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8 min read Published August 15, 2022
Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of borrowing money to buy cars. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promise
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If you have questions about money. Bankrate has the answers. Our experts have been helping you master your money for over four years. We continually strive to provide our readers with the professional advice and tools needed to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , therefore you can be confident that our content is honest and precise. Our award-winning editors and reporters create honest and accurate content that will help you make the best financial decisions. Our content produced by our editorial team is factual, accurate, and not influenced through our sponsors. We’re open regarding how we’re in a position to provide quality content, competitive rates, and helpful tools for you by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the placement of sponsored products or services, or through you clicking certain hyperlinks on our site. Therefore, this compensation may influence the manner, place and when products are listed in the event that they are not permitted by law for our mortgage, home equity and other home loan products. Other factors, such as our own website rules and whether or not a product is available within your region or within your self-selected credit score range may also influence how and where products appear on this website. Although we try to provide a wide range offers, Bankrate does not include details about every credit or financial item or product. One in four new car buyers are now considering purchasing an or hybrid like they would the traditional gas-powered vehicle, according to (KBB). The choice of electric vehicles — or any alternative fuel vehicle can prove to be worthwhile for both your wallet as well as the environment. Before you head to the dealer, it’s recommended to research electric car options and be aware of the differences in terms of cost. What exactly is an electric car? Electric cars have seen a huge rise in popularity in recent years and especially as the understanding of climate-related issues is growing. This, along with the high cost of gas has led to drivers looking to save money by going electric. Unlike the typical gas-powered vehicles lining highways and parking lots, EVs have a motor powered by batteries. There are three types of electric vehicle. Hybrid electric vehicles (HEVs) Powered by both an electric motor and the internal combustion engine HEVs boast the strength of a gas-powered traditional vehicle and the benefits of improved performance and fuel efficiency. There is no charge for an HEV the same way as the EVs it is compared to, however it charges the battery through the engine. There are a large variety of models and makes of HEVs available in the marketplace. Some highly rated options according to KBB are the Honda Accord Hybrid, the Toyota RAV4 Hybrid and the Hyundai Elantra Hybrid. Plug-in hybrid electric vehicle (PHEVs) Plug-in hybrids is exactly as it sounds it is a hybrid vehicle can be charged by plugging it into. It is powered by an internal battery within the vehicle that is charged through an external cable. PHEVs also use an alternative fuel, which is typically gasoline to power their internal combustion engines (ICE). The vehicle makes use of electricity until it is consumed and then taps it’s ICE capabilities. The choices for PHEVs can be smaller, but KBBs standout options include that of Ford Escape SE Plug-in Hybrid and the Hyundai Tucson Plug-in Hybrid and the Kia Niro Plug-in Hybrid. Full electric cars (EVs) A fully electric vehicle is a step up and is powered completely with an electric motorwithout ICE or an alternative fuel sources involved. These have a battery pack which powers the vehicle. It is charged in a similar manner to PHEVs. EVs are charged through a specialized outlet. While charging stations can be located in the local area, it is essential to be aware of the extra expense that a charger will cost, if you are contemplating a fully electric. KBB’s top fully electric choices are the Chevrolet Bolt EV, the Nissan Leaf and the Ford Mustang Mach-E. Price of electric vs. gas vehicles Before you dive headfirst into the world of hybrid and electric vehicles, it is important to understand the differences in price between electric and gas. Although driving an EV will have lower overall costs however, the initial cost could be a roadblock for many. Lately, buying a new vehicle is expensive no matter what the power source. July 2022 saw record-breaking price for new vehicles of over $48,000, as reported by . However, the cost for an EV is still higher than that of a gasoline-powered vehicle. It is estimated by KBB estimates for an EV is more than $60,000which is in line with the average price for a luxury car. It is expected that the EV market will grow to 40 percent by 2031 according to . This prediction is supported by more vehicles hitting the market. This increase in EV availability is an opportunity to equalize. When more consumers are looking into purchasing electric vehicles, the average cost will go down. This growth is already clear in the number of new models coming onto the market. For the quarter that began in early 2022, 4.64 percent of new vehicle registrations were electric vehicles, while 7.18 percent were hybrids, according to Experian’s report of automotive market trends. This made for a 60.4 percent growth in EVs over the first quarter of 2022 and a 10.7 percent growth for hybrids. Cost to own electric as compared to. gas cars While the initial cost of the next car is crucial, you must also understand the cost to maintain and own the vehicle over the lifetime of ownership. Take a look at the cost-to-own analysis for five years of two popular sedans according to Edmunds. The first, 2022 Chevrolet Bolt EV, comes in at $31,955 MSRP . It comes with a huge capacity, spacious cabin, and well-rated handling. The second, a 2022 Mazda 3, is a popular choice for gas powered vehicles with a price tag of $24,115. It comes with an elegant interior, a smooth ride and a turbocharged engine. Consider how the following expenses accumulated over the course of five years of car ownership will affect the type of vehicle you’d prefer. 2022 Chevrolet Bolt EV
2022 Mazda 3
Vehicle depreciation
$8,767
$6,700
Fees and taxes
$2,603
$1,814
Financing
$2,921
$2,309
Fuel
$2,283
$11,255
Insurance
$5,411
$3,941
Repairs
$731
$666
Maintenance
$2,806
$4,592
True cost to own
$25,522
$31,277 Fuel At the most basic scale, driving an electric vehicle will mean the end of having to the gas station. In a 2020 study, it was found that EV owners will spend, on average, 60 percent less money for fueling their vehicles. The price difference for fuel between the Chevy and the Mazda is more significant than the typical. But getting power for your EV is not as simple as choosing regular middle-priced or premium. The charging process for EVs can be divided into three choices that have different benefits and costs. One charging. This is the most popular type of charging that is accessible through the same outlet you charge your phone using. They are the most slow charging options and offer up to five and two miles charge per hour. Level two charging. These chargers, which are typically placed and located in your garage are powered by the same electricity as your washing machine. It is possible to gain 10 to 20 miles of charge in an hour. Level three charging. Also known as DC charging, these are available in public spaces. They’re the fastest option and drivers can receive an 80 per cent charge within 20 minutes. Similar to how running your washing machine several times in succession will cost you more electricity, the additional cost incurred by charging at home could increase. This cost per month is added to the one-time average price to set up an at-home charging station that can vary from $300 to $50,000 according to the size of charge. Keep in mind that many communities are now equipped with chargers, meaning you might not have to shell out to install it right away. Visit a free map of EV stations to find chargers in your local area. Finance Although you are able to finance a cargasoline or electric powered — simply apply online or in person with some lenders before settling on the green car can come with some added perks. These loans are available to those looking to finance an electric car. These kinds of loans are typically found through a credit union , and typically offer lower rates of interest than traditional auto loans. There is also the possibility of qualifying for a financial incentive which is offered in certain states in the U.S. You can benefit from a credit amounting as high as $7,500, contingent on your home state. Insurance Insuring your car is a vital part of the ownership process that will protect you and your passengers. It follows the same method you would take to cover the traditional vehicle option. It will cover collision, bodily injury, responsibility and comprehensive insurance. Like any other vehicle, your exact price will be determined by a variety of factors. But the insurance cost for an EV is typically more expensive than traditional gas-powered options. The reason for this is due to the cost of the vehicle’s parts. A minor accident can result, for example having to pay to replace a battery pack which could be priced at more than $15,000. Bankrate analyzed 12 vehicle models provided by Quadrant Information Serves and discovered that on average premiums are higher for electric vehicles. This is evident in the higher insurance rates expected for Bolt over the Mazda 3. Bolt in comparison to the Mazda 3. The pros as well as cons for electric cars Electric vehicles can offer a vehicle which is healthier for the planet and your wallet over the long run however, they’re not without downsides. Advantages of electric cars A few benefits to driving an electric car are less maintenance. Electric cars require less visits to the mechanic, which means less money spent on costs, such as oil changes and brake system checks. A lower cost for the life of the car. Car ownership can be costly, but EVs come with a lower cost. More sustainable to the planet. Electric vehicles do not emit pollutants from the tailpipe, making them more beneficial for the local air quality and overall carbon dioxide emissions. The latest technology is readily is available. A lot of the latest electric cars have advanced control panels and mobile apps that allow you to control and monitor the vehicle. There are cons to electric cars. Some negatives associated with driving an EV include: Higher purchase cost. On average, buying an EV has a more expensive initial cost, which is close to $12,000 more, according to KBB’s average July 2022 transactions prices. Range anxiety. Charging stations can be a bit scarce and far in certain locations, leaving drivers feeling stressed when searching for a place to get power. Faster vehicle depreciation. Battery deterioration and vehicle incentives cause a quick loss of value when it comes to electric cars. Cost of installing an electric charging station. If you prefer being able to charge at your own home, installing a charging station can cost up to $50,000. Are electric cars the right choice for you? If your next set of wheels will be electric, it must be thought of similarly to how you’d pick the model or design of a traditional car is the best fit for youtake into consideration your lifestyle and requirements. If your commute fits with the available range an EV offers or if you prefer the sleek style and environmental benefits, then an EV may be a great option. However, if committing to an all-electric EV is too big of a financial investment, you might want to look into an alternative, such as the hybrid or plug-in option in the event that you’re considering buying. Hybrids and PHEVs tend to be less expensive upfront and carry some of the money-saving advantages that an electric car does. Take note of these key aspects when you are shopping to make sure that you’re choosing an EV is worth your investment. The range of the vehicle If you have a long commute to work and do not have access to charging stations on the route and at the point you want to go, take into consideration the range of the vehicle that your potential new car holds. The battery’s range of use can differ significantly based on the type of car. Make sure that you don’t buy a vehicle that can’t be easily charged for your daily outings. Access to chargers Prior to going to the dealer to look around, check for access to charging stations in your region or look into the cost of the installation and maintenance of an on-site charger. This is a way of weighing the levels one, two, and three options based on your requirements. Your lifestyle Not only is it important to consider your way of life in terms of style but also in function. Electric vehicles tend to function differently than the ones you’re familiar with. Because of its dependence on regenerative braking, as an instance, you could expect slower brakes, but a more smoother overall experience. The final word: the price of owning an EV can be less expensive than a gas-powered option. Even with a higher rate of depreciation and potentially higher insurance and financing, the less maintenance costs and the five-year time frame to own an EV can make it a viable option. If you are a prospective car owner it is crucial to decide which expenses matter most to you, and if EV is compatible with your lifestyle. FAQs What is the time it takes to take to charge an electric car? Based on the size of the battery, the process can take as few as 30 minutes or 12 hours. The best way to go is to fill up your EV by smaller portions instead of all at one time to reduce the time to charge. What is the cost to recharge an electric vehicle? The exact cost for charging will vary based on the location due to different electric costs, the charge is determined by the range available and cost per kilowatt (kWh). In California for instance electric power is typically 18 cents per unit therefore an electric vehicle that has a range of 150 miles will fall somewhere between $7 and $7 for a full charge. How long will the batteries in electric cars last? Batteries found in an EV can last between 10 to 20 years before they need a full replacement.
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of borrowing money to buy a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain confidence to manage their finances through providing clear, well-researched details that cut otherwise complex topics into manageable bites.
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