Considerable Cost Savings When Using Electricity vs Gas

With so much press dedicated to the advancements in battery technology and vehicle ranges in the emerging Electric Vehicle (EV) market, many consumers are starting to take a hard look at EV as a viable option when purchasing a new vehicle. EV has now become a reasonable consideration not only because of the range of models offered by multiple of manufacturers but also because cost has settled into a price range where EV can be as cost effective, if not cheaper, than a comparable combustion vehicle. Incentives, federal and state rebates may help to offset costs and increase sales of EV’s. Before any incentives, you can get into a Mustang E for around $37,000, which includes many options and appointments found in similar class vehicles.

Consumers understand that there may be a considerable cost savings when using electricity vs gas to fuel a vehicle, especially in this current economic situation. The looming question is what is the real math and how do you calculate your expected electric usage and balance against what you are currently paying at the pump?

Don’t sweat the math, it’s relatively simple to calculate what the cost will be to charge your vehicle. There are some basic assumptions that you can use to create a general cost for the average US consumer. In this blog, we will also provide the formulas to that you can use to input your personal variable to allow you to create your own results.

Basic Assumptions

Approximately 85% of EV owners charge their vehicles at home. Home charging is the cheapest way to charge your electric car. When charging at home, you are paying your electric utility company a specific amount per kilowatt (kWh) hour to power your home. Just like gas prices, where each state has a different price per gallon, each state has a different average rate they charge per kWh. This will create significant variation your kWh per mile cost. Currently the national average cost per kWh is $0.11. However, there is a significant variation based on where you live. As an example, the cost per kWh in New York, NY is about 15 cents/kWh and in Atlanta, GA it is 9 cents. Areas in NE are as high as 20 cents so understanding your cost is an important factor in calculating your annual savings. You can easily calculate your cost per kWh by dividing your electric bill by the kW used. This is all found on your monthly statement.

EV’s currently get between 3 and 4 miles per kWh. Let’s be conservative and use 3 which equates to 4 cents per mile (11 cents/3 miles) if we round up a bit, to charge your car.

Gasoline, on the other hand, is considerably more expensive. As of the publication of this blog, the average price per gallon of gas is $5.02. According to Federal Highway Administration, the average fuel economy of US vehicles is 25.4 MPG. Let’s do the math if $5.02 of gas gets you on average 25 miles, gas costs about 20 cents per mile. ($5.02/25.)

Ok let’s do a comparison of EV vs gas powered cars. According to the FHA, US drivers travel an average of 14,000 miles per year.

The Math

EV cost per mile 4 cents per mile. Gas Vehicle costs 20 cents per mile.

Using our calculations, a conventional gas-powered vehicle would cost the average driver approximately $2,800.00 annually to drive (14,000 miles per year x 20 cents per mile)

Conversely, an electric vehicle would cost that same average driver approximately $560.00 annual to power their car (14,000 miles per year x 4 cents per mile).

That is a cost savings of over $2,000 annually!

Other cost considerations for at home charging Electric cars come standard with a 120-volt Level 1 portable charger. These chargers can be plugged into a simple household outlet and don’t require any special installation. Charging speed is between 3-5 miles per hour so owners can expect to get around 36-60 miles per overnight charge.

Level 2 chargers can be hardwired to your panel or simply plugged in to a 240V outlet. Level 2 chargers provide 12-60 miles per hour charge which is a considerable improvement over a Level 1 charger. You will most likely need to engage an electrician to install the outlet if one is not available. The permit for hardwiring can be more expensive and complicated. Depending on the unit you chose and contractors, Level 2 charger installation can range from $900-$2500 including materials and labor.

Options to Increase Your Savings When Owning An EV

Additional savings can be realized by taking advantage of charging off peak times. Most utility providers have peak and off-peak rates to allow customers to get a better price to use electric when demand is lower. Several chargers and charging stations have options to program charging during these off-peak times. This occurs usually during the later hours in the evening into the early morning and can save owners up to 40% in electric cost in some areas.

It is easy to understand why EV demand is increasing and the number of EVs vehicles sold has doubled in 2021. The availability of a wide variety of models to satisfy all types of consumers and price points is settling in similar ranges of gas vehicles coupled with the overall cost savings presents an interesting option for many new car buyers. With all the financial and environmental benefits some consumers are moving into the EV market.