The True Cost of Owning an Electric Vehicle: What You Need to Know

Car and Driver

6 hours ago

If you're thinking about buying or leasing your first electric vehicle, what costs should you be prepared for beyond the purchase price? Will there be any expensive surprises? Will maintenance cost more or less than a traditional gas-powered car?
We'll answer this with in-depth information on EV insurance, depreciation, charging costs, tax incentives, home charging installation, and more. After you read this guide, you'll have a better idea of what it costs to own an EV.
One of the most important factors that car buyers consider is affordability, up there with quality and fuel economy. But for EVs, you'll want to look beyond the window sticker to determine what you're really going to pay.
The MSRP (manufacturer's suggested retail price) often doesn't reflect the real cost of an EV. For one, the MSRP of an EV is usually significantly higher than a comparable gas or hybrid vehicle, in part because of their expensive-to-produce batteries.
According to Kelly Blue Book data from June 2025, the average transaction price of a new EV was $57,734, while the average price for a gas-powered vehicle was $48,799—a nearly $9000 difference.
But MSRP and purchase price aren't the whole picture.
Mario Tama
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EV State and Federal EV Tax Incentives
State and federal EV tax incentives can reduce the real-world cost of an EV significantly. The maximum federal tax incentive is $7500 at the time of this writing, bringing your average EV closer to cost parity with nonelectric vehicles.
Not every EV or buyer qualifies for the credit. EVs must contain a certain percentage of domestically produced parts, buyers must not exceed an income limit, and vehicles with MSRPs greater than the IRS guidelines below do not qualify:
Vans, SUVs, trucks: $80,000 maximum MSRP
All other vehicles: $50,000 maximum MSRP
This article has more information about federal tax credits; the government also has a list of vehicles that qualify for full or partial tax credits.
The tax credit is different than a typical dealer incentive; it's not a discount on the purchase; instead, it reduces the buyer's tax liability. If a buyer owes less than $7500 in federal income tax, they won't get the full benefit of the credit. But buyers can transfer the tax credit to the dealer, who can then give them an immediate discount on the vehicle purchase price. The IRS has more details on how this works.
Also check with the relevant agency in your state to see if there are additional state tax incentives or rebates. For example, Colorado is known for having a particularly generous tax credit of up to $3500 in addition to the federal credit.
Other EV Incentives
Slow-selling EVs may also have substantial incentives, discounts offered by the dealer or manufacturer. In early 2025, the new electric Dodge Charger Daytona saw discounts that could exceed $12,000, hinting at its low demand. Check for current offers at the manufacturer's website; many car-shopping sites also highlight attractive deals.
How to Pay for an EV
While the tax credits make EVs stand out from typical cars and trucks, the process of buying an EV is largely the same. You could pay cash up front or (more likely) finance the vehicle's price through a loan. Loans may be initiated through the vehicle manufacturer's financing arm (also known as captive auto lenders) or through a bank, credit union, or online lenders.
Check out our in-depth guide to all facets of auto financing.
Some lenders offer EV-specific loan terms. These are sometimes known as green loans. They may offer better interest rates or other terms. Some captive auto lenders naturally offer lower interest rates to incentivize low-emissions-vehicle sales. Some banks and other lenders also offer specialty loans. When researching which lender to finance through, it's worth asking about EV-specific loans.
Many EV makers bypass dealer networks and sell directly to car buyers. Following the lead of EV pioneer Tesla Motors, more recent startups, including Rivian, Lucid, and Volkswagen's upcoming Scout truck and SUV brand, intend to sell directly to consumers. While there's typically no negotiation, there may be incentives or other special offers.
Some states have specific rules prohibiting this practice, while others currently only allow an exception for Tesla. You may check with local dealers, direct-to-consumer retail outlets, or your state vehicle-licensing agency for more information.
What It Costs to Insure an EV
EVs have a lot of advantages, but one area in which they fall short of their fossil-fuel kin is in the insurance department. As we've covered in our in-depth guide to insuring EVs, insurance for these green vehicles is generally more expensive than an average car.
There are a few reasons why EVs are more expensive to insure:
Higher purchase cost.
More expensive to repair.
Higher labor and parts costs.
A 2023 study found that EVs, on average, cost $442 per year more than an equivalent gas vehicle to insure.
That said, a number of factors influence insurance costs, so be sure to do your due diligence with your insurance agent or broker.
Additional Costs: Registration Fees, Additional Taxes
In many states, transportation infrastructure repair for roads, freeways, and bridges is funded in large part by sales taxes on gasoline and diesel fuel. Many states have implemented increased registration fees or other taxes to make sure that EV owners are paying their "fair share" of the costs.
The fees can add up. For example, in Texas there is a $400 fee for new EV registrations, with an additional $200 fee for each yearly renewal. According to some analyses of various state registration fees and taxes, EV registration fees actually exceed what non-EV drivers pay in gasoline taxes. If you're in one of the following states, it's worth researching the fee before getting a nasty surprise at the licensing office.
Alabama
Arizona
Arkansas
Georgia
Idaho
Indiana
Kansas
Minnesota
Mississippi
Missouri
Nebraska
Nevada
New Hampshire
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Tennessee
Texas
Virginia
Washington
West Virginia
Wyoming
Factor in registration and licensing costs into the total cost of the vehicle no matter what state you live in. The numbers will likely be available on your state's vehicle-licensing office's website.
EV Maintenance and Repair
Compared to an internal-combustion gasoline or diesel engine, electric motors are relatively simple mechanically. That could mean less maintenance, as there are fewer things that can go wrong. But there are some maintenance items that EVs and gas cars share:
Tires
Brakes (although an EV's regenerative braking can make the brakes last longer)
Suspension (shocks, struts, springs)
Cooling system
EVs often use specialized tires to cope with their extra weight and special rubber compounds to decrease rolling resistance and thus improve range and efficiency. When it comes time to replace tires—when worn out, damaged, or at six to 10 years—they may cost more than those on a gas- or diesel-powered vehicle. There is also some data indicating that heavier EVs cause increased tire wear and require more frequent replacement.
Brakes, however, are a bright spot. Instead of using the brakes to slow down, most EVs use regenerative braking to turn their electric motors into electric generators. The traditional brake components, like brake pads and brake discs, are present but used less frequently, resulting in lower maintenance costs.
While the math gets trickier for fancy upscale EVs with adjustable suspension systems, there's nothing special about most EVs' suspension other than optimization for the vehicle's increased weight.
The cooling system (more accurately a thermal-management system) on an EV helps maintain the battery at its optimum temperature so it can work correctly. In cold weather, or to prep the battery for fast-charging, it will actually heat and circulate fluid to warm the battery to the right temperature. This all means that there's a liquid that fills the system, often a specialized (and expensive) one, and various pumps and sensors. Unless there's an unforeseen problem, the system will be inspected and the fluid changed at regular intervals per the manual.
What's the bottom line? In general, EVs are cheaper to maintain.
The Cost to Charge an EV
Installing home charging can be the biggest surprise expense of the EV-ownership experience. Some lucky homeowners will have suitable wiring and a convenient outlet ready to go but others may face significant costs (from about $500 to more than $1300 on average, according to a study by Angie's List). Check the requirements of the charger you are planning to use and consult an electrician. Incentives and rebates may offset the cost of the charger or the price of installation; talk to your utility company about that. Our home charger buying guide provides a comprehensive overview of the process, costs involved, and recommendations for home charging units.
Your local electricity rate will also affect the cost of EV ownership. The cost of electricity varies widely, but it's usually expressed in dollars per kilowatt-hour (kWh); the national average as of March 2025 was $0.17 per kilowatt-hour. (Hawaii had the most expensive rate, at $0.41, and North Dakota the least at $0.11.) Electricity rates may vary during the day or seasonally.
After determining your electricity rate, you can get a ballpark estimate of the cost to "fill up" your EV by multiplying your battery capacity in kilowatt-hours by the electricity rate in dollars per kilowatt-hour and then adding another 10 percent to account for losses during charging. For example, a current 2025 Chevrolet Equinox has an 85-kWh battery. Many owners do not fully drain or fully charge their batteries to extend their service life, so a 20 to 80 percent charge would cost $9.54 at the national average electricity rate. That would recoup 171 to 191 miles of EPA driving range, depending on which Equinox EV model you're charging.
Charging at home is significantly more economical than using a public charger. While some public chargers are of the same type you'd use at home, what comes to mind when most EV drivers think of public charging are the ultra-fast, high-voltage chargers operated by companies like Electrify America, EVgo, ChargePoint, and others. These are also known as DC fast-chargers, and they're much faster than any home charging system—filling up most EVs in minutes rather than hours.
It is almost always significantly more expensive. Public DC fast-charger rates vary by too many factors to list here, including local electricity rates, time of day, and demand, but in general, it's around $0.50 per kilowatt-hour. Using our Equinox EV example, it would cost nearly $27 to fill up from 20 to 80 percent.
What Is an EV Worth When It's Time to Sell or Trade It In?
EV owners generally don't hold on to their vehicles as long as the overall average—typically three to four years. This means that anyone considering buying an EV needs to think about how much it will be worth a few years down the road when the time comes to sell it or trade it in. This is called depreciation; how much the value of an item has decreased over time.
EVs typically have notably worse resale value than other types of vehicles. A recent study finds that, on average, EVs depreciated by 58.8 percent over five years, compared to an overall market average of 45.6 percent. Recently, Tesla models are being hit particularly hard by depreciation.
This means an EV will be worth less at the end of an ownership period. That's less money coming back to you, so you can think of it as an additional cost to factor in.
The Bottom Line
As you can see, there are many factors that influence the cost to own and drive an EV. The biggest single factor in the total cost is the selection of the vehicle itself. A less expensive, more reliable EV with a higher resale value could prove to be a prudent choice. Equally important is how the EV will be charged. Home charging installation can be very expensive; if you have an older house, you may want to go over your plans with an electrician before buying an EV. If you'll charge at DC fast-chargers, budget for significantly higher charging costs.
But remember, reduced maintenance costs, EV tax incentives, and any other purchase or lease incentives could drastically alter the picture.
The best advice we can give you about the cost of EV ownership is that it pays to do your homework. With knowledge about some of the less obvious factors and some tools to estimate them, you'll have a good idea of what owning an EV will cost you.