Electric Vehicles: 10 Costs That Make Them a Bad Financial Decision

SAVING & SPENDING - HOME & AUTO
Discover why the allure of electric vehicles may not add up for your wallet.
Updated July 18, 2024
Fact checked
Woman smiling in car

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

There's something really appealing about pulling into work in a new Mustang Mach-E or driving down the street and watching others' others' heads turn to look at your brand-new Tesla. 

These cars certainly offer a lot, from being good for the environment to a sleek design. If you find yourself still struggling to get ahead financially, though, an electric vehicle (EV) might not be the right option for you.

Here are a few reasons why you may not be able to afford an electric car yet.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today”
  • Create your account (important!) by answering a few simple questions
  • Start enjoying your discounts and perks!

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

It costs more to insure

RomanR/Adobe toy car along with pennies, key and calculator on wooden table showing saving money for car

Your car needs to be insured, but saving money on car insurance may be more difficult when buying an electric vehicle.

Here’s the problem: The higher value of the EV means that you can expect to pay more for car insurance. If the insurer has to replace the car, it will cost them more. 

Repairs also cost more. This means higher costs are passed on to you and your policy premium.

Purchase price is too high

ViDi Studio/Adobe woman in showroom opening car door in shock while buying new car

Though costs range widely and competition is growing, EVs are still expensive to buy. In 2023, the average price of an electric vehicle was just over $53,000, according to Kelley Blue Book.

Although some models may be a bit cheaper, that's still more than the average price of a gas-powered vehicle, which is $48,334.

Cost to repair is higher

deagreez/Adobe man in suit screaming in frustration at automobile workshop as mechanic explains bill

Accidents happen, and components break down. When that happens to your EV, you can expect to pay more for the repairs than you would if you had a traditional car.

For example, where it can cost between $45 and $250 to replace a traditional car battery, a replacement battery for an electric vehicle can sometimes cost as much as $20,000, making it a very expensive repair.

Resolve $10,000 or more of your debt

Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.

National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1

How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.

Try it

You can’t qualify for specific credits or rebates

Monthira/Adobe girl standing on street holding blue piggy bank besides car showing car loan concept

Some great tax credits are available to electric car owners for 2024 and beyond, but you should do your due diligence to better understand how much you would save and if your purchase even qualifies.

The IRS issued a $7,500 tax credit for qualified EVs this year. However, the credit has a long list of qualifications. 

For instance, you need to buy the vehicle for your own use and not resale, and the vehicle must primarily be used in the United States. There are also specifics regarding your adjusted gross income. You can find more details on the IRS website.

Installing an EV charger at home can be expensive

Tomasz Zajda/Adobe male worker standing outdoor charging cord of electric vehicle charger

You don’t have to do this, as you can go to an EV charging station to get the battery juiced up for your next road trip. However, that takes time and often means sitting in a gas station for what could seem like forever.

You may decide you want to add an EV charger to your home to save that time, and the cost will depend on how quickly you’d like your car charged. 

Level 1 and Level 2 options take longer to charge and range from $200 to $1,500. A Level 3 charging station is the fastest option, but it can cost up to $50,000 to install.

Electricity isn’t free

ink drop/Adobe tiny bulbs on stack of gold coins showing rise in energy cost concept

There’s a sweet satisfaction in knowing you don’t have to worry about the cost of gas with an electric vehicle. However, electricity isn’t free. You’ll still have to spend money to charge your vehicle in some way. 

You’ll spend about $60 per month if you have an at-home EV charger. If you don’t have a charger at home, the costs might be higher than this.

It still needs maintenance

uflypro/Adobe male mechanic sitting besides car using software to auto tune car on tablet

Gas vehicles need extensive functional and mechanical support to keep them operating well. Although you may not have to deal with oil changes or have an expensive tune-up, there are still maintenance costs to factor into your budget when you own an EV. 

You’ll need to have it inspected, and any moving parts will likely need replacement over time.

You’ll pay more in sales tax

bradcalkins/Adobe yellow keys of tax subtraction and tax addition on keyboard showing tax increase and decrease concept

Electric vehicles are more expensive, which means that when you purchase one, you’ll have to pay more in taxes than you would if you bought a traditional car. 

And if you choose to finance your vehicle, this will likely mean you’ll need to put down more upfront to get a better rate.

High registration fees

Richelle/Adobe pen choosing registration fees increase option on form

Depending on where you live, your EV might be hit with an unusually high registration fee. Higher registration fees are one way in which states make up for the loss in gas tax from electric cars

Gas and fuel taxes help cover the cost of repairing roadways. If you’re driving an electric vehicle, you’re not paying a gas tax, which means the state could be losing a significant amount of money. This is why they apply higher registration fees.

Earn cash back on everyday purchases with this rare account

Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2

With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!

This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.

Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.

Apply for a Discover Cashback Checking account today

You don’t use all of the built-in features

metamorworks/Adobe autonomous car with digital speedometer driving on road without driver

If you want to maintain your budget and keep your costs down, consider skipping the high-end features that are nearly always a component of EVs. 

Many manufacturers are focused on making these cars as enhanced as possible with all of the bells and whistles. If you don’t use these features, you’re spending a lot more for a vehicle to drive to work every day.

Pro tip: Buying a stripped-down version of any vehicle could help you keep more money in your bank account, and you may not notice the difference. 

Bottom line

lovelyday12/Adobe man writing on notebook while saving pennies in glass jar showing saving money concept

Although an electric vehicle is a more environmentally friendly option, it’s not always the most stress-free financial option. 

If you’re still living paycheck to paycheck, find a few ways to lower your debt and earn more money.

This can put you on the path to owning an electric car, so long as you understand it requires a bit more funding than a traditional vehicle.

  • You could save up to $600 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Sandy Baker Sandy Baker is a has over 17 years of experience in the financial sector. Her experience includes website content, blogs, and social media. She’s worked with companies such as Realtor.com, Bankrate, TransUnion, Equifax, and Consumer Affairs.