EV Economics

How a combination of factors makes EV ownership more affordable

A mix of factors can make owning an EV less expensive than a similar gasoline vehicle. Our in-depth analysis explains how leasing, residual values, automaker strategies, federal incentives and state differences play a role in EV cost over time.

EVs cost less long term than ICE vehicles in most states

Despite high sticker prices, EVs had a cost advantage over gasoline counterparts in 48 states, according to J.D. Power. Here’s why.

Where EV owners save the most

In every state except Maine and West Virginia, the total cost of ownership for an EV over 5 years is less than a comparable gasoline vehicle. EV owners in Colorado, Illinois, Nevada and New Jersey will save more than $8,000 on their vehicle versus a comparable gasoline vehicle.

-$2,000 to $0

$0 to $2,000

$2,000 to $4,000

$4,000 to $6,000

$6,000 to $8,000

$8,000 to $10,000

$10,000 to $12,000

EV vs. similar ICE ownership costs

An analysis of 5 years of ownership costs conducted in the 1st quarter shows that New Jersey was the most affordable state for owning an EV versus a comparable gasoline vehicle. EV buyers there benefited from the state’s sales tax exemption. West Virginia was the least affordable state, but the cost gap was less than $400 per year.

	EV 5-year costs	ICE 5-year costs	EV vs. ICE savings
New Jersey	$63,426	$73,771	EV: $10,345
West Virginia	$65,193	$63,393	ICE: $1,800

EV vs. similar ICE leasing costs

Mississippi was the most affordable state for leasing an EV versus a comparable gasoline vehicle in the first quarter, according to J.D. Power’s analysis of cost over 3 years, the typical length of a lease. Consumers in the state are buying less expensive EVs compared with other states and are reducing the cost further with the federal tax credit. Connecticut was the most expensive state to lease an EV, largely because of high electricity costs.

	EV 3-year lease	ICE 3-year lease	EV vs. ICE savings
Mississippi	$41,701	$44,785	EV: $3,084
Connecticut	$42,429	$35,634	ICE: $6,795

Source: J.D. Power, Q1 total cost of ownership data

Note: Total cost of ownership includes the monthly payment over three years; discounts from the federal government, states and utilities; automaker charger incentives; operating costs; and tax, title and license fees.

New Jersey was the best state for EV affordability. Not anymore

The total cost of ownership for EVs in New Jersey is increasing by $1,350 on average over a five-year purchase.

Automakers tackle EV affordability with price cuts, incentives, base trims

EVs priced below $45,000 represent a stark departure from launches of the past two years, when vehicles such as the GMC Hummer EV pickup were priced above $100,000.

EV prices fall

Average transaction prices, excluding the federal tax credit, have fallen for most EVs. The average transaction price of the Ford Mustang Mach-E dropped 30% to $42,000 in the 1st quarter, compared with a year earlier. The average transaction price of the Tesla Model Y fell 10% to $57,300. Here’s how prices have fluctuated for the Mach-E and the Model Y since the 1st quarter of 2021.

Audi, BMW and Mercedes lease nearly all new EVs in Q1 with tax credit boost

Leases help dealers move otherwise expensive EVs with federal tax credit that many EV purchases are ineligible for.

Uncertain used EV values could become more predictable

Complex market dynamics are affecting EV residual values. That won’t always be the case, experts told Automotive News.

Incentives grow

More than three quarters of electric vehicle sales were eligible for the tax credit in the 1st quarter, up from 26% when the incentive debuted in 2022.

% of EV sales eligible for credit

% of eligible EV sales that used the credit