Electric vehicles are becoming increasingly popular, with sales of electric vehicles rising year-on-year.
And while it may seem like an ideal option 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 than owning a gas-powered vehicle, but that's only part of the story.
Here are the hidden costs associated with buying and owning an electric vehicle:
1. High insurance rates
- Insurance rates for electric cars are usually higher than those for gasoline-powered cars, due to higher replacement costs if they are damaged in an accident or suffer mechanical failure.
- In addition, insurance rates may be higher based on the type of vehicle. Tesla's insurance cost is higher than most EVs, and for its Model X, the costs are nearly twice that of a luxury gas-powered SUV.
- In general, you can expect to pay anywhere from 5% to 25% on auto insurance.
- Premium Costs Research ahead of time so you know what kind of additional expenses you'll face if something happens to the car.
- Shop around and compare different insurance companies to find the best deal and see what insurance discounts you might qualify for.
2. Repair costs
While electric cars don't require oil changes or other conventional maintenance like gasoline-powered cars, they do require that certain parts (such as batteries) be replaced periodically—and those parts can be very expensive.
JD Power found that EVs' repairs were 1.6 to 2.3 times higher than their gas-powered counterparts.
In the long run, EVs cost half the range to maintain than gas-powered vehicles, but you can expect to shell out more money for repairs.
3. Higher initial costs
Yes, the price of EVs has dropped dramatically, but according to KBB, the average EV is $16,000 more than a gas-powered vehicle.
The average price of a new vehicle hit a record high of $48,681 in November 2022. By comparison, the average price of a new EV was $65,041.
Fortunately, if your EV meets certain criteria, you may qualify for a $7,500 federal tax credit.
This can help offset the higher costs, but you're still paying more upfront for an EV, which results in a higher monthly auto loan.
4. Higher registration fees
EV owners have to pay higher registration fees in many states. The amount ranges from $50 to several hundred dollars, depending on the size, weight, and type of EV you buy.
States charge a gasoline tax and to offset lost revenue with EVS, 31 states charge an additional registration fee each year for both hybrid and electric vehicles.
5. Anxiety scale
- An often overlooked cost when it comes to electric cars is range concern — the fear that your car won't have enough range to get you where you need to go without having to stop and recharge.
- Although the EVS range has gone up significantly, there is any concern that you may not have enough miles to get to your next destination.
- I own a Tesla and live in an apartment with no chargers, so I have to rely on finding a supercharger on my way to my destination.
- Even with a supercharger, you have to find a convenient station, make sure you have a charger available, and spend 15 minutes charging 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 further than the EV allows.
- To avoid this sedative, research the range capabilities of the vehicle you're interested in, how many miles it will drive in a day, and how you'll charge it.
- Electric cars offer great potential to reduce emissions and save money on fuel and maintenance in the long run, but there are some hidden costs associated with them as well.
- Potential buyers should be aware of this before making a purchase.
- Range anxiety, maintenance costs, and high 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 ensure they're getting the most out of their investment.