Electric vs. Gas: Which Should You Buy?

Only about 3 in 10 Americans would consider purchasing an electric vehicle (EV) and cost may be a factor, according to a study by Pew Research. The study found that the majority of Americans say electric vehicles cost more to buy than gas-powered vehicles. They technically aren’t wrong. According to Kelly Blue Book, the average transaction price for an electric car is $55,614, while the average price of a gas-powered car is $48,641. 

Before you write off EVs as more expensive, consider what might be influencing those averages, warns Liz Najman, Director of Market Insights at Recurrent Auto. “Although the average price for a new EV remains higher than the average price of a new gas car, that’s largely due to new luxury models, such as the Cybertruck, new Porsche models and a handful of top-of-the-line electrified BMWs,” she says.

Najman says she can list at least 12 new EV models that have MSRPs under $42,000, noting that, “Overall, EVs have become much more affordable in 2025.”

The true cost differences between electric and gas vehicles depend on several factors, including the type of car you get, how you use and maintain the car, the auto lender you choose and the financing terms you receive. There is more to the cost of owning a car than the purchase price, so consider the initial price and lifetime costs when debating between buying electric versus buying gas.

Financing

If you choose to finance your vehicle, know that your auto loan interest rate won’t change based on whether the vehicle is electric or gas-powered. When it comes to getting the best auto loan rate, your financial situation plays the biggest part. 

Make sure you have a stable income, lower debt-to-income ratio and a good to excellent credit score. This is largely how lenders determine your rate, and you can qualify for more favorable auto loan rates based on your credit score, especially if you exceed the lender’s minimum credit requirement. 

While the type of car you finance may not affect your interest rate, it could affect your financing options and savings. For example, you may have additional financing sources for EV cars through green auto loans. These types of loans are typically found through a credit union and tend to have lower interest rates than conventional auto loans. You may also qualify for EV tax credits, a financial incentive offered in certain states, and a federal credit worth up to $7,500.

Consider buying used

If you choose to buy used, you’ll save on the overall purchase price for either EV or gas-powered cars in comparison to new. But, you’ll likely save more for used EVs, according to Najman. 

“Used EVs, which are making up an increasingly important part of the EV landscape, are as cheap and in demand as used gas cars,” she says. “Nearly 60% of used EVs are listed under $30K, and 70 percent are under five years old. Compared to many used gas cars, they are a bargain.”

Fuel

At the most basic level, driving a fully electric vehicle will mean no more trips to fill up at the gas station. According to the Department of Energy, an electric vehicle can save you up to $2,200 a year on fuel and up to $1,500 if you drive a hybrid. Of course, just how much you’ll save depends on factors like:

• Where you live.
• How much you drive.
• Road conditions and terrain.
• Your car’s efficiency.
• The price of gas and electricity in your area. 

According to AAA, the national average cost of a gallon of gas as of March 2025 was $3.11. Meanwhile, the national average cost of a kilowatt-hour of electricity was 34 cents. In Hawaii, one of the states where gas and electric charges are most expensive, the average is $4.54 per gallon and 56 cents per kilowatt-hour. In Texas, one of the states where gas and electric charges are the least expensive, the average is $2.73 per gallon and 30 cents per kilowatt-hour.

While you may save on gas, if you plan on charging your car at home, there will be costs to consider. That includes higher electric bills and the cost to install an at-home charger if you don’t already have one. That cost can range from $400 to $50,000 depending on the level charger, which ranges from level one to level three. Level one is the least expensive, but the slowest charge, while level three is the most expensive, but fastest charge, adding 100 to 250 miles of range in under an hour.

Insurance

Bankrate analyzed 16 vehicle models provided by Quadrant Information Services and found that, on average, car insurance estimates are higher for electric cars. This is demonstrated by the higher insurance costs projected for the Tesla Model 3, one of the most expensive cars to insure on the list. Another study by PolicyGenius found that insuring an EV was about $44 more expensive per month than insuring a gas-powered car, on average. 

When it comes to insuring an electric vehicle, the high costs are often attributed to the cost to repair or replace parts. Due to their more complex nature, EV repairs require specially-trained mechanics. Additionally, EV batteries cost thousands of dollars more than gas-powered vehicle batteries, and their parts are less common as EVs themselves are less popular. 

Maintenance

As reported by Bankrate, the average cost of car maintenance based on car type is:

• Hybrid: 66 cents per mile.
• Electric: 85 cents per mile.
• Gas-powered: 59 cents to $1.10 per mile.

On average, EVs are more expensive to maintain than gas-powered vehicles for the same reason insurance is more expensive — parts and labor. EV batteries are significantly more pricey than car batteries, and some repairs may require specialized training. On the flip side, EVs have fewer moving parts that need regular maintenance, like transmission fluid and oil changes, spark plug replacement or exhaust repair. 

Cost to own electric vs. gas cars

While the upfront cost of your next vehicle is important, you must also understand the cost of maintaining and owning the vehicle. Consider the five-year cost to own comparison for two popular sedans, according to KBB.

The first, a 2024 Hyundai Kona, comes in between $25,645 to $33,195 MSRP, depending on the model, and is reported to have comfortable seats and be pleasant to drive. The second, a 2024 Mazda 3, is a popular gas-powered option with an MSRP of $25,335 to $36,615. Its trims offer a premium interior, a smooth ride and a turbocharged engine.

Consider how the following costs accrue over five years of vehicle ownership to determine which vehicle you would prefer. Fuel and other costs will vary based on location and state fees are not included.

While this example shows a higher cost of ownership for the gas-powered vehicle, whether you’ll save money by buying an electric car or gas-powered will depend on several factors, including—but not limited to—the type of car purchase, how much you drive, where you live and if you use any incentives. 

Bottom line

The best way to determine the cost differences between electric and gas vehicles is to do your research to find average numbers that best fit your lifestyle, including the state you live in, your commute, the brand and type of car you want and your estimated financing rate based on your financial situation. Remember, your APR may be higher if you need a bad credit auto loan. Once you have numbers that represent your situation, use them to compare EVs against their gas-powered counterparts.