How to Make an EV Fit Your Budget

Prices of electric vehicles (EVs) are finally coming down, thanks to rising inventories, tax credits, dealer incentives, and cheaper batteries.

But will an EV save you money over the long term? Fully electric vehicles generally command higher prices, depreciate faster, and cost more to insure than gasoline-powered cars, although the gaps are narrowing. And you’ll probably want to install a fast, level 2 charger at home. But when it comes to fuel and maintenance costs, EVs win hands down.

If you factor in the total cost of owning a car over five years or leasing one for three, EVs can be cheaper than gas-powered vehicles, according to J.D. Power. In 2024, out of 48 EVs analyzed, 21 were more affordable to purchase and 29 were more affordable to lease.

In a similar study conducted in 2024, Vincentric found that 20 out of 41 EVs had a lower cost of ownership over five years than their gas-powered counterparts.

These averages can be misleading,though. When Tesla—which controls just under half the EV market—changes prices, it can sway industry averages.“Every single vehicle has to be looked at separately,” says Elizabeth Krear, a vice president in J.D. Power’s EV division.

It’s hard to compare EVs versus gasoline vehicles side by side because only a few models come both ways. Even when possible, it’s not a one-to-one comparison because automakers tend to load up EVs with fancier equipment, says Ronald Montoya, senior consumer advice editor with Edmunds.

That’s changing, though, as automakers try to reach mainstream buyers, says Stephanie Valdez Streaty, a director of industry insights with Cox Automotive. To get a rough idea of how much it might cost to own a specific EV (and compare it to other models) try using the AAA Your Driving Costs Calculator. This tool estimates the all-in cost over five years based on your state, vehicle, miles driven annually, and other details.

Just like any big purchase, buying an EV requires doing your homework. Here are factors to consider:

Price

Don’t fixate on MSRP. Many dealers are offering incentives that bring the purchase price below the sticker price. During the first seven months of 2024 compared to the same period in 2023, buyers paid $2,900 less for a mainstream EV and $2,300 less for a premium EV, according to J.D. Power. The average transaction price for an EV in July 2024 was $56,520, which was 1.5 percent lower year over year, according to Kelley Blue Book estimates.

Tax Credits

Buyers who make less than $300,000 a year (married and filing jointly) or $150,000 (single) can get a federal tax credit as high as $7,500 on a limited number of new EVs that undergo final assembly in North America and meet certain price and parts-sourcing requirements. Federal tax credits are also available on some used EVs. You’ll need to dig into the fine print at energy.gov to find out what’s available. Some states and utilities also offer rebates and tax incentives.

Leasing

Companies that acquire EVs to lease can get the federal tax credit on any EV and pass it along—or not—to customers who lease the car, regardless of the lessee’s income. Many leasing companies advertise that they pass it along. J.D. Power found that most do, Krear says.

Fuel Economy

To estimate and compare fuel costs for most vehicles, use the Department of Energy’s savings calculator. You can personalize results based on your electricity and gasoline prices, driving habits, and purchase/lease costs—but the calculator does not include other factors, such as maintenance and insurance.

Insurance

A recent Policygenius study estimated that electric vehicles cost $44 more per month to insure because they are costlier to repair, but call your insurance company to get a quote for the exact model you’re considering.

Maintenance

EVs can cost as little as 50 to 60 percent of what gasoline vehicles cost to maintain because they have fewer mechanical parts. In its 2024 Your Driving Costs report, AAA found that EVs had the lowest maintenance costs of all cars evaluated in the study. Montoya says that even though you won’t need to change the oil, spark plugs, timing belts, or exhaust systems, the tires will wear out faster because EVs are heavier. Most batteries are warrantied for eight years or 100,000 miles, whichever comes first.

Chargers

Public charging stations can be unreliable. According to recent data from J.D. Power, from April to June 2024, 19 percent of visits to a public charger ended in a failed recharge attempt. For Tesla Superchargers and Electrify America, those figures dropped to 6 percent and 10 percent, respectively. For many EV owners, it can be cheaper and more convenient to charge at home; 86 percent of EV owners use a fast, level 2 charger, according to a J.D. Power survey. Installation costs vary widely depending on your home’s wiring, but the average owner in the survey paid just over $1,200 to buy and install a home charger.