EV vs Gas:
What Does It Really Cost?

What Is Total Cost of Ownership (TCO)?

Total cost of ownership is the complete financial picture of owning a vehicle over time — not just the sticker price. TCO includes purchase price (or net after tax credit), financing interest, annual fuel or electricity cost, insurance, maintenance, and depreciation (the value you lose when you sell). Over 5 years, the difference between purchase price and TCO can be $20,000–$40,000 depending on the vehicle.

EVs often cost more to purchase but significantly less to fuel and maintain. The break-even point is the month when cumulative EV savings first exceed the higher upfront cost — after that point, the EV costs less per mile driven.

How the EV vs Gas Cost Calculation Works

This calculator builds a full TCO model for both vehicles using your inputs. For each year of the projection period, it computes cumulative fuel cost (electricity rate × kWh per mile, or gas price ÷ MPG), cumulative maintenance, loan interest paid, and running depreciation. The break-even month is identified as the first point where the EV's cumulative costs drop below the gas vehicle's — accounting for the tax credit reducing the EV's effective purchase price.

Resale value loss is calculated as: purchase price × (1 − resale percentage), spread over the ownership period. This single factor often dominates the TCO calculation, especially for vehicles held fewer than 5 years.

EV vs Gas: Annual Cost Comparison

At 12,000 miles/year with average US electricity and gas prices, EV fuel cost is typically 60–70% less per mile than gas. Maintenance savings average $600–$800/year. Higher upfront cost and faster depreciation offset these savings in the early years.

Federal EV Tax Credits (2025–2026)

The Inflation Reduction Act established the current EV tax credit structure. Credits are applied at point of sale starting in 2024, reducing your effective purchase price immediately rather than requiring you to wait for your tax return.

When Does an EV Make Financial Sense?

An EV is likely the right financial choice when: you drive more than 12,000 miles per year (higher mileage shortens break-even), you have home charging access (public fast charging often costs 3–4× more per mile than home charging), you qualify for the full $7,500 tax credit, and you plan to keep the vehicle 5+ years to absorb the upfront cost premium.

An EV may not yet make financial sense if: you drive under 8,000 miles/year, you rely primarily on DC fast chargers (which can cost $0.35–$0.60/kWh), or you plan to sell in 2–3 years before the savings compound. Use the 3-year projection in this calculator to see your specific scenario.

How This Calculator Works

Enter the purchase price of each vehicle, financing details, annual mileage, fuel and electricity rates, ownership costs, and expected resale value. The calculator computes true total cost of ownership including depreciation, finds your exact break-even point, and shows year-by-year cumulative savings across 3, 5, 7, or 10 years.

Frequently Asked Questions

Are EVs cheaper than gas cars over 5 years?

It depends on your driving habits and electricity rates. At average US prices, EVs typically break even with a comparable gas car in 3–6 years when including fuel and maintenance savings. After that point, the EV is generally cheaper to own — especially at higher annual mileages.

What is the federal EV tax credit in 2025?

The federal clean vehicle tax credit is up to $7,500 for new EVs and $4,000 for qualifying used EVs. Income limits apply — $150k single / $300k joint for new EVs. MSRP caps ($55k for cars, $80k for trucks/SUVs) and battery mineral sourcing requirements also determine eligibility.

How much cheaper is it to charge vs fill up with gas?

At average US prices ($0.16/kWh electricity, $3.50/gal gas), charging an EV costs roughly 3–4× less per mile than fueling a gas car. A 30 MPG gas car costs about $0.12/mile in fuel. A 100 MPGe EV costs about $0.05/mile — a 58% reduction in per-mile fuel cost.

Do EVs really require less maintenance?

Yes. EVs have no oil changes, transmission fluid, spark plugs, or timing belts. Regenerative braking extends brake life 2–3×. Average EV maintenance runs $400–$700/year, compared to $1,000–$1,500 for a comparable gas vehicle — a savings that compounds significantly over 5–10 years of ownership.

How fast do EVs depreciate?

EVs have historically depreciated faster than comparable gas cars, in part because the $7,500 new EV tax credit reduces used-EV demand. However, depreciation varies widely by brand and model — Tesla and some others hold value better than average. Depreciation rates are expected to normalize as EV adoption grows.

What is total cost of ownership?

Total cost of ownership (TCO) includes purchase price, financing interest, fuel or electricity costs, insurance, maintenance, and the value you lose at resale (depreciation). The sticker price alone significantly understates the real cost of a vehicle over 5–10 years of ownership.

Does home charging make EVs more economical?

Yes — significantly. Home charging rates can be as low as $0.08–$0.10/kWh on off-peak electricity plans, compared to $0.30–$0.50/kWh at public DC fast chargers. Drivers who charge primarily at home see the largest fuel cost savings and the shortest break-even timelines.

When does an EV break even with a gas car?

The break-even point depends on the purchase price gap between vehicles, annual mileage, fuel and electricity rates, and maintenance cost differences. Most comparisons show break-even between 3 and 7 years. Higher mileage drivers break even fastest — every extra mile reduces the per-mile cost of the higher upfront EV price.

Is now a good time to buy an EV?

The federal tax credit, expanding charging infrastructure, and wider model selection make 2025–2026 a competitive window for EV buyers. However, technology improves every 1–2 model years, so waiting 12–24 months may yield better range or lower prices. Your budget, mileage, and charging access should drive the timing decision.

How does MPGe compare to MPG?

MPGe (miles per gallon equivalent) measures EV efficiency by expressing how far the vehicle travels on the energy equivalent of one gallon of gasoline — defined as 33.7 kWh. A higher MPGe means lower electricity cost per mile. Most EVs rate between 90 and 150 MPGe, compared to 25–35 MPG for typical gas vehicles.

EV Owner Resources