So you’re watching gas prices change day by day, and thinking about all the people who are swapping their gas consumers for EVs and hybrids while still dealing with increased prices because of our pointless war with Iran. You might also be wondering whether it makes sense to buy an EV yourself, trade in your current ride and get something electrified. Well, unfortunately, it probably doesn’t make a whole lot of economic sense for you – at least, until you account for maintenance.
If your car is reaching the end of its usable life and needs replacement anyway, it’s probably not a bad idea for you to get an EV. However, if you still have payments, swapping to a new electric car with its almost inevitably higher monthly cost could do more harm than good. Luckily, we can tell with a simple formula whether you’re a good candidate for saving money through an EV: (Current Payment) + (Current Monthly Fuel Usage x Current Fuel Cost) = (EV Payment) + (EV Electricity Usage x Current Electricity Rate per kWh).
Let’s look at some averages
We can plug some average numbers into this formula to find out whether it is cheaper to switch to an EV or not. We will use an average used car payment of $531 per month (per month) lending tree) as our current payment, and the average monthly fuel cost for 2024 is $201 (per motley flower) $3.584 per gallon (per Energy Information Administration for the end of May 2024) to reverse-engineer the monthly fuel usage by approximately 56 gallons. The average new car payment of $770 per month would be equivalent to our new EV payment, and the average monthly cost of charging it would be $65.30 (per kelly blue book). With those figures, the average person won’t save money by switching to an EV until gas prices reach $5.434 per gallon — something that doesn’t seem likely as prices keep falling.
You can incorporate your own use case into this formula and figure out what gas price represents your own break-even point. It may be that your current payment is so low that it greatly exceeds the required fuel costs, or you may be able to find a cheaper EV near you – it will all depend on you, your situation and your local dealers. For many people, purchasing an EV based on gas prices alone isn’t financially justifiable, but rising prices on services like oil changes could begin to lower that barrier even further.
