When Does Buying An EV Actually Start Saving You Money Over Gas?

So you're watching gas prices change by the day, and thinking about all the people swapping their gas guzzlers out for EVs and hybrids to get through the still-inflated prices spurred on by our pointless war with Iran. Maybe you're even wondering is it makes sense to buy an EV yourself, to trade in your current ride and get something electrified. Well, unfortunately, it probably doesn't make purely economic sense for you — at least, not until you account for maintenance. 

If your car is reaching the end of its usable life and needs replacement anyway, going EV likely isn't a bad idea for you. If you still have a payment, though, swapping to the almost inevitably higher monthly cost of a newer electric car could end up doing more harm than good. Luckily, we can tell whether or not you're a good candidate for saving money via EV with a simple formula: (Current payment) + (Current monthly fuel usage x current fuel cost) = (EV payment) + (EV power usage x current power rate per kWh). 

We can figure out whether it's cheaper to switch to EVs on average by plugging some average numbers into this formula. We'll use the average used car payment of $531 a month (per Lending Tree) as our current payment, and average monthly fuel cost of $201 for 2024 (per Motley Fool) at $3.584 a gallon (per the Energy Information Administration for late May of 2024) to reverse-engineer a monthly fuel use of about 56 gallons. The average new car payment of $770 a month will stand in for our new-to-us EV payment, and the average monthly cost to charge it will be $65.30 (per Kelley Blue Book). With those numbers, the average person won't save money by switching to an EV until gas prices reach $5.434 a gallon — something that doesn't look likely as prices keep dropping. 

You can, and should, plug your own use case into this formula and figure out what gas price represents your own break-even point. Maybe your current payment is low enough that it drives the required fuel cost way higher, or maybe you can find a cheaper EV near you — that will all be up to you, your situation, and your local dealers. For many folks, it doesn't quite make financial sense to buy an EV on gas prices alone, but rising prices on services like oil changes could start to push that barrier ever lower.