Which Cars Are More Affordable To Own Between EVs and Gas?

Some electric vehicle enthusiasts may argue that electric cars have lower fuel and maintenance costs, making them more affordable overall. Skeptics of electric vehicles will argue against them due to the higher cost of many EVs, which can be measured when a car brand offers both a traditional gas-powered and electric version of the same vehicle. Therefore, do electric vehicles truly end up being more affordable in the long run of possession?

Kind of, every now and then. As the saying goes, it's complex. We selected two models, the Hyundai Kona and Kona Electric, and the Ford F-150 and F-150 Lightning, to compare if an electric vehicle is truly more cost-effective for daily transportation than a gas-powered one in the U.S. market. We examined all available information on their operational expenses from reliable sources.

Analysis Of Costs Over A Three-Year Period

We chose to analyze the total cost of ownership for the initial three years. And we stayed with the figures we were able to accurately determine. In order to make a clear comparison, we are including both financing expenses and insurance premiums.

Original Price of Purchase

The beginning of our journey is marked by the cost of the purchase. We opted for the standard trim for the Hyundais and the XLT trim for the F-150s, which is a slight upgrade from the base trim level for each model. We also installed the Standard-Range battery in the Lightning. The calculation will include any eligible Federal tax credits for the two EVs at a later stage.

Distance Traveled

We chose 15,000 miles driven per year, which has been the typical mileage for American drivers for many years. Both electric cars, the Kona Electric, and the F-150 Lightning, have estimated EPA ranges close to the industry average of 258 miles and 230 miles respectively, which should suit owners just fine. The outcome was a total mileage of 45,000 miles over three years.

Costs Related To Upkeep And Repairs

The expenses are categorized according to different market segments (sedan, SUV, Pickup, EV, etc.) for maintenance tasks including tire replacements, brake repairs, oil changes, and overall repairs within a five-year timeframe. Indeed, it exceeds our initial three-year plan, therefore the preliminary numbers for mileage may be higher than what you can expect to achieve with these vehicles in three years.

These costs for keeping up the vehicle are greater than those we encounter in our extended 40,000-mile examinations. However, our data provides a reliable foundation for comparison, ensuring that all the cars being assessed are treated fairly. As anticipated, EV maintenance costs are lower due to the absence of oil changes and other engine upkeep.

Costs Associated With Charging

It is more challenging to estimate charging expenses.  Paying per kWh ensures that both electric cars that charge at different speeds have similar costs, leveling the playing field. In order to calculate the expenses of charging at home, we utilized the average rate of $0.1546/kWh in the United States for July 2022, which is the most up-to-date rate. Electricity prices in the United States greatly differ.  

In June 2021, a study revealed that 70-80% of electric vehicle charging takes place at either a home or a workplace parking lot. Our calculations were based on an 80% home charging and 20% public charging split. We pooled all these figures together in a container to calculate the quantity needed for maintaining the sufficient charge of the two electric vehicles for 45,000 miles.

Hyundai Kona Electric costs $2548.

The cost of the Ford F-150 Lightning is $4529.

Decrease In Value

The last factor influencing the overall cost of owning a vehicle is significant: depreciation. Forecasting depreciation is a complex topic since it relies on an informed estimation influenced by prior knowledge, consumer interest, car supply, brand image, and possibly even lunar cycles. A brief glance at recent data reveals that electric vehicles lose value faster than traditional gasoline cars.

It’s explained that the expensive price of electric vehicles leads to their greater depreciation. In terms of cost, we do observe an additional charge on a similar ICE (Internal Combustion Engine) vehicle equipped with similar features from the same time period. It's simply the cost that is responsible for the quicker decrease in value. 

Electric Vehicle Tax Credits

There are other factors to consider, including a $7500 tax credit available for both electric cars when purchased brand new. However, the Inflation Reduction Act also specifies that in order to qualify for half of the credit, a specific percentage of battery materials must come from either the U.S. or nations that have free-trade agreements with the U.S. In order to get the remaining half, the battery must be produced in the United States.

If a vehicle uses battery materials sourced from a "foreign entity of concern," it cannot receive the credit. All of this is complex, and as various rules are introduced at different times, obtaining an EV tax credit for purchasing a car in the upcoming year will become more intricate. Yet, several companies such as Hyundai and Ford intend to produce EV batteries within the U.S. soon, so let's assume for now that your specific vehicle's batteries were made domestically.

Which Option Is More Cost-Effective To Possess?

Therefore, based on our analysis, the electric F-150 ends up being $2664 more affordable to own and use in the initial three years compared to the gas version, even without factoring in the tax credit. With it, there is a significant decrease of $10,164. The Kona Electric, in contrast, is more expensive than the gas model by $2041 before the tax credit, but $5459 less expensive after it. If available, state and local incentives for electric vehicles should also be taken into consideration.

Currently, even though manufacturers intend to produce EV batteries in the U.S., most batteries available do not satisfy all the criteria outlined in the Inflation Reduction Act. Actually, a lot of cars may not qualify due to their batteries containing Chinese materials, as China dominates 76% of the world's lithium-ion battery production as of 2020 and is possibly deemed as one of the bill's "foreign entities of concern”.