseth has owned her Tesla Model S for almost five years. She has gone on multiple cross-country road trips in her car, which she writes about on her blog, “Coast to Coast Tesla”.

She said electric cars can support any type of lifestyle.

“There’s virtually no maintenance to them,” she said. “I don’t know of a single drawback.”

Here’s a breakdown of the financial benefits and drawbacks to buying an electric car.

Financial benefits to electric cars

Electric cars not only reduce your carbon footprint, they can save drivers thousands of dollars each year. The average cost of electricity for a Chevrolet Bolt — according to DOE calculators — is about $430 per year, given typical driving. In comparison, the average driver spends $1,500 per year on gas, according to AAA.

Fuel costs vary significantly by vehicle type, ranging from 3.68 cents per mile for an electric vehicle to 13.88 cents per mile for a pickup truck. New vehicle owners, on average, will spend a little more than 10 cents per mile – about $1,500 annually — to fuel their vehicles.

Electric costs also vary widely by state. Certain states, like Alaska, Hawaii and California have a high cost of energy in general, which could drive up your electric bill, said Mays. But costs will still be lower than owning a car that uses gas.

Buyers can also get a federal tax credit of up to $7,500 with the purchase of an all-electric or plug-in hybrid car. The size of the tax credit depends on the size of the vehicle. Some states also have their own tax credits for electric cars. Learn more at the Department of Energy website.

There is a caveat: The tax credit is only available for each manufacturer until 200,000 vehicles have been sold. Currently, no manufacturers have been phased out yet, but Mays expects the credit to begin phasing out for some manufacturers by the end of the year.

Drawbacks to electric cars

Electric cars are typically more expensive up front. They also require additional infrastructure, like a charger, which can be an additional few hundred bucks, said Mays.

“It's really important to consider what your utility costs are at home,” he said. “Assuming that you're not gonna do anything really substantial, like put solar panels on the roof of your house.”

Learn if you should go solar to save electricity.

Depreciation also impacts the lifetime cost of owning an electric car. The AAA reported that in 2017, electric cars lost $5,704 off their original value, which is higher than most average cars.

Many current electric cars have 200-plus mile ranges, she said. But it’s important to think about where you can plug your vehicle in, when you would be able to charge it and what type of charger you would need.

If you end up using the car for road trips or other long trips, “chances are you’re going to have to find a place to charge your car,” said Mays. “And just because there's a place listed online to charge doesn't necessarily mean the infrastructure's currently working.”

Borseth said she’s never had a problem finding somewhere to charge. Whenever she needs to stop to charge her car during a road trip, which takes about 40 minutes, she uses it as a chance to recharge herself.

“I go for a walk, read a book, grab a bite to eat,” she said. “It’s a nice break. It’s an enjoyable experience.”

Want to learn more? Here’s a guide to getting car insurance for electric vehicles.

Image: Marco Vacca

Not sure what money moves to make in this turbulent economy? Check out our free e-book on surviving (and thriving) financially during a recession. You can download it here.

This article originally misstated the amount the average driver spends on gas. It is $1,500, not $8,469.