Electric vehicles (EVs) are touted as a remedy to high gasoline prices – unfortunately, the math doesn’t support this. An EV costs, on average, $10,000 or more than a gasoline powered car. A 2022 Hyundai Ironiq 5 electric SUV costs approximately $15,000 more than 2022 Hyundai Tucson, a similar-sized vehicle. An at-home charger adds another $700.
EV efficiency is measured in kilowatts-hours (kWh) per 100 miles, which is the kilowatt-hours required for the EV to drive 100 miles. EV efficiency varies across vehicles, with average EV efficiency being 35 kWh per 100 miles. The most efficient EV is the 2021 Tesla Model 3, requiring 23.7 kWh to drive 100 miles. The least efficient EV is the 2022 Audi e-tron S, requiring 53.3 kWh per 100 miles.
Residential electricity in Michigan costs 17.65/kWh. Thus, it would cost $4.18 to charge the most efficient EV to drive 100 miles, $6.17 for the average EV, and $9.40 for the least efficient EV. A private charging station will likely charge more than this.
The average gasoline powered vehicle gets about 25 miles per gallon (mpg) with some vehicles, such as the Toyota Corolla and the Honda Civic, getting 35 mpg. Assuming gasoline costs $4/gallon, it would cost the average gasoline car $16 to drive 100 miles with the Corolla and Civic costing under $12 to do so.
Assuming a driver drives 15,000 miles a year, a driver of an average gasoline powered vehicle would spend $2,400 on gasoline while the driver of a Corolla or Civic would spend $1,714. A driver of an average EV would spend $627 on electricity, assuming all charging is done at home. A driver of the most efficient EV would spend $627 on electricity while the driver of the least efficient EV would spend $1,410.
Thus, an average EV saves $1,475 in gasoline compared to a gasoline powered vehicle that gets 25 mpg. This means it would take about seven years to pay back the additional $10,000 price of the EV, making the EV a break-even proposition as a new vehicle has an average life expectancy of about eight years. It is worse than break-even to purchase an EV if the driver must replace the battery; replacing a battery out-of-warranty can cost upwards of $20,000 – nearly the cost of a new vehicle.
Some people wondered if they should trade in their gasoline-powered vehicle for an EV when the price of gasoline increased by $2/gallon in the first half of 2022, hitting a peak of $5.15/gallon on Memorial Day weekend. The average trade-in value of a used car is about $17,000. Purchasing a $40,000 EV would thus mean spending $23,000 to save this $2/gallon increase, a payback period of over 19 years, which is longer than the life of the car.
Unless there is a breakthrough in battery life, lower EV prices, or gasoline prices substantially increase above $5/gallon, purchasing an EV to avoid high gas prices does not make financial sense. Consumers are stuck with higher gasoline prices for the foreseeable future.