How Long Does it Take to Recoup the Extra Cost of an Electric Car?

 In EV Industry, Green Fleet

From a cost perspective, buying a plug-in vehicle is an investment that pays off the more you drive. In the United States, the additional purchase cost of a battery-powered vehicle is offset to at least some degree by a $7,500 federal tax credit, but even with that credit most electric cars still cost more than their most popular internal combustion competitors.

In many cases though, this added cost is more than made up for by fuel savings over the long term. Electricity isn’t free, but electric costs per-mile pale in comparison to even the most efficient comparable gas vehicles.

So just how long does it take to recoup the “plug-in premium?”

It depends on the vehicle. Here we look at seven of the leading electric vehicles and compare them to their closest gas-fueled equivalents. Using current average electric and gas prices we calculated fuel costs per mile for each model and added them to the post-credit MSRP of each vehicle over time—or “miles” as the case may be.

Under this simplified approach (and without factoring in maintenance costs), nearly every one of these plug-ins recouped its premium and then some during the normal lifespan of a vehicle—with some offering significant cost-of-ownership savings over time.

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Nissan LEAF vs. Honda Civic

Nissan Leaf vs Honda Civic

The base-level 2016 Nissan LEAF is a low-cost compact EV with a big enough range to handle the vast majority of daily consumer and fleet demands on a single charge. The Honda Civic is one of the most popular and well-reviewed compacts on the market, but it doesn’t take long before the LEAF starts paying fuel cost dividends.

Chevy Volt vs. Volkswagen Golf

Chevrolet Volt vs Volkswagen Golf

The Volt is an extended range electric vehicle, meaning it can run on gas as a hybrid once its battery is depleted. But for many consumers and fleets, it’s possible to go almost entirely gas-free thanks to the Volt’s substantial 53-mile electric range. Unfortunately, the added freedom of a gas engine comes at a cost, making the Volt’s hefty price premium compared to the Volkswagen Golf difficult to offset.

BMW i3 vs. Audi A3

BMW i3 vs Audi A3

The BMW i3 is a small compact electric vehicle with a range of 81 miles. For its internal combustion analogue, we chose the Audi A3, whose mix of stylishness, performance and size appeal to a similar demographic of buyers.

Tesla Model S vs. Mercedes-Benz CLS-Class

Tesla Model S vs Mercedes Benz CLS-Class

Not may cars can compare to the Model S in terms of performance or luxury, but the CLS-Class is one of the few cars on the market that puts up a fight. On a cost basis, the Model S starts out roughly $3,400 cheaper than the CLS thanks to the $7,500 federal tax credit and offers luxury buyers huge fuel cost savings the very first time they take it for a spin. Over the course of 100,000 miles, the Model S costs more than $12,000 less to own than the CLS-Class, which requires expensive premium gasoline.

Smart ED vs. Smart ForTwo

Smart ED vs Smart ForTwoYou don’t have to look far for a solid comparison point for the Smart ED. The diminutive Smart ForTwo had already become in fleet applications when, in 2013, Smart released an electric version of the two-seater. Unfortunately, it’s hard to compete with the original ForTwo’s sub-$13,000 MSRP. The Smart ED is still a very low-cost vehicle to drive, but you’ll have to drive it almost 120,000 to reap any savings from its electric drivetrain.

Ford Focus Electric vs. Ford Focus

Ford Focus Electric vs Ford FocusAnother obvious comparison can be found in the Ford Focus and its zero-emissions sibling, the Focus Electric. In this case, the plug-in variant comes at a very reasonable starting price, making its path to ownership savings a relatively short 52,752 miles.

Tesla Model X vs. Porsche Cayenne

Tesla Model X vs Porsche CayenneThe Tesla Model X only recently began selling at high volumes, and the 75-kWh variant of the electric SUV was announced just months ago. Still, the lowest priced Model X looks to be a great value proposition compared to other luxury performance crossovers. The Porsche Cayenne S, which is considered to be one of the best luxury small SUVs on the market, starts out slightly cheaper than the X 75D. But in less than a year, its fuel costs start to really add up.

Unpredictability Complicates Purchase Decisions

These kinds of analyses can help give us some perspective on long-term ownership costs that don’t get included in sticker price, but they’re always changing. The average price of a gallon of unleaded gas in the U.S. today is just $2.36, but exactly three years ago it was hovering around $3.60 per gallon.

For a sense of how significant that difference is, if we were to plug gas prices from June 2013 in and compare them against the Chevy Volt, the Volt would recoup its premium over about 60,000 miles—a little more than half its current cost recovery distance versus the VW Golf. Electricity prices, resale values, available discounts and incentives can also fluctuate wildly, often leading consumers and fleet managers to delay purchasing plug-ins out of uncertainty.

The key making an educated investment in electric drive—one that is almost certain to pay off in the long run—is knowing your needs and finding the car that best matches them. How many miles do you drive each year, and how often do you travel outside of the range capabilities of low-cost EVs like the LEAF? How much does gas and electricity cost in your area compared to other parts of the country? In states like California, gas prices are often more than 20 percent higher than average.

Predicting the trajectory of fuel prices at a given moment is a task even the experts frequently fail at. Understanding your driving patterns and how to maximize efficiency and fuel savings from your plug-in can be the difference in providing the additional clarity needed to take the plunge and reap the rewards of driving gas-free.

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  • DaleDe

    I like the comparison but you cannot buy a new Volt for 26,500 anywhere. I would think the slope, original cost and cost after 100,000, could be used to compare any scenario shown above assuming the cost of ownership is accurate.

    • DTTechRisk

      Actually I did, not counting the federal/state tax credits. But very very few people would take the time to find the deal I found:

      Price was 30k straight up via local dealer incentive.
      3k California EV CARB Rebate
      1.5k GM Provider discount (like friends and family)
      Obviously add tax, title, and registration its more. But getting one of these for under 30k is totally doable in California.

      • DaleDe

        Was this a 2015? The web site for California says: Funding is currently exhausted. All applications submitted after June 10, 2016 will be placed on a rebate waitlist. I have not seen anything like your price on a current vehicle 2017. I bought a 2016 with no such discounts available. I only got about 2K off sticker using Costco and a 700 gift card. I did get a rebait of a smaller amount from a different agency but using single state rebaits paints a unobtainable value for your readers, and skews the answers. I expect my volt break even to be significantly longer.

        • DTTechRisk

          This was a 2017. I just barely got the 3k rebate as that is now closed as of 6/10. Check out http://ev-vin.blogspot.com/ which appears to track only lease deals but all the ones I looked at had precisely the same incentives available for both purchases and leases.

        • DTTechRisk

          This is a good place to hang out too to find the best dealer incentive: http://gm-volt.com/forum/forumdisplay.php?24-Buying-Leasing-amp-Selling-Chevy-Volt. Mine was like 30,050 for the absolute bare bones volt (it’s my wife’s car btw and she loves it!)

    • JRo

      I did as well, but including the Federal and State tax credits, plus a $2k discount from Costco. Got a fully loaded 2016 LTZ Premium for $26.5k.

  • JRo

    This article doesn’t mention anything about maintenance costs. Driving my Volt almost a year now and I’m still at 76% life remaining on my oil. All EVs enjoy less maintenance than their ICE counterparts. If you’re going to make this purely about math, you must put that into consideration.

    • John M. Glennie

      ..then my LEAF would recoup its cost even sooner than 50 000 miles. :D

  • Telveer

    LOL. How long does it take to recoup the cost of a gas car?

  • canuckinthewild

    Very interesting analysis, and I think it shows that EVs do “pay off” in certain situations. (Perks like HOV access aren’t monetary, but they really are huge.)

    However, it would be helpful if the assumptions about costs were explicitly included. Also missing is the expected all-electric driving for the PHEVs in the comparison–obviously, the more all-electric driving, the faster the payback. I would also quibble with one or two of the conventional vehicles used for comparison–for example, is there any reason why a Leaf couldn’t be compared to a Prius? Granted, a Prius is not conventional, but to the user, it essentially is. Finally, there is no Model S with 70 kWh. The closest is 75 kWh, and when priced on the Tesla site, the lowest “trim” level is $74,500, not $71,000.

  • Steve

    Nice analyses, but effectively misleading. Ongoing maintenance costs for gas powered vehicles are significant and serve to further reduce the break even period of EV vehicles. In a Tesla S (which I own), among other items, there are no oil changes, no cooling system flushes or belts to replace, no transmission fluid to replace, brakes last more than 125k miles, no exhaust systems w/ expensive catalytic converters to replace, no emission inspections (including HOV privileges). Not to mention that it takes all of 6 seconds of my time to plug and unplug the Model S daily, vs driving 15 minutes each way to fill up a gas tank that usually ends up taking 15 minutes including the inevitable wait time, approx 3 times every 2 weeks.