Are Electric Vehicles Affordable? 10 Factors You Need to Know

 

See how lower prices, tax credits, and lower fuel and maintenance costs make electric cars affordable.

Are electric vehicles (EVs) affordable? This is a common question for potential buyers weighing the switch from traditional gasoline vehicles.

The great news is that EVs are not only more affordable than many think – they can actually lead to significant long-term savings.

Many EVs now have a sticker price on par with similar gas-powered vehicles. Additionally, fuel and maintenance costs are often A LOT lower. Driving an EV can lead to an average savings of $6,000 - $10,000 over its lifetime, or much more for drivers who use a lot of gasoline.

As one example of the affordability of EVs compared to gas cars, F-150 Lightning drivers in Pennsylvania can save around $27,600 versus the gas-powered F-150 owners.

In sum, EVs offer cleaner air, healthier communities, and a more affordable driving option than many realize.

Let's break down how and why electric cars can fit into nearly any budget.

 

1. EV Incentives Can Be Massive


Starting in 2024, eligible buyers of new EVs or plug-in hybrids can receive a $7,500 federal EV tax credit as an instant “on the hood” discount, eliminating the need to wait until tax filing. Additionally, there’s a new credit for used EVs priced under $25,000, offering up to $4,000 or 30% off the vehicle cost, whichever is lower (more info below).

Many states and regions provide extra incentives that can stack with the federal EV tax credit totaling thousands of dollars.

Check for EV incentives here, or if you are in California, learn more about EV incentives in California.

 

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2. EV Battery Costs Are Dropping


The cost of electric vehicles is largely determined by battery prices. Thanks to advancements in technology, battery costs have dropped by 89% from 2008 to 2022 and are projected to continue falling. Between 2022 and 2023, the average EV cost dropped by around $15,000.

Battery breakthroughs in solid-state technology and new battery technologies such as glass, cobalt-free batteries, carbon nanotube, lithium metal, lithium sulfur, sodium, graphene and zinc air should reduce costs even further. Learn more about EV batteries.

The future of electric vehicles is bright as their batteries become more affordable and accessible for consumers.

 

3. Prices For Many New EVs Are Already Competitive Without Incentives


Thanks in part due to the drop in battery prices, many EVs are already sticker price cost-competitive with gasoline cars. A recent analysis showed buyers can choose from up to 21 electric vehicle (EV) models priced under $35,000, and 47 models priced below the average new car price of $48,000 last year.

EVs are even more competitive when you can factor in EV incentives and projected fuel plus maintenance savings.

Learn more about EV prices and ranges with our nonprofit’s searchable and sortable list for EV range and price comparison range of choices to suit different needs across the country.

 
As one example, the Tesla Model 3 starts at $42,390 MSRP, while a gasoline-powered Toyota Camry starts at $28,400 MSRP. However, when factoring in the $7,500 federal EV tax credit, plus additional state rebates and fuel and maintenance savings, the Tesla Model 3 may end up costing less than a Camry.
 

4. There Are Outstanding EV Lease Deals


Leasing an EV is also an affordable option — many can be found for $9 or $10 per day. Leasing an electric can be an excellent choice as EV technology advances, allowing you to upgrade to a new and improved model every few years with a typical 3-year lease.

Here is a recently updated list of EV lease deals at electrek.co

You can cross reference against EV lease deals here

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The Hidden Costs of Gas Vehicles

Switching gas cars to EVs offers hidden health benefits by reducing harmful emissions. This means lower risks of asthma, heart and lung diseases, and other vehicle-emissions-related health problems—especially for families living near busy roads. The U.S. Environmental Protection Agency recently estimated the social cost of greenhouse gases at $190 per ton.

Imagine cleaner air for your children to breathe, a quieter neighborhood, and fewer trips to the mechanic. EVs aren’t just about saving money—they’re about creating a better future.

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Join thousands of others making the switch to cleaner transportation! Sign up for our nonprofit’s Beyond Gasoline newsletter to stay up to date on the growing movement.

 
 

5. Used EVs Are Becoming More And More Affordable


In 2023, used EV prices dropped by about 28% compared to 2022.

Based on this report’s findings, used EVs are, on average, cheaper than their gasoline counterparts.

In many U.S. regions, used EVs can be found for $10,000 or less.

With the new federal tax credit offering up to a $4,000 discount on used EVs, buying a used EV is an even better deal for many.

The credit applies to vehicles purchased from a licensed dealer on or after January 1, 2023, as long as they meet criteria such as priced at $25,000 or less, and at least two model years old.

Many regions offer stackable rebates and incentives that further reduce the cost of used EVs.

Learn more about used electric cars - how to find deals, incentives and tips.

 

6. EVs Are Cheaper To Fuel: Electricity Costs Much Less Than Gasoline


Electricity is cheaper than gasoline in all 50 states, especially when charging at home. American drivers now save 8.1 cents per mile on fuel with an EV, up from 7.6 cents in late 2023, compared to gas-powered vehicles.

Compare EV vs. gas costs in your state

EV drivers can also get their electricity from free sunshine from solar panels. California programs can help provide rooftop solar for homeowners and renters. Homeowners with solar panels can charge EVs at home for virtually no cost. You can also find inexpensive or even free public EV charging stations.

A number of states offer discounted electricity rates to low-income customers, lowering EV fueling costs further. For instance, California utilities offer a 30% to 35% electricity rate discount.

Electricity vs Gas Prices

Electricity is highly regulated and locally generated from a variety of sources. Electricity prices have been largely stable (around $1 per gallon equivalent), and are forecast to remain so, especially since renewable sources, which are the majority of new electricity generation coming online, are cheaper than existing fossil fuel sources. Also, a large-scale move to electric vehicles would likely reduce electricity rates to all electric utility customers.

U.S. gasoline prices often experience dramatic swings, influenced by global oil markets, economic disruptions, and geopolitical events, creating significant financial strain for consumers.

In contrast, electricity costs—when measured in dollars per gallon equivalent—have remained steady and consistently lower, offering EV drivers stability and affordability.

This contrast underscores a key economic advantage of EV ownership: not only are operating costs lower, but EV drivers are also shielded from the volatile price spikes that can make fueling a gas-powered car unpredictable and expensive.

 

 
Imagine never having to visit a gas station again, or worrying about unpredictable gas prices. With an electric vehicle, this could be your reality—while potentially saving thousands over time.
 

7. EV Maintenance Costs Are Lower


According to the U.S. Department of Energy, EVs require less maintenance than cars with gasoline components.

EV maintenance costs less due to fewer moving parts and no need for oil changes, timing belts, fan belts, spark plugs, head gaskets, cylinder heads, air filters, exhausts, transmission fluids or mufflers. EVs also feature regenerative braking, which uses the electric motor to slow the car, allowing further savings on brake pads and rotors.

EV drivers save 8.1 cents per mile on fuel compared to gasoline vehicles plus 3 cents per mile on maintenance. For the average driver switching to an EV, that's about $1,200 in fuel savings per year in your pocket, and for people who drive a lot, it’s much more!

 
While a traditional car might cost you at the pump and in the repair shop, an EV can deliver fuel savings and low maintenance year after year.
 

8. Global Gasoline Vehicle Phaseouts Will Drive EV Prices Even Lower


11 US states and almost 50 countries have announced gasoline vehicle phaseouts. China is leading an electric vehicle revolution. Automakers ramping up EV production to meet global demand will lead to economies of scale, driving prices down even further.

 

9. EV Batteries Last Longer Than You May Think


EV batteries typically come with an 8-year or 100,000-mile warranty, but many are designed to last much longer.

Tesla batteries, for instance, can last up to 500,000 miles, and newer battery technologies are aiming for more than 1 million miles.

If the battery does wear out, buying a new one is the effective equivalent of getting a new EV — unlike a gas vehicle, whose mechanical parts will continue to fail with age. When this is factored into the total price of the vehicle, an EV comes out much cheaper than a gas-powered car (that may last up to 200,000 miles, if you spend the money on regular maintenance).

Learn more about electric car battery life and how you can extend it.

 
EVs don’t just save you money. Imagine never needing an oil change again, or never worrying about a noisy muffler. Electric vehicles are simpler, more efficient, and built to last.
 

10. Low-Income Families Could Get Extra Discounts


Some EV incentives are directed towards low-income families. For example, in different areas of California, income-qualifying residents could receive up to $12,000 to replace their own older, high-polluting vehicle via Clean Cars for All. Through the Peninsula Clean Energy DriveForward Electric Program, income-qualifying residents of San Mateo County may be eligible for up to $2,000 in incentives when purchasing a used electric vehicle.

Check for EV incentives here.

 

Conclusion

Switching to an EV is a smart financial move that will benefit the planet, our health and your wallet for years to come.

With falling purchase prices, generous tax credits, and lower costs of fuel and maintenance, EVs can deliver impressive long-term savings. As the market for used electric vehicles expands, there are now affordable options to fit virtually any budget.

Whether you’re looking for a brand-new model or exploring the growing selection of used EVs, making the switch to electric is an investment in both your future and the environment. Embrace cleaner, cheaper, and more sustainable driving today!

Take the next step towards driving an EV with our Electric Vehicle Roadmap.

 

Electric Car Affordability FAQ


Are Electric Vehicles Affordable?

Yes, electric vehicles (EVs) are increasingly affordable, thanks to advancements in technology, reduced battery costs, and a variety of financial incentives. Federal tax credits of up to $7,500 for new EVs and $4,000 for eligible used models make EVs more accessible, while many states offer additional rebates. Plus, lower fuel and maintenance costs mean EV owners can save an average of $6,000 to $10,000 over the vehicle's lifetime compared to gas-powered cars, and people who drive a lot can save much more. With new, used, and leasing options available, electric vehicles are now within reach for more drivers than ever.

Is It Financially Smart to Buy an Electric Car?

Yes, investing in an electric vehicle (EV) today can be a financially wise decision. With declining battery prices, generous state and federal incentives, and long-term savings on fuel and maintenance, an EV can reduce overall transportation costs compared to traditional gas-powered cars. Fewer parts and minimal maintenance needs add to EVs’ appeal as a cost-effective option. Explore EV incentives.

Are Electric Cars Getting More Affordable?

Absolutely, EVs are becoming more affordable as technology improves. Battery costs have dropped by nearly 89% since 2008, making EVs accessible for a wider range of budgets. With more affordable models and used EVs entering the market each year, the price gap between electric and gas cars continues to narrow. Check out the least expensive EVs available.

Can the Average Person Afford an Electric Car?

Yes, declining EV prices combined with a range of financial incentives make electric cars increasingly accessible to the average buyer. Federal tax credits, state rebates, and a growing selection of affordable used EVs allow more people to consider going electric, even on a budget. And people who spend a lot on gasoline, filling their tanks at least weekly, may find that switching to an EV will save them on total monthly costs, even including the EV car payments. Find affordable used EVs.

Do You Actually Save Money with an EV?

Yes, EVs can generate significant savings over time. On average, EV owners save around $6,000 to $10,000 in fuel and maintenance costs over the vehicle’s lifetime compared to gas-powered cars. These savings are due to lower electricity costs and fewer maintenance requirements, helping drivers keep more money in their pocket. See how much EV owners save on fuel costs.

Are Electric Vehicles (EVs) More Affordable Than Gasoline Cars?

Yes, EVs can be more affordable in the long run than gasoline vehicles. Lower fuel costs and reduced maintenance expenses contribute to potential average lifetime savings of $6,000 to $10,000 for EV owners – and much more for the drivers who use the most gasoline. Learn about the hidden costs of gasoline.

What Incentives Are Available to Make Electric Vehicles More Affordable?

Federal tax credits up to $7,500 for new EVs and up to $4,000 for used EVs can significantly reduce the purchase price. Many states also offer additional rebates and incentives, bringing EVs within reach for more drivers. Read more about federal EV tax credits.

How Do Fuel Costs for EVs Compare to Gasoline?

Electricity is significantly cheaper than gasoline, making EVs much more affordable to fuel. EV drivers can also save further by charging at home or using solar power. Many states offer discounted electricity rates for EV drivers, making fueling costs even lower than gas. Explore the comparison of electricity vs. gasoline.

Can Low-Income Families Receive Additional Support for Purchasing an EV?

Yes, many programs offer extra incentives to low-income families. In California, for instance, eligible residents may receive up to $12,000 toward an EV, making electric vehicles accessible to a broader range of budgets. Learn about EV rebates in California.

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