Buying an electric car in 2023 could save you as much as $7,500 per year. If you own the car for five years – which is how long most people keep a car before replacing it – those savings add up to $35,000.
It should come as no surprise to learn that most of these savings come through lower fuel costs. Gasoline is an expensive fuel source, and it's prone to sudden price spikes. If you’re like us, you’re still recovering from the sky-high gas prices we had to pay last year. When you switch to electric, your costs will instantly come way down: it costs just $10 to $15 to give a car battery a full charge.
However, it’s important to know that EV savings aren’t totally straightforward. Your fuel savings, for one, can be highly variable. There are also substantial savings available from incentives and maintenance costs, although these too can vary quite a bit. We’ll explain what we mean below, and give you easy tips on how you can boost your savings.
Electric car savings at a glance
- Charging an electric car with solar panels will save you $4,500 in fuel costs each year.
- You can use the federal EV incentive to save up to $7,500 on the purchase of a qualifying vehicle, and additional rebates may be available where you live.
- Your maintenance costs will also be lower, saving you up to $1,000 annually.
- You can save as much as $35,000 in just five years when you switch from a gas car to an EV!
1. Fuel savings
You can save: $1,150 to $4,500 yearly
Fuel savings is where you’ll see the greatest benefit when switching to electric. It’s the money you save by spending on electric car charging instead of buying fuel for a gas car.
A battery electric vehicle (BEV, or EV for short), of course, doesn’t actually run on fuel. EVs run on electric motors with large onboard batteries, which you charge up with electricity.
These electric motors are very efficient, allowing them to get your car moving with a lot less energy than a gas car uses. As a result, each mile you drive in an EV costs you a lot less – just 4 to 5 cents per mile, compared to an average of 13 cents per mile in a gas car.
As you rack up mileage over time, these savings start to add up. If you drive an average amount and charge your car with grid power, you can usually save 1,500 to $2,000 a year.
And if you drive long distances and charge with a cheap power source like solar panels, your savings will be even higher. We found, for instance, that Californians that drive 520 miles per week and charge their EV with home solar panels can save $4,500 on fuel costs annually.
That said, there are a few things that can affect your exact level of fuel savings. Here are the ones worth paying attention to:
- Miles driven: EVs have a lower cost per mile, so the greater your mileage, the greater your savings. As a rule of thumb, you’ll save $1,000 with an EV for every 5,000 miles driven.
- Your driving style: Adopt efficient driving methods to get the most out of each charge. Driving with a lead foot will reduce EV mileage by up to 40%, which can cost you over $100 in monthly savings
- The car’s fuel economy: Opting for an EV with a high MPGe rating means you can drive further with the same amount of energy. The highly efficient Tesla Model 3, with an MPGe of 132, can save you $200 more per year than a typical EV with an MPGe of about 100.
- Make use of regenerative braking: Regenerative braking boosts the efficiency of electric cars in stop-and-go traffic conditions. It can save you an additional $50 per year if you mostly drive in busy places like the city or inner suburbs.
- The cost of the alternative – gasoline: Now this isn’t something you can control, but gas prices also have an impact on your fuel savings. If fuel prices rise 10% from current rates, you’ll save another $400 per year. (On the flip side, when gas prices go down, your savings will fall).
Low charging costs are key for big fuel savings
Tesla Superchargers can charge up your battery quickly. Sadly, they’re also expensive to use. Image courtesy of Tesla, Inc.
The way you charge your EV will have a huge impact on your fuel savings – so big that we felt it deserves its own section.
You see, while gas prices tend to be pretty similar within a given location, there can be very large cost differences between various charging options.
Here’s a look at the comparative costs of the three main methods to charge an EV.
| Type of charging | Electricity cost | Cost to fully charge an EV* |
| Public charging station | $0.28 - $0.69 per kWh | Up to $40 |
| Grid power at home | $0.10 - $0.40 per kWh | Up to $23 |
| Solar power at home | $0.05 - $0.11 per kWh | Up to $6.50 |
*Assumes Tesla Model 3 RWD and 85% conversion efficiency
kWh = kilowatt-hour
Source: Solar Powered Electric Vehicles - Consumer Guide
Home charging will almost always be your cheapest option. If you use a home charger connected to grid power, your costs will usually be around 15 to 20 cents per kilowatt-hour (kWh), although this can vary a bit by the utility. If you charge with home solar panels, you’ll pay even less – as little as 5 cents per kWh.
By contrast, commercial charging can be very expensive, especially if done at a DC fast charging station. Tesla's Supercharger network charges up to $0.58 per kWh, and other providers charge even more than that.
Because of these cost differences, your choice of charging option has a huge impact on your savings. Assuming you do all your charging at public stations, the switch to charging with home solar panels will add $2,500 a year to your fuel savings.
Charging at home isn’t just cheaper, it’s more convenient. With a Level 2 home charging station, you can fully charge up your EV while it’s parked in the garage overnight. Avoid public charging stations unless you’re in a pinch.
Savings tip #1: There are lots of incentives out there to help homeowners reduce the cost of energy-efficient home improvements. Avoid costly public charging stations unless strictly necessary. Your charging costs will be much lower at home, especially if you use a rooftop solar panel system.
2. EV incentives and rebates
You can save: up to $7,500 plus location-based rebates.
All taxpayers have access to a federal EV incentive worth up to $7,500, and you may be eligible for thousands of dollars more through location-based rebates. If you qualify, you can use them to knock a large amount off your EV purchase costs.
Federal EV tax credit
Let’s start by looking at the incentive that’s available nationwide: the $7,500 federal EV incentive. It’s a tax credit, so when you buy an EV you apply to cover a portion of your income taxes. The incentive does have certain conditions and exclusions:
- The car’s battery must meet both critical mineral and assembly requirements to receive the full $7,500. If only one is met, the car is only eligible for $3,750.
- Final assembly of the EV must occur in North America.
- The car’s MSRP cannot be above $80,000 for an SUV, van, or pickup truck or $50,000 for any other vehicle.
- Your adjusted gross income cannot exceed $300,000 for joint filers, $225,000 for heads of households, and $150,000 for all other taxpayers.
Local EV tax credits
There are also location-based incentives and rebates. Many states, utility companies, and local governments have programs that can reduce your EV ownership costs. Here are some notable examples:
- New Jersey: The state offers up to $4,000 for the purchase of a new EV through the Charge Up New Jersey incentive program.
- Connecticut: The CHEAPR initiative offers a rebate of up to $9,500 on an EV purchase to eligible buyers, while Eversource, the state’s main utility, will give you $1,000 for a home charging setup.
Remember, incentive availability varies between locations, and its program has its own set of eligibility criteria. Your ability to benefit from incentives and rebates is highly dependent on your circumstances.
Savings tip #2: Choose an EV that qualifies for the $7,500 federal incentive. There are only a handful of models that are eligible for the full amount. You can find a complete list from the Department of Energy.
3. Lower maintenance costs
You can save: $400 to $1,000 per year
One of the great things about EVs is that they’re so much easier to service and maintain. Electric motors can operate without the lubricating oils required by combustion engines. In other words, no more oil changes!
That’s just the tip of the iceberg. EVs require fewer fluids overall, they’re built with fewer parts, and they see reduced brake wear because of their regenerative braking. All this means that they need to be serviced and repaired a lot less frequently, and their upkeep is a lot cheaper.
In fact, a comparative study by the U.S. Department of Energy (DOE) finds EVs are roughly 40% cheaper to maintain than gas cars. While the average cost to maintain a gas car is 10.1 cents per mile, for an EV it is just 6.1 cents per mile.
Using the DOE’s figures, it’s easy to estimate your annual maintenance costs and savings. If you drive 25,000 miles a year, you’d spend $2,525 for the upkeep of a gas vehicle, but just $1,525 for an EV. That’s a savings of $1,000!
You’ll still save if you don’t drive very much; at an annual mileage of 10,000 miles, you’ll still be $400 ahead every year.
Savings tip #3: Electric cars require less maintenance than gas cars, but any maintenance you do need you may be able to handle yourself. DIY guides are posted online by many carmakers, including Tesla.
Verdict: The potential savings are huge
There are many electric car reviews available online, and they’re a great resource if you’re curious about things like EV performance and range.
But they tend to lack reliable info on the most important question for many consumers: how much do you actually save when you buy an EV? We wanted an answer, so we crunched the numbers ourselves. We found that while they can be variable, EV savings are very substantial indeed. Here’s a breakdown:
How much can you save with an electric car?
| Savings factor | Max. yearly savings | Max. 5-year savings |
| Fuel costs | $4,500 | $22,500 |
| Incentives* | $1,500** | $7,500 |
| Maintenance | $1,000 | $5,000 |
| Total | $7,000 | $35,000 |
*Only includes nationally-available federal EV incentive.
**One-time incentive savings divided by duration of ownership (5 years).
In short, you can save a lot of money if you buy an electric car – as much as $35,000 over five years!
Just remember that the best way to maximize EV fuel savings is by installing a rooftop solar panel system. Solar panels will not only charge your EV cheaply, but they can also offer substantial electric bill savings while also reducing your grid reliance. You can check your home’s suitability for solar panels by using the easy-to-use solar calculator below.
Ralph Baruth
SolarReviews Blog Author
Zeeshan is passionate about promoting renewable energy and tackling climate change. He developed these interests while studying at beautiful Middlebury College, Vermont, which has a strong focus on sustainability. He has previously worked in the humanitarian sector — for Doctors Without Borders — and in communications and journalism.