A new study from the University of Michigan compares the ownership costs of electric and internal combustion vehicles in 14 U.S. cities, revealing that the path to cost parity between the two varies by region.
The study found that the total ownership cost of a midsize electric SUV with a 300-mile range varies by $52,000 across all cities studied. Electric vehicles were more cost-competitive in cities with high gasoline prices, low electricity prices, moderate climates, high annual mileage, direct purchase incentives, and, for homeowners with home charging, time-of-use electricity rates.
However, there were some crossroads. San Francisco and Los Angeles were the most expensive cities for both electric and gasoline vehicles. Yet, the cheapest cities for electric vehicles were Atlanta, Chicago, and Cleveland, while the most affordable cities for gasoline vehicles were Houston and Dallas.
Researchers also found that cost variability was higher for “larger and longer-range vehicles.” Small and short-range electric vehicles were found to be less expensive than similarly sized internal combustion cars, while larger and longer-range electric vehicles tended to be more expensive than their internal combustion counterparts.
Home charging can also reduce ownership costs by an average of $10,000 over the vehicle’s lifespan, and up to $26,000 in some cases, including the cost of a charger, according to the study.
Cost parity in terms of ownership cost is a different discussion than comparing the purchase prices of electric and gasoline vehicles, but it’s also important. According to researchers, over 25 years, across all vehicle types, the total ownership cost equals or exceeds the purchase price of a new car.
“Electric vehicles are currently a cheaper option in some cities,” said Maxwell Moody, lead author of the study, in a statement. “As battery costs decrease, we expect electric vehicles to become cost-competitive in more places and for more people.”
As noted by the Department of Energy in 2022, each U.S. electric vehicle already costs less than $1,000 per year in fuel, assuming standard average driving amounts. While it’s true that electricity prices have significantly increased in recent years, especially in New England, which already had the highest electricity prices in the country.
A 2020 study found that ownership cost advantages of electric vehicles were even greater for SUVs and trucks. Depending on how trucks are used, electric trucks could replace nearly half of gasoline trucks, saving owners money in the process.
