Are Electric Cars Worth the Money?

“I was really focused on the total cost of ownership,” explained Gooch, a consumer who wanted to replace his gas-powered sedan with an electric vehicle (EV). “I made my pitch to Trisha. The car payments would be a little more month-to-month. However, the cost to operate an EV is significantly less than a gas car.”

In fact, more than one million consumers chose to purchase an electric vehicle in 2023, as sales reached a record high. With the cost of EVs dropping, the possibility of tax credits, and improvements in technology, an EV may make good financial sense over time, especially when gas prices are high.

If you want to lower your carbon footprint and stretch your dollars in the long run, an EV may be ideal, with a payoff that might be both financial and environmental. While you can’t use a personal loan to purchase a car, you may be able to get a green loan to cover the cost of a home charging station or to help pay for EV maintenance down the road.

Interested in exploring whether an EV might make sense for you? Here are some things to think about.

Table of contents

• Why is the appeal of EV ownership increasing? 
• Are tax credits available for EV purchases?
• What are the benefits of electric cars?
• Are EVs really better for the environment?
• What are the potential drawbacks of EVs?
• Are there enough EV charging stations?
• Can you easily charge an EV at home?
• How do you know if an EV is right for you?

Why is the appeal of EV ownership increasing? 

Electric vehicles receive plenty of attention these days, and for good reason. With greater public concern about the environment, EVs are expected to make up more than 50% of global car sales by 2030.¹

Although purchasing a new EV may set you back more than a comparable gas-powered car, the price gap is narrowing. In fact, the average price of an EV fell nearly $15,000 through 2023.  

Also, since electric cars are less mechanically complex than gas-powered cars, EVs typically require less standard maintenance,² with potential savings adding up to hundreds of dollars a year.  For maintenance, repairs, and tires, EVs are estimated to cost $949 each year, which is $330 less than a gas-powered car.³

Are tax credits available for EV purchases?

To add to the savings, EV tax credits and rebates may also be available from federal and state agencies for many models of cars, depending on the type of vehicle, your income, and where you live. New EVs purchased in 2023 or after may be eligible for a federal income tax credit of up to $7,500, and for the first time, used EVs might be eligible for a $4,000 credit.⁴

Additionally, new rules from the U.S Department of the Treasury will now allow participating auto dealers to provide the tax credit directly to consumers at the point of sale, making savings more immediate.⁵ Many states also offer their own tax incentives and rebates. Be sure to double check with your tax professional.

What are the benefits of electric cars?

Benefits for EVs range from saving money on gas and maintenance and reducing your carbon footprint, to the convenience of powering up your vehicle at home. 

With more electric cars on the road these days, it may be easier to find information from various sources on the pros and cons of EVs to help you make your decision when shopping for a new car. You can now also choose an EV from almost every class of vehicle  whether you’re looking for a subcompact, an SUV, a luxury sedan, or even a truck.

For many, the most compelling benefit is the amount of money that won’t be spent at the pump, especially if the vehicle is charged at home. For example, Derrick said the Gooch family was spending $300–$350 each month on gas for Trisha’s daily commute. Since buying a second EV to replace her gas-powered car, they’re now saving up to $250 per month, even as their monthly electric bill increased $75–$100 to charge the two cars. 

Such cost savings are largely based on the fact that EVs are 2.6–4.8 times more efficient per mile than gas-powered engines, according to government data.⁶

This kind of reduction in your monthly spending might go a long way towards reducing your expenses and helping you reach financial goals, so it’s definitely worth considering.

Are EVs really better for the environment?

An EV’s carbon footprint is typically smaller over its lifetime than that of a gas-powered car, even when including the electricity used for charging and battery manufacturing.⁷

As more people and businesses become interested in pursuing renewable energy sources like wind and solar, these alternatives will make up an increasing share of the electric power–generation grid, adding yet another layer of assurance for green-minded EV drivers looking to charge up.

The process of recycling old EV batteries is also improving, as research on how to reclaim more EV battery materials and boost the recycling rate is underway.   

For these reasons, especially for people who drive every day, choosing an EV may be an important step towards developing a lifestyle that’s more eco-friendly.

What are the potential drawbacks of EVs?

Despite the cost savings and environmentally friendly benefits, there are a few potential downsides to owning an EV.

Among the concerns is worry over the vehicle’s range. Rapid advancements in battery technology, however, mean that most EVs can be driven more than 100 miles on a fully charged battery, and some can exceed 200 or 300 miles.⁸ Automakers plan to release even more long-range models in the years ahead.  

Driving habits and weather conditions also affect the range of an EV. For example, if you need to run the heat or A/C, you’ll need to recharge sooner. Charging a vehicle’s battery can be more difficult or take longer in cold weather.  

While the cost of maintenance tends to be lower for EVs, issues about battery replacement and vehicle depreciation are also real. Although replacing batteries may be costly, batteries may last eight–15 years, depending on climate, with some manufacturers offering eight-year or 100,000-mile warranties, or extended warranty programs.⁹ However, the issue of battery replacement may lead EVs to lose their value faster than gas-powered cars.  

Are there enough EV charging stations?

One persistent concern about EVs is the availability of charging stations, especially in rural areas. In response, the federal government has launched a number of initiatives to address the specific EV charging needs of rural areas in the U.S.,¹⁰ as well as specific issues in urban settings.¹¹

While the availability of charging stations was a bigger problem in the past, the number has been increasing, with the U.S. having more than 165,000 public charging ports as of year-end 2023.¹² Seven major automakers have also announced a joint plan to build 30,000 more beginning in 2024.¹²

In addition, workplace charging is available in some places. You can use an app to locate a charging station wherever you are, and several automakers are integrating charging location information into their vehicles’ dashboard information systems.  

Can you easily charge an EV at home?

With the right equipment, charging an EV at home can be simple and efficient. Home charging options vary according to where you reside: some multifamily homes built in the past few years have access to vehicle charging stations on-site. In some parts of the country local code requirements for new-home construction include specifications to accommodate EV charging.  

EV owners who live in older homes are typically able to charge an EV using a standard 110-volt power outlet. While it can take up to 12 hours to reach a full charge, this option might still serve your needs, depending on your driving habits.

For faster charging, you could install a Level 2 (240-volt) charging station, which can power up a vehicle in just a few hours. But there may also be additional expenses if your home’s electric line needs to be adjusted. 

How do you know if an EV is right for you?

Whether you’re motivated by the prospect of saving money on your transportation costs or taking steps towards a greener lifestyle, it might be worthwhile to consider your options.

There may be multiple reasons to jump on board with the growing EV trend, including less maintenance and the ability to ignore price jumps at the pump. Other benefits are potential tax credits and helping to reduce your environmental impact. 

However, there might also be additional expenses that come with owning an electric car, including paying an electrician to inspect your home’s power system, installing an at-home charging station, or replacing the battery.

For his part, Derrick Gooch said he’s happy with his family’s switch to electric. “I know our family is done buying gas cars,” he said. “I haven’t been to the gas station or gotten an oil change for my car in four years. We’ve seen the tangible impact to our monthly operating costs, and we aren’t going back.” 

If you’re looking at the EV option, or for other ways to green your life and home, but are worried about the costs, don’t fret. Learn how a green loan could help you make energy-efficient and cost-saving improvements in a way that fits your budget now and in the future. 

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