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8 min read Published August 15 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers to navigate the ways and pitfalls of taking out loans to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to control their finances with precise, well-researched and well-studied facts that break down complicated subjects into digestible pieces. The Bankrate promise
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You have money questions. Bankrate has the answers. Our experts have been helping you manage your finances for more than four years. We strive to continuously provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and journalists produce honest and reliable content that will help you make the best financial decisions. The content created by our editorial team is factual, objective and uninfluenced by our advertisers. We’re open about how we are capable of bringing high-quality information, competitive rates and helpful tools for you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and, services, or by you clicking on certain links posted on our website. This compensation could impact how, where and in what order products are displayed within the categories of listing in the event that they are not permitted by law for our mortgage home equity, mortgage and other home loan products. Other factors, such as our own website rules and whether or not a product is available within the area you reside in or is within your personal credit score may also influence how and where products appear on this site. Although we try to provide the most diverse selection of products, Bankrate does not include details about each credit or financial item or product. One-in-four new car shoppers now consider buying a hybrid or electric vehicle just as they would with gasoline-powered vehicles According to (KBB). The choice of electric vehicles — or any alternative fuel vehicle is a good idea for your pocket and the climate. However, before you go to the dealership , it’s recommended to research electric car options and know the difference in cost of ownership. What is an electric car? Electric cars have seen a huge rise in popularity over recent years, especially as the awareness of climate-related issues continues to grow. This, combined with and rising gas prices, has caused drivers to save money by going electric. Unlike the typical gas-powered vehicles on the roads and in parking lots, EVs have a motor which is powered by a battery. There are three kinds of electric vehicles. Hybrid electric vehicles (HEVs) powered by an electric motor and the internal combustion engine, HEVs are able to compete with the power of a traditional gas-powered vehicle but with the added benefit of better fuel economy. You do not charge an HEV like some of its EV counterparts but rather it charges the battery by the engine. There are many varieties of makes and models of HEVs that are available on the market. Some highly rated options according to KBB include the Honda Accord Hybrid, the Toyota RAV4 Hybrid and the Hyundai Elantra Hybrid. Plug-in hybrid electric vehicles (PHEVs) Plug-in hybrids is exactly as it sounds it is a hybrid vehicle is charged through a plug. It’s powered by batteries inside the vehicle and charged through another cable. They also make use of other fuels, typically gasoline to power their internal combustion engines (ICE). The vehicle makes use of electricity until it’s consumed and then taps its ICE capabilities. The choices for PHEVs can be less limiting, however KBB’s most popular choices are that of Ford Escape SE Plug-in Hybrid, the Hyundai Tucson Plug-in Hybrid as well as the Kia Niro Plug-in Hybrid. Full electric cars (EVs) The fully electric vehicle is a step up and is entirely powered with an electric motorthere is no ICE or alternative fuel sources involved. These have a battery pack that powers the vehicle and is charged in the same way to a PHEV. Electric vehicles are charged using an outlet designed specifically for them. While charging stations can be located in the local area, it is important to remember the added expense for a station to charge, if you are you are considering an all-electric. KBB’s top fully electric choices are The Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. Cost of electric as compared to. gas cars Prior to diving headfirst into the world of hybrid and electric cars, it is essential to know the cost differences between gas and electric. While it is true that driving an EV can come with lower overall costs, the upfront price tag is an obstacle for many. In recent times, purchasing a new car is costly regardless of the power source. July 2022 saw record high average prices for transactions on new vehicles of over $48,000, as per . However, the cost for an EV is higher than the gas-powered alternative. It is estimated by KBB estimation for the EV exceeds $60,000- which aligns with an average luxury car price. It is expected that to be that the EV market will grow to 40 percent by 2031, according to . This estimation is supported by more vehicles hitting the market. And, fortunately, this increase in EV availability serves as an opportunity to equalize. When more consumers are looking into buying electric cars and electric cars, the cost of them will decrease. This is evident in the number of new models being introduced to the market. The first quarter in 2022, 4.64 percent of all new vehicle registrations were for electric vehicles, and 7.18 percent of them were hybrids according to Experian’s report of automotive market trends. This resulted in 60.4 percent growth in EVs over first-quarter 2022 and a 10.7 percent growth for hybrids. Cost of owning electric vehicles in comparison to. gas vehicles While the upfront cost of your next vehicle is important you should also consider the costs involved in maintaining and keep the car for the life of ownership. Look at the five-year cost-to-own comparision of two popular cars, according to Edmunds. The first is 2022 Chevrolet Bolt EV, comes with a price tag of $31,955 and comes with a huge range, spacious cabin and an excellent handling rating. The secondmodel, the 2022 Mazda 3, is a popular choice for gas powered vehicles with a price tag of $24,115 that offers an elegant interior as well as a smooth ride. an engine that is turbocharged. Take into consideration how the expenses accumulated over the course of five years of car ownership influence which vehicle you’d prefer. 2022 Chevrolet Bolt EV
2022 Mazda 3
Vehicle depreciation
$8,767
$6,700
Taxes and fees
$2,603
$1,814
Financing
$2,921
$2,309
Fuel
$2,283
$11,255
Insurance
$5,411
$3,941
Repairs
$731
$666
Maintenance
$2,806
$4,592
The true cost of owning
$25,522
$31,277 Fuel At the most basic level, owning an electric vehicle means that there will be no need to gasoline stations. In a study for 2020, it was found that EV owners spend an average of 60% less for fueling their vehicles. The difference in cost of gasoline between Chevy as well as the Mazda is even steeper than the average. However, getting power for your EV is not easy as simply choosing standard middle-priced or premium. The charging process for EVs is broken down into three choices that have different benefits and costs. One charging. It is by far the most popular method of charging and is available through the same outlet you would charge your phone with. They are the slowest charging option and provide anywhere between 2 and 5 miles charging per hour. Level two charging. These chargers, typically installed and located in your garage utilize the same power that your washing machine would. You could get up to 20 miles charging in just an hour. Level three charging. Also called DC charging, these are available in public settings. They are the quickest option and drivers can receive an 80 percent charge in only 20 minutes. Just as washing your washer several times in succession will increase your electricity bill and the extra cost from charging at home can increase. This ongoing cost is added to the one-time average price to set up an at-home charging station that can vary between $300 and $50,000, depending on the level of the charger. However, keep in mind that most communities have access to chargers, which means you do not need to pay to install it right away. Visit a free EV station map, to find chargers in your area. Financing Although you can -gasoline or electric powered — apply online or in person with several lenders prior to deciding on the green car may come with certain benefits. serve drivers looking to finance their electric vehicle. These types of loans are usually offered through a credit union and generally offer lower rates of interest than traditional auto loans. You could also be eligible for , a financial incentive that is available in certain states of the U.S. You can benefit by a credit of as high as $7,500, contingent on your home state. Insurance Insurance is an essential aspect of the ownership process that will protect you along with your passengers. It follows the same method that you’d take to protect the traditional vehicle option. It will cover collision, bodily injury, responsibility and comprehensive insurance. As with all vehicles the cost will depend on various variables. However, the insurance cost for an EV is typically more expensive than traditional gas-powered options. One reason is the price of the vehicle parts. An accident of a minor nature could cause, for instance having to pay for a replacement battery — which can be priced at more than $15,000. Bankrate looked at 12 models of vehicles that were provided by Quadrant Information Serves and found that, on the average premiums are more expensive for electric cars. This is evident in the higher insurance costs forecast for Bolt over the Mazda 3. Bolt over the Mazda 3. Pros and disadvantages of electrical vehicles Electric vehicles can offer a vehicle that is better for the environment as well as your wallet in the long haul, but they’re not without downsides. Advantages of electric cars A few advantages to driving an electric car include the following: less maintenance. Electric cars need fewer visits to the mechanic, which can mean lower costs for expenses for oil change and brake system checks. Lower cost over the life of the vehicle. Car ownership can be costly, but EVs come with a lower cost. They are better environmentally. They do not release pollutants from tailpipes, making them more beneficial for the local air quality and overall emission of greenhouse gases. Advanced technology is available. Many newer electric car models come with advanced control panels as well as mobile apps that allow you to control and monitor the car. There are cons to electric cars. Some disadvantages of driving an electric vehicle include: Higher purchase cost. On average, buying an EV comes with a higher upfront cost, close to $12,000 more, based on KBB’s average July 2022 transaction prices. A fear of distance. Charging stations can be few and far between in some locations, leaving drivers feeling stressed when searching for a location to charge their energy. Faster vehicle depreciation. Battery deterioration and vehicle incentives cause a quick loss of value when it comes to electric cars. Cost of installing the charging station. If you prefer being able to charge at your own home, installation could cost you up to $50,000. Is an electric car right for you? If your next set of wheels is electric, it should be considered similar to how you would pick which model or style of a classic car is the best fit for yoube aware of your lifestyle and needs. If your commute works with the available range an EV offers or if you prefer the sleek style and environmental benefits, then an electric car could be an excellent choice. However, if committing to an all-electric EV is too big of a financial investment, you might want to look into the option of the hybrid or plug-in option when you’re planning to purchase. Hybrids and PHEVs tend to cost less upfront and still provide the savings benefits that a fully electric vehicle does. Be aware of these factors when shopping to ensure that the EV is worth investing in. The range of your vehicle If you’re on a long commute to work , and do not have access to chargers along the way as well at the destination you are heading to, think about the vehicle range that the new vehicle you’re considering purchasing. The battery’s range of use can vary greatly depending on the model. Be careful not to buy a vehicle that can’t be easily charged for your daily outings. Access to chargers Before going to the dealer to look around make sure you have access to chargers in your area or think about the expense of installation and upkeep of an at-home charger. This involves weighing the level one, two, and three options with your needs. Your lifestyle. Not only is it important to consider your life style in terms of appearance but also as a the way of function. EVs tend to operate differently from what you are familiar with. Due to its reliance on regenerative braking, as an example, you can expect a slower brake but a smoother overall drive. The final result The cost of owning an EV can be less expensive than a gas-powered option. Even with steeper vehicle depreciation as well as higher insurance costs and financing costs, the lower maintenance cost and the five-year period for owning an EV can make it a viable option. If you are a prospective car owner it is crucial to decide which expenses matter the most to you and whether EV fits the rest of your life. FAQs How long does it take to charge an electric car Based upon the capacity of your car’s battery, charging could take as little as 30 minutes, or up to 12 hours. It is recommended to charge your electric vehicle in smaller increments rather than all at once in order to decrease the amount of time required to charge. What’s the price to recharge an electric car? The exact cost for charging will vary based on location due to varying electricity costs, the price is based on the available range and price per kilowatt (kWh). In California for instance the average electricity price is 18 cents per unit therefore an electric vehicle with a range of 150 miles would be about $7 for a complete charge. What is the length of time battery packs for electric vehicles last? The batteries in an EV will last between 10 to 20 years before they require a complete replacement.
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The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the details of taking out loans to purchase cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to manage their finances with clear, well-researched information that breaks down otherwise complex subjects into bite-sized pieces.
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