Are Electric Vehicles Really More Expensive To Drive Than Gas?

Some Electric Car owners are now experiencing higher costs to power their vehicles than to fill up their gas-powered equivalents—if you calculate the costs a certain way.

Key Takeaways

• An analysis by a consulting group shows some electric cars are more expensive to "fuel up" with electricity than their gas equivalents.
  
• Soaring electricity prices and relatively cheap gas in early 2023 changed the math on whether gas or electric was the more economical option.
  
• In practice, electric vehicle drivers can charge their cars for cheaper than was shown in the study, considering discounts available for off-peak charging, rebates for installing chargers, and other incentives.
  

Analysis by the Anderson Economic Group (AEG), a public policy consulting firm based in Lansing, Michigan, showed that in the first half of 2023, for most classes of vehicles, it cost more to drive a mile on electricity than on gas, according to the report. 

For example, owners of gas-powered mid-sized cars and crossovers used $11.08 worth of gas to drive 100 miles, while EV owners paid $12.62 to charge their cars to go the same distance if they charged up at home. The price jumped to $16.10 per mile for drivers using public chargers.

It Depends How You Calculate Cost

The old caveat “your mileage may vary” applies to those statistics. In practice, EV owners may be able to get lower costs than Anderson’s research showed. While Anderson’s figures take into account the cost to install a home charging system, along with other costs like taxes and the cost to travel to gas or charging stations, they assume that only a fraction of drivers are getting cheaper electricity than many EV owners can take advantage of. 

For instance, many utility companies allow EV owners to charge their vehicles at deeply discounted rates overnight and other off-peak times and offer rebates to install home chargers. Also, many EV manufacturers offer free charging for newly purchased cars.

The Anderson study separately looks at the dollar cost of the “time burden” of charging EVs based on charging times and typical hourly wages, but it is not included in the overall calculations. In Anderson’s calculations, the driver of a luxury electric vehicle paid a “time burden” of $401.50 per month if they mostly charged at commercial chargers, while those who fueled up their luxury rides with gasoline spent less than $33 worth of their time waiting at the pump.

Electric vehicle bloggers have criticized past versions of the Anderson Economics report for including this metric in the overall calculations, arguing that EV owners who habitually charge up at home overnight aren’t inconveniencing themselves very much.

Indeed, past studies have shown that electric cars offer big savings over the long term. A 2020 study by the Department of Energy calculated that EV owners save $14,500 in fuel costs over 15 years of driving an electric car instead of a gas-powered one.

The Changing Price of Power

Anderson’s study is also a snapshot of a time when electricity prices are soaring, and gasoline has fallen from a recent peak. Every time the price of gas and electricity changes so does the math on whether it makes financial sense to go electric. When gas prices surged in 2021, Anderson’s data showed EVs being cheaper.

“These results underline the importance of considering real-world costs before making a buying decision,” the consulting firm wrote in the report. “These include knowing how often you travel away from home, your ability to install and rely upon a home charger, the costs and availability of commercial charging, and any road taxes levied on EV drivers in your state.”

Correction—Sept. 24, 2023: A previous version of this story mistakenly stated that the current version of AEG's fueling cost study includes the dollar cost of the "time burden" of charging an EV. While a previous version of the AEG's fueling cost study included this cost, the current version does not.