Electric vehicles are becoming increasingly popular, with sales of electric cars rising year over year. While they might seem like an ideal choice for those looking to reduce their environmental footprint and save money on fuel, there are some hidden costs associated with electric cars that some may not be aware of. In a 2020 report from Consumer Reports, researchers found that owning an EV is less expensive over time compared to owning a gas-powered vehicle. But that’s only part of the story. Here are the hidden costs associated with buying and owning an EV to know about before you take the plunge.
1. Higher insurance rates
Insurance rates for electric vehicles are typically higher than those for gasoline-powered vehicles, due to their higher replacement costs if they’re damaged in an accident or suffer a mechanical failure. Plus, insurance rates may be higher based on type of car. The cost to insure a Tesla is higher than for most EV cars, and for its Model X, costs are almost double that of a gas-powered luxury SUV. Overall, you can expect to pay anywhere from 5% to 25% more on car insurance.
Research insurance premium costs ahead of time so you know what kind of additional expense you’ll be facing if something happens to the vehicle. Shop around and compare different insurance companies to find the best deal and see what insurance discounts you may qualify for.
2. Repair costs
While electric cars don’t require oil changes or other traditional maintenance like gasoline-powered cars do, they do require certain parts (like batteries) to be replaced periodically — and these parts can be expensive. JD Power found that repairs for EVs were 1.6 to 2.3 times higher than their gas-powered counterparts. Over the long run, EVs cost half as much to maintain than gas-powered vehicles, but you can expect to shell out more money for repairs.
3. High initial costs
Yes, the price of EV cars have gone down significantly, but according to KBB, the average EV is over $16,000 more than a gas-powered vehicle. The average price for a new vehicle hit a record high of $48,681 in November 2022. In comparison, the average new EV price was $65,041. Luckily, if your EV meets certain criteria, you may be eligible for a $7,500 federal tax credit. This can help offset the higher costs, but you still will be paying more upfront for an EV, leading to a higher monthly auto loan payment.
4. Higher registration fees
EV car owners have to pay a higher registration fee in many states. The amount ranges from $50 to several hundred dollars, depending on the size, weight, and type of EV you purchase. States charge a gasoline tax and to make up for lost revenue with EVs, 31 states charge an additional registration fee every year for both plug-in hybrids and electric vehicles.
5. Range anxiety
One cost that is often overlooked when it comes to electric cars is range anxiety — the fear that your car won’t have enough range to get you where you need to go without having to stop and recharge. Even though the range for EVs has gone up significantly, there is that concern you may not have enough miles left to get to your next destination. I own a Tesla and I live in an apartment with no chargers, so I have to rely on finding superchargers on the way to my destination.
Even with the superchargers, you have to find a conveniently located station, ensure there is a charger available, and spend the 15 minutes to charge your Tesla up to 200 miles. Range anxiety can lead people to spend more time charging than necessary, with some even deciding to buy an extra vehicle just in case they need to drive farther than what their EV allows. To avoid this pitfall, research the range capabilities of the car you’re interested in, how many miles a day you will drive, and how you will charge it.
Electric vehicles offer great potential for reducing emissions and saving money on fuel and maintenance over the long run, but there are some hidden costs associated with them as well. Prospective buyers should be aware of this before making a purchase decision. Range anxiety, maintenance costs, and higher insurance rates all contribute to the overall cost of owning an EV over its lifetime, but being aware of these potential expenses can help buyers create a budget for ownership and make sure they get the most out of their investment.
