Operating Costs: 6 Things to Know

Buying a car can be an exhausting process. With everything to consider – vehicle type, make, model, trim level and price, it’s easy to overlook the operating costs. But when you’re considering an EV, you have to first understand how those costs compare to a combustion vehicle, because there are key differences that impact the ownership experience, cost and level of maintenance required. The primary difference, of course, is the cost of fuel versus the cost of charging. That’s not the only thing, though. Vehicle maintenance and insurance costs diverge, too. So will it cost you more or less to keep your EV on the road?

I’ll take you cost-conscious shoppers through the savings and expenses related to owning an EV. Let’s dig in. 

Fuel

The cost of charging is brought up frequently by both sides of the EV debate. Conventional wisdom says that an EV should cost less to charge, but the prices of both electricity and gasoline are volatile and regional, so is it really true? A quick analysis using average costs for gasoline and electricity shows big savings for EVs when you charge at home. A lot has been written about this, including an excellent article by CNET updated last month. I’m going to steal their math and give you a couple scenarios where the inputs reflect regional differences to prove it out further. (Note: Public charging can cost 3-4X more and this is where you may hear of EVs costing more.)

CNET Analysis		Massachusetts		California
Average EV	Average ICE	Average EV	Average ICE	Average EV	Average ICE
3 miles per kWh	25mpg	3 miles/kWh	25mpg	3 miles/kWh	25mpg
416 kWh/month (~1,250 miles)	50 gallons	416 kWh/mo	50 gal	416 kWh/mo	50 gal
$0.16/kWh	$3.65/gallon	$0.281/kWh*	$3.929**	$.3299	$4.859
$66.56/month	$182.50	$116.90	$196.45	$137.24	$242.95
EV Savings: $115.94/month $1,391.28/year		EV Savings:  $79.55/month $954.60/year		EV Savings:  $105.71/month $1,268.52/year

Unless there is a large shift in the prices of oil and natural gas (43% of our electricity-generating fuel and abundant in the U.S.), the average EV should save owners about $1,000 a year in fuel costs. 

Maintenance

One great thing about EVs is that they’re far simpler machines than ICE vehicles. Less parts = less maintenance and fewer things to break. There are no engines (though there can be up to 4 motors), no alternator, no spark plugs, no fuel pumps, water pumps or exhaust systems. And that’s not even the full list of additional components. Most of these auxiliary parts will need service or replacement by 100,000 miles, but not on an EV.

EVs do need maintenance. However, much less often or for fewer components than an ICE vehicle. Here’s a quick comparison of what the first 50K miles looks like between an ICE vehicle and an EV. 

ICE Vehicle			Electric Vehicle
Item	Interval	Cost	Item	Interval	Cost
Oil Change	10K miles	$100 each	20K Service*	20K miles	$500
20K service(Oil change, coolant flush, dealer inspection)	20K miles	$400	Tires	20K miles	$1,200
40K service (Oil change, spark plugs, air filter, dealer inspection)	40K miles	$500	40K service* (dealer inspection, software updates, check fluids)	40K miles	$500
Brakes and brake fluid	40K miles	$1,400
Tires	40K miles	$1,200	Tires	40K miles	$1,200
Transmission fluid	50K miles	$400
Total Maintenance		$4,400	Total Maintenance		$3,400

Extrapolate this even further to 100K miles and it only looks worse for ICE vehicles!

You’ll notice the table above shows new tires for the EV every 20,000 miles. EVs are about 10-15% heavier than ICE vehicles and their electric motors deliver ample torque, so they can burn through tires quickly. EV owners report wildly different experiences, with some saying they’re getting the same long life driving conservatively, while others report much less. The prevailing opinion seems to be that mileage is dependent on the tire, the vehicle, upkeep, and just how spirited a driver you are. If you do like a bit of speed, budget for tires every couple years or 20,000 miles. If you don’t drive like me, lower that total maintenance cost above. Differential in favor of EVs: $1,000 – $2,000 in the first five years. 

What about battery repair and replacement? How long is a battery expected to last and what will it cost to replace? There’s a lot of fear about this driven, I think, by our experiences with cell phones. Li-Ion batteries are seemingly delicate and they degrade over time. EV manufacturers tell owners to only charge them to 80% unless you’re on a long-distance road trip to extend the life of the battery. Because of this fear, most manufacturers offer an 8-year, 100,000 mile warranty, with stipulations for a certain amount of degradation, usually about 70% remaining capacity. Replacing a battery can cost anywhere from $5,000 – $15,000 at today’s costs and there are very few places that will open one up to replace faulty cells. I do believe this will become more common, though. One new EV-focused service center in Massachusetts, Eco Auto, is developing techniques to diagnose and replace faulty cells at a fraction of the cost of a whole new battery. 

If you’re leasing or intend to buy a new vehicle in 5 years or less after purchase, don’t even think about the long-term impact to the battery. But maybe be a good steward of it for the next owner and follow that 80% guideline as often as you can. 

Insurance

The final difference in operating costs is insurance. Insurance companies factor in a number of variables when quoting policy prices, including the type of vehicle. Newer vehicles cost more because their values are higher. Larger vehicles also cost more because they can cause more damage. On the other hand, vehicles with safety features, like blind-spot monitoring and traction control may qualify for discounts. 

As EVs differ from ICE vehicles, so too will the cost to insure them. According to the National Association of Insurance Commissioners, EV insurance costs about 20% more than an ICE vehicle. The primary drivers are higher new car prices and the cost of repair. EV batteries are expensive and if they get damaged in a collision, it isn’t going to be a cheap fix. Additionally, there aren’t as many facilities capable of repairing EVs, so service providers can charge more for repairs. The make and model of the car matters, too. Luxury brands tend to be much more expensive because of their price and technology. On a vehicle with a $1,500 premium each year, the EV adjustment would put you at $1,800. 

So Where Does it Net Out?

Anecdotally, EV owners will tell you they spend a lot less than they used to. A simple analysis proves that to be true and helps quantify what your experience might be. 

5 Year Projection

• Fuel Savings ~ $1,000/year for 5 years = $5,000

• Maintenance Savings to 50K miles = $1,000

• Insurance Premium for 5 years = ($1,500)

Net Savings $4,500

Driving an EV will save you money now and in the long run. As I’ve written before, EVs don’t have to cost more to purchase than ICE vehicles and, in some cases, better equipped vehicles are available for less than the average new car. With recent lease deals hovering around $300 a month, driving an EV with the latest features and technologies is actually a pretty good budget play.