A new study comparing the total cost of ownership of electric vehicles (EVs) and their gasoline-powered counterparts found that over the long term and considering various factors, some EVs were less costly but others—in particular, larger and longer-range ones—were more expensive.
The researchers developed a detailed TCO model encompassing five vehicle classes, three powertrains, and three EV ranges, with the analysis covering 14 cities in the United States and incorporating multiple charging scenarios.
Adjustments were made for local gasoline prices, electricity rate plans, and home charging access, with the TCO model incorporating inputs such as purchase price, financing, taxes, fees, insurance, refueling, and maintenance—as well as the effects of local temperatures and drive cycles on fuel economy.
Overall, the study offers a counterpoint to the cost-of-ownership assessments that EV advocates often reference.
Detailed Findings
The study concluded that small and low-range (roughly 200 miles) EVs are less expensive than gasoline vehicles, but larger, longer-range (400-plus miles) EVs are more costly than their gas-powered counterparts.
Midsize EVs (in roughly the 300-mile range) are also more expensive than gasoline vehicles, although, in certain cities, they can reach cost parity with gasoline vehicles if they get government incentives.
However, the researchers noted that the question of cost parity between EVs and gas-powered vehicles is “best answered on a case-by-case basis, as vehicle costs are ultimately unique to each specific location and each individual user.”
For instance, for a 300-mile-range midsize electric SUV, the total cost of ownership varied by nearly 40 percent, or $52,000, depending on the location.
Home charging was a critical factor, with access to it reducing lifetime ownership costs by about $10,000 and as much as $26,000 in some cases.
In reaching their overall conclusions that smaller EVs are cheaper than gas-powered vehicles, the researchers assumed a base case of 80 percent home charging and 20 percent at public charging stations.
Having access to home charging flipped the lifetime total cost of ownership in favor of midsize EVs in eight of the 14 cities investigated, the researchers noted.
“EVs are more competitive in cities with high gasoline prices, low electricity prices, moderate climates, and direct purchase incentives, and for users with home charging access, time-of-use electricity pricing, and high annual mileage,” the researchers wrote.
Other studies have challenged the narrative that EVs cost less to operate.
‘True Cost’ of EV Fueling
A recent study from the Austin, Texas-based think tank Texas Public Policy Foundation found that, when considering various subsidies and regulatory credits, the actual cost of operating an EV is equivalent to running a gas-powered car with prices at $17.33 per gallon.The report found that various subsidies, regulatory credits, and charging costs of an average EV from the model year 2021 add $53,267 to the vehicle’s price over a decade.
Assuming that the EV is driven for 10 years at 120,000 miles, this would make the “true cost of fueling” equivalent to the EV owner paying $17.33 per gallon of gasoline—many times higher than the $1.21 per gallon claimed by other estimates.
“This analysis shows that electricity is a long way from becoming a cost-effective transportation fuel compared to gasoline,” the report reads. “Without increased and sustained government favors, EVs will remain more expensive than [internal combustion engine vehicles] for many years to come.”
Although the differences varied across segments and depended on whether charging was done at home or commercially, the results of the AEG study suggest that EVs can cost more to run.
For example, in the Entry segment (which includes cars such as the Chevy Bolt and Honda Civic), a gasoline-powered model costs, on average, $9.78 per 100 miles to fuel, per the study. By contrast, the average EV in the same segment costs $12.55 to charge per 100 miles—but only if charged mostly at home. If charged mostly commercially, that cost increases to $15.97 per 100 miles.
EVs can be cheaper in the Luxury segment, where a high-end vehicle such as a Tesla Model X costs an average of $13.50 to charge per 100 miles when charged at home and a gas-powered vehicle such as the BMW 5 Series costs, on average, $17.56 per hundred miles to fuel.
The cost of charging a luxury EV climbs to $17.81 per 100 miles for mostly commercial charging, slightly more than for a high-end gasoline-powered vehicle.
