When searching for a new vehicle, most buyers would focus on the price. However, the true cost of owning a vehicle extends far beyond the initial purchase, especially for electric vehicles (EVs). To make an informed decision, consider the total cost of ownership (TCO) includes purchase cost, fuel, maintenance, insurance, and depreciation. Through these factors, we will break down the factors that influence the TCO with EVs compared to internal combustion engine vehicles (ICEs). 

The initial purchase cost between EVs and ICEs comes differently. EVs, generally come with a higher price point due to the expensive and advanced battery technology that powers them. However, that price gap has gradually been closing as battery technology advances and production scales up, where the more batteries deployed, the more affordable it will with battery costs down 19% by every doubling of deployment. 

In terms of operating costs, one of the major advantages of BEVs is their lower cost to fuel up as electricity is cheaper than pumping gasoline or diesel. Other than electricity being more sustainable than using gasoline to fuel up, it is also generally easier to charge your BEV as it can be done even at home with the right home charger. 

To elaborate, Consumer Reports reported that BEV owners driving 15,000 miles per year spend about $620 on charging, compared to $1,420 for fuel in an ICE vehicle. This noteworthy difference can impact the TCO over the lifespan of the vehicle, making the overall operating cost much more beneficial with BEVs. Notably, the average lifetime cost for repairing and maintaining EVs at $4,600 and is roughly half of what it costs for ICE vehicles at $9,200. 

Another factor that is considered in the TCO for BEVs and ICEs is the maintenance costs, where BEVs also benefit from lower maintenance costs. With fewer moving parts and no need for an oil change, transmission maintenance, or exhaust system repairs, BEVs are less of a concern regarding noticing the several aspects of maintaining a BEV. 

Interestingly, BEVs only have components regarding their battery pack, electric motor, fluid management, and tire and brake considerations same as ICEs with BEVs having their own path for EV owners to navigate through their maintenance profile. 

Compared to ICEs, Consumer Reports also found that for the first 50,000 miles, maintenance and repair costs for a BEV are just $0.012 per mile, compared to $0.028 for ICE vehicles. Over a longer period, the savings on maintenance for BEVs become even more pronounced. As a result, the savings that BEVs will provide in the long run will gradually become more apparent with less maintenance and repair needed.

The most table factor that has been making headlines for its financial perks for BEVs is the federal EV tax credit. This tax credit provides financial benefits for a maximum credit of $7,500 for new EVs and $4,000 for used EVs. With this in mind, the appeal to new EV buyers entices them to take advantage of this tax credit when purchasing their ideal EVs. Furthermore, automakers have been leveraging this tax credit by abiding by its requirements with one being localizing production to match its battery capacity and material regarding eligibility for the tax credit in their EVs. 

Importantly, many regions offer tax incentives or rebates for purchasing BEVs, which can offset the higher initial purchase price. For example, California offers the Clean Cars 4 All program that provides varying amounts from $2,000 to $9,500 to replace older internal combustion engine (ICE) vehicles with EVs for income-qualified Bay Area residents. Additionally, BEVs often benefit from lower road taxes. These incentives vary by country and can significantly affect the TCO.

Depreciation is another critical factor in TCO. It is also important to note that BEVs, despite their many environmental benefits and cutting-edge technological features, tend to depreciate faster initially due to rapid technological advancements and shifting market conditions. Nevertheless, as the market matures and demand for used BEVs increases, this gap is expected to narrow. Currently, ICE vehicles often have better resale value, but popular BEV models are improving in this regard with them possessing higher quality features of more often possessing self-driving technology, notably influenced by Tesla’s Full Self-Driving (FSD) technology.

Moreover, BEVs generally experience lower depreciation compared to ICE vehicles. This is due to the build of BEVs including simpler drivetrains, fewer moving parts, and reduced wear and tear. Consequently, BEVs often retain their value better over time, making them a more attractive option for long-term ownership. This lower depreciation rate, combined with potential savings on fuel and maintenance, enhances the overall economic appeal of BEVs.

In contrast to ICE vehicles, BEVs do not possess the same amount of charging stations compared to their number of gas stations, making accessibility to charging infrastructure for BEV owners a challenge. Yet, the growing amount of efforts to increase charging stations has been noted as many states have offered grants and funding to bolster charging stations in total numbers, where states have received grant awards from the National Electric Vehicle Infrastructure (NEVI) Program including Ohio, Oklahoma, Maine, Pennsylvania, Ohio, Vermont, and many more.

As the U.S. set a goal to reach 500,000 charging ports by 2030, the country has now reached more than one-third with a total of charging ports to 183,000. With gas prices continuously increasing with no signs of reverse, the option of expanding charging infrastructure appears to be a more sustainable choice to avoid reliance on non-renewable energy solutions. As charging infrastructure expands, the TCO for BEVs improves, making them a more viable option for a broader range of buyers.

The automotive landscape is undergoing a seismic shift towards electric mobility, driven by environmental concerns and governmental policies promoting sustainability. This trend, coupled with improvements in charging infrastructure and ongoing technological innovations, will likely make BEVs even more attractive from both economic and environmental perspectives, where even the factor of depreciation value may lean toward BEVs shortly.

Through the findings when researching the considerations of the TCO between the two, BEVs often emerge as the more economical option compared to ICE vehicles in the long run, despite their higher initial purchase price but the major savings in fuel, maintenance, and financial tax incentives, coupled with the environmental benefits, make BEVs a more compelling option.

As the global market continues to evolve and adapt to more BEVs sharing the road, the financial, technological, and ecological advantages of BEVs will only become more definite, making the switch to electric mobility not just a smart economic decision but a responsible environmental choice as well.

Want to learn more about EVs? Thinking of buying an EV? Head over to EV.com and discover more.

EV.com is the world’s 1st Electric Vehicle (EV) marketplace that aims to promote zero-emission mobility by providing a platform for consumers to learn about, compare, and purchase EVs.