How to calculate if an electric car will save you money

Pricing out an electric car can come with a lot of factors right now. Insider lays them out point-by-point.

• There are a lot of factors to consider when calculating potential cost-savings for an EV.
• New tax credits are making the math work for more buyers right now.
• After the purchase price, the cost of charging is the most important to consider.
• This article is part of a series called Getting Ready for Electric, a practical guide to buying your next EV.

If you're considering switching to an electric vehicle, or just adding one to your driveway, there are some savings to keep in mind — and some costs, too.

Since the start of the year, deals and discounts on electric cars have abounded. 

New EV tax credits are helping to defray the cost of these expensive vehicles. But there is more to consider than the purchase price of these cars, which averaged $61,448 in December, according to Kelley Blue Book.

Experts say that EV shoppers should think about everything from federal and state EV incentives, to the amount they might spend on charging versus gas, and potential installation costs for at-home charging. While EVs purport to require less regular maintenance than their gas-powered counterparts, the cost of repairs on an electric vehicle could be steeper given the amount of technology packed into these cars.

Here are all the points to consider when calculating whether an electric vehicle will save you money in the long run.

Purchase price

EV tax credits offered under the Inflation Reduction Act can defray the upfront cost of an EV, but it's important to know the ins-and-outs of what qualifies for the rebates before you place an order.

Right now, qualifying new EVs are eligible for a $7,500 tax credit. The US Treasury and IRS are expected to release further guidance on which vehicles qualify for the credit in March, which could exclude some vehicles that now make the cut.

That's why car-shopping experts say that now is the time to buy if you want to make sure you get the full tax credit on an EV purchase. 

The cost of charging versus gassing up

The other piece of the EV cost-savings equation is whether having a battery-powered car will really save you money on fueling up. 

While gas prices remained low and car makers tuned engines to get better gas mileage, EVs were a tough sell to the average buyer. That changed some in the last year as gas prices climbed to new highs.

Edmunds did its own cost analysis last year, and found that while the cost of electricity is more stable than gas, the average paid per kilowatt-hour varies greatly from state to state. On the low end, Alabama residents pay about $0.10 per kilowatt hour. In California, where EVs are more popular, the average residential cost per kilowatt hour is about $0.23, according to Edmunds. 

(A list of state-by-state averages can be found here)

Right now, most public charging stations are much cheaper than gas stations – and many are still free to charge at, depending on the vehicle you drive. 

Charging at home

Most electric vehicle owners do most of their charging at home, and most EVs come with a cord that plugs into any standard 110-volt home outlet. However, these cords can't deliver as much electricity to your battery at once and have much longer charging speeds than higher-voltage Level 2 chargers.

The cost of installing a Level 2 home charger can be quite expensive, and should be considered as part of the full cost of your electric car, experts said. 

The first requirement for installation is a 240-volt outlet. Homeowners already equipped with such an outlet can expect to pay anywhere from $200 to $1,000 for a Level 2 charger, not including installation costs, according to Edmunds.

Installation can cost another $1,000, depending on factors like market and labor rates.