Electric vehicles (EVs) cost more than gas-powered cars. But their operating costs over five years are low enough that, in 48 states, you’ll save money by buying an EV instead of a new gas-powered car.
In a new analysis from J.D. Power researchers published in Automotive News, “EVs had a cost advantage over gasoline counterparts in every state but Maine and West Virginia.”
Related: Study — EV Ownership Costs Vary Widely Between Owners
Difference Between States Can Run to Five Figures
The actual advantage varied drastically from state to state. At one end of the scale, New Jersey residents could save $10,345 over five years by going electric. On the other hand, Vermonters could save just $29.
In Maine, an EV costs $1,619 more over five years than a gas-powered car. West Virginia residents would pay an extra $1,800 to go electric.
A host of factors influence the extreme differences across state borders.
“Electricity is expensive in the Northeast, where EV owners save only a small amount on fueling over five years,” Automotive News explains. “In California, EV drivers pay more on average for insurance compared with other states because they tend to drive premium models that are more expensive to insure.”
State-by-state incentives also make a big difference. New Jersey’s high savings figures “mostly come from New Jersey’s EV sales tax exemption, a unique perk that starts to phase out in July.”
Tax Incentives Working for Most
The federal government’s $7,500 EV tax incentive has helped lower the price of many EVs. J.D. Power researchers found that more than 75% of EVs sold in the first quarter of 2024 were eligible for the tax break.
A price cap means many luxury EVs are not eligible. However, a quirk of the tax law means those cars can take advantage of the credit when leased. The researchers say leases made up nearly all EV sales among luxury cars that quarter.
The credit, however, points to one caveat in the research. J.D. Power compared costs between comparably-priced vehicles. America has few truly low-priced EVs. The price of the average electric car has fallen over the past two years but remains well above that of the average gasoline-powered vehicle.
