Gas vs. electric cars: Financial & environmental aspects

Electric cars were invented more than 100 years ago, but until recently, they were a small niche in the auto market. Now, electric vehicles are a more practical option thanks to advances in tech. A growing number of consumers are making the switch after considering the pros and cons of gas and electric cars.

Electric vehicles have come down in price, but you're still usually going to see a higher number on the sticker for an electric car compared to a gas-powered car. Kelley Blue Book reports that in November 2021, electric vehicles sold for $56,437 on average. In comparison, the average prices for traditional cars were $25,650 for compact-sized, $31,713 for mid-sized and $42,804 for full-sized.

Another consideration is that if you go electric, you'll probably want to purchase an upgraded charger for it. Most electric cars come with a level 1 charger, which is a cord that can be plugged into an ordinary wall outlet. These can take up to 20 hours to complete charging. A level 2 charger is necessary if you're hoping to get your car to full power overnight—they get the job done in just three to eight hours. The downside is that the upgraded charger plus installation costs an additional $2,000 on average.

Maintenance costs are typically higher for a gas car than for an electric car. Gas cars need regular oil changes, and there's more wear and tear on the brakes. There's also more going on mechanically under the hood, meaning more parts that can break down. Consumer Reports estimates that buying an electric car results in savings of $4,600 on repairs over the vehicle's lifetime.

In terms of cost per distance traveled, an electric car typically incurs scheduled maintenance costs of 6.1 cents per mile while scheduled maintenance on a gas car adds up to 10.1 cents per mile.

Car warranties reflect the difference in repair needs. It's common for the warranty on an electric car's battery to extend for 8 to 10 years or cover 100,000 miles. In comparison, the warranty on a gas car is usually three years or 36,000 miles.

But in the event that an electric vehicle needs a major part replaced, the bill can be high. According to Consumer Reports, putting in a new battery pack costs about $5,500, and a new electric motor may be priced at $6,000 to $9,000. That's quite a bit higher than the $2,500 to $4,000 it takes to rebuild a combustion engine or the $4,000 you'll need to replace a four-cylinder engine.

Electric cars can offer dramatic savings compared to gas-powered cars. To see how, it helps to look at the numbers.

Let's consider the 2021 Kia Rio, a fuel-efficient subcompact sedan that gets 36 miles per gallon for combined city/highway driving.

The U.S. Department of Energy offers estimates of fuel costs for this and other vehicles, depending on how much you're planning to drive the car and the price of gas. According to the U.S. Department of Transportation's Transportation Statistics Report 2020,a vehicle is typically out on the road for a little more than 10,000 miles per year. And as of April 2022, gas was around $4.098 per gallon.

Assuming you're going to drive 27 miles most workdays plus an extra 4,000 miles a year on other trips, for a total of 10,615 miles a year, and you're paying $4.10 per gallon, you can plan on buying 285 gallons of gas a year for this vehicle and spending $1,169 on gas annually. That's just over $97 a month, and it works out to about 11 cents a mile for fuel.

For a second gas-powered example, consider an SUV like the 2021 Toyota 4Runner, which gets only 17 combined miles per gallon. If you drive that same distance with it, you'll need to buy 602 gallons of gas a year, which would set you back $2,470 annually or nearly $206 per month. The fuel costs will add up to a little more than 23 cents a mile.

On the electric side, let's look at the 2021 Nissan Leaf, which has a range of 226 miles and uses 31 kWh of electricity for every 100 miles driven. If you're driving the same amount as in the other example, you'll use 3,408 kWh of electricity each year. In January 2022, consumers paid an average of 13.72 cents per kWh. If you're charging at home, then, you'd pay about $468 per year for electricity. That's about $39 per month, and it works out to little over 4 cents per mile.

As another electric vehicle example, consider the 2021 Chevrolet Bolt. It has a range of 259 miles and uses 29 kWh per 100 miles driven. To travel that same distance, you'll need 3,110 kWh per year, which would cost $427 annually or $36 a month for at-home charging. That translates to 4 cents a mile to power the car.

One thing to be aware of, though, is that if you're not charging at home but instead buying electricity at public charging stations, you could end up paying significantly more. You're likely to pay about 44 cents for a kWh of electricity at a public station. So if you use public charging exclusively, you'd pay about $1,500 a year to power the Nissan Leaf or $1,368 a year for the Chevrolet Bolt. Buying a charger is essential if you want to enjoy lower fuel costs.

As you can see, it costs much less to charge an electric vehicle than to buy gas as long as you're using your own charger. Your exact savings will depend on factors like the current prices of gas and electricity, your vehicle's efficiency, and how far you're driving. But overall, the Environmental Protection Agency estimates that if your household switches one of its main cars to an electric vehicle, your fuel costs could go down by $500 to $1,000 per year.

If you drive a traditional car, you pay taxes on gas when you fuel up. If you drive an electric car, you're not paying for gas or those taxes, but you may owe an extra registration fee, depending on your state. You can look up your state's fees on the National Conference of State Legislatures website.

You might qualify for a tax credit or other incentives to help offset the cost of a new electric car. The U.S. Department of Energy offers a list of the federal tax credits available for certain models. It also provides a search function to help you find incentives in your state. Tax credits and other incentives vary by state.

If you're concerned about being able to sell a car later, there's no clear answer on whether gas or electric is better.

In the past, electric cars depreciated faster than the gas-powered competition. That could be because buyers were concerned that electric vehicles' range might not hold up in the long term or because tax incentives made new electric cars more attractive. But in 2022, the prices of some used electric vehicles have been buoyed by high gas prices and a shortage of new models for sale.

If you expect high gas prices to persist and electric vehicles to grow in popularity, you might be optimistic about an electric car's resale prospects. On the other hand, if you want a car with a track record of holding value over time, you may prefer a model with a combustion engine.

Both gas and electric vehicles have some negative implications for the natural world. If you look at different points in a car's lifetime, you might reach different conclusions about which option is better for the environment.

First, there's manufacturing. Building a battery for an electric car takes more energy and can release more greenhouse gases into the atmosphere, driving climate change. So if you're comparing a gas-powered car and an electric car at the dealership, the electric car might be responsible for higher emissions at that stage.

But as these two types of vehicles head out on the roads, gas-powered cars take a greater toll on the planet. Gas cars contribute to air pollution with the exhaust they let out while electric cars don't produce any tailpipe emissions. And the gas that goes into a car comes from oil that first has to be taken out of the ground then processed and transported, adding emissions at every step of the way.

Of course, the electricity used to power an electric car is also usually produced from fossil fuels. But on average, the emissions generated by driving an electric car are well below those generated by a gas car. In the U.S., driving a gas-powered car typically releases 381 grams of carbon dioxide equivalent per mile while driving a battery-based electric car produces only 110 grams of carbon dioxide equivalent per mile. And as green energy sources become more prevalent, the carbon emissions from electric cars will likely fall further.

The balance shifts back toward gas after vehicles reach the end of their useful lifetimes and are scrapped. The parts that make up a gas car can largely be reused, but spent electric vehicle batteries are tricky to recycle, and there's no standard system in place to reclaim them. And if these batteries are put into landfills, heavy metals can leak out into the surroundings, posing a hazard.

All in all, electric vehicles usually come out ahead in terms of environmental impact because the benefits from their fuel efficiency outweigh the emissions from manufacturing and disposing of them. But there's still work to be done to reduce harm to the Earth.

Whether you decide on an electric car or a gas car, consider applying for preapproval with Thrivent Credit Union to take some of the guesswork out of financing your purchase.