Do Hybrid & Electric Cars Save You Money?

March 3, 2022 | Savings & Tips

The auto industry is going green, and some states will be phasing out gasoline-powered vehicles (some as early as 2030 or 2035) in the not-too-distant future. With more environmentally conscious changes happening each year, many drivers are turning to or considering eco-friendly cars. But are there any tangible benefits today? Do hybrid and electric cars save you money? How do they compare to traditional gas-powered vehicles? We’ll answer these questions (and more) below, so get ready to learn about the pros and cons of hybrid and electric vehicles.

What Are the Differences Between Hybrid, Electric, and Gas Cars?

Before comparing cars, let’s define the different vehicle types in question. Here’s the lowdown on gas, electric, and hybrid cars, according to DRiV.

What Is a Gas-Powered Vehicle?

Historically, vehicles have been gas-powered, and while the landscape is changing, most cars you see on the road are still gas-powered. These types of vehicles are pretty much exactly what they sound like. They use an internal combustion engine, drawing their power from the fuel you fill up with at gas stations everywhere.

What is an Electric Vehicle?

When you look under the hood of an electric car you’ll see batteries, a controller, and an electric motor instead of a typical engine. The battery powers the vehicle. The controller takes that power, converts it, and moves it along to the motor. The motor uses that electric power to move the car. Electric vehicles must typically be charged before you drive them.

What Is a Hybrid Vehicle?

A hybrid car combines the technology found in gas-powered vehicles and electric cars, meaning they have a combustion engine and supplement it with an electric motor and battery. So, you’ll still have to fill up at the gas station, but electric vehicle features, like automatic starting and stopping while idling, will help you get better mileage and cut down emissions.

There are actually three different types of hybrid vehicles: full hybrids, mild hybrids, and plug-in hybrids, according to AutoGuide.com. Mild hybrids are less efficient because their electric components must work alongside the gas engine, meaning fuel is always burning. Full hybrids can operate on the gas engine alone, with the gas and electric elements working in tandem, or in full electric mode. Plug-in hybrids typically have the same features as a full hybrid, but they also have larger batteries, allowing them to operate in full electric mode for longer stints. If you’re only running brief errands, like to the grocery store down the street, you might never need to burn gas with a plug-in hybrid.

Pros & Cons of Hybrid, Electric, and Gas Cars

So, now that we know the differences, let’s break down the good and the bad. Here are some of the most important pros and cons for the different vehicle types, according to Edmunds, the trusted car-shopping guide.

Gas Cars Pros & Cons

Gas vehicles are what most drivers are accustomed to. On the plus side, they’re typically more powerful than comparable hybrid and electric models. And while it might not be the case forever, gas-powered automobiles are generally less expensive to purchase. As alternative energy becomes more commonplace, parts should become cheaper. But for now, traditional combustion engines tend to offer more savings upfront. Lastly, when you run out of gas, you can stop at a nearby gas station, refill, and continue your journey. If you have an electric car, you need to find a charging station and wait for your ride to recharge.

While there are a lot of items in the plus column for gas-powered cars, they also do more damage to the environment with harmful emissions. Compared to a hybrid, gas-powered cars aren’t as fuel-efficient. And while you won’t ever have to wait for your vehicle to recharge like an electric car owner, you will spend money on gas, which adds up over time.

Electric Cars Pros & Cons

If you decide to drive an electric vehicle, there are some things you’ll have to accept or get used to. First, you’ll almost certainly be paying more money for your car upfront than someone who purchases a gas-powered or hybrid automobile. As we mentioned above, you’ll have a limited driving range while this technology is relatively new, and you’ll have to track down charging stations (and/or install one at home). If you’ve ever wondered how much does it cost to charge an electric car, well, it depends. If you install a charger at home, you’ll be adding a little bit of money to your utility bill (estimated $25-$50) every month. If you use public charging stations, it could cost you nothing, a subscription fee, or be based on the amount of power you use, according to the California Air Resources Board.

However, if you’re okay with these minor roadblocks, there are plenty of things to love about going electric. Many electric vehicles offer a smooth, quiet ride, and you won’t be spending money on gas. You can rest easy at night knowing you’re doing your part to cut down on the burning of fossil fuels. Electric vehicles also tend to be cheaper to service, helping offset some of their sticker prices. Perhaps the most significant benefit of all is the potential to qualify for a federal tax credit or other financial incentives because you went green.

Hybrid Cars Pros & Cons

With a hybrid vehicle, you get the best of both worlds. Since you have a typical combustion engine, your car does burn gasoline, meaning you won’t get stuck waiting to recharge like you could with an electric vehicle. But you’re also able to take advantage of the technology used in electric cars to improve your fuel economy. You might also qualify for tax credits because of your energy-conscious purchase like electric vehicle owners.

The cost of a hybrid vehicle is typically less than a comparable electric model. However, you’ll still almost certainly be paying more than what you would for a gas-powered machine. Also, you’ll be more energy-efficient than gas-powered vehicle owners, but electric car owners will have the upper hand on you.

Tax Credits for Hybrid & Electric Cars

We touched on this briefly above, but electric and hybrid vehicle owners may qualify for certain federal tax credits (up to $7,500) or state and local incentives. For example, California residents can take advantage of a $750 rebate on a new all-electric ride or plug-in hybrid through the California Air Resources Board as long as they meet the proper terms and conditions. Here are some other states with incentives (from electric vehicle purchase rebates to special time of use rates when charging) to go green.

Enel X, one of the leading car charging station providers, notes there are plenty of incentives for installing a home charging station. In fact, their JuiceBox Charger qualifies for most of the state installation programs out there. Those are just a few examples; there are many other financial incentives for going green at the federal, state, and local levels. If you’re shopping for a new hybrid or electric car, be sure to run a search to see what options are available to you.

So… Do Electric and Hybrid Cars Actually Save You Money?

In the short-term, electric and hybrid cars might be more expensive. But, as a long-term investment, going green can save you some serious money. It is worth noting that factors like where you live, how much you drive, how much gas costs, and the amount of maintenance your vehicle needs could sway the cost-benefit analysis one way or the other.

Are electric cars more expensive to purchase?

When you look at the purchase prices, there’s no debate. The price tag for cleaner energy vehicles is higher. The average purchase price of an electric vehicle was $56,437 in November 2021 compared to the industry average of $46,329, according to Kelly Blue Book. But with the tax credits and other financial incentives we mentioned above, the $10,000 difference is more minor. It’s also worth noting that as electric vehicles become less expensive to make, their price tag should drop. But for now, you probably need more cash upfront to buy electric, even if you can get a rebate.

Do alternative energy vehicles save you money over time?

Though you’ll probably spend a little more upfront on an alternative energy vehicle, you start to make up that extra cash each year you drive your vehicle. For starters, fuel costs are much lower. Hybrids tend to get more miles per gallon than gas-powered cars, and people who own electric vehicles could see fuel savings of $4,700 in their first seven years when compared to those who have to fill up at the pump, according to Consumer Reports data. As far as repair and maintenance costs, Consumer Reports estimates that battery electric vehicle owners and plug-in hybrid owners save roughly 50% over an average vehicle’s lifetime. When everything’s said and done, electric vehicle owners can expect to save $6,000-$10,000 over the automobile’s lifetime. So, yes, electric vehicles do save you money over time.

Will Hybrid Vehicles Be Phased Out?

With a goal to eliminate harmful emissions, some countries, like France and England, have announced they’ll stop the sale of gas and diesel cars by a certain target date in the future, like 2040 or 2050. So, the future seems to be all-electric, eventually phasing out hybrids. The United States hasn’t announced anything concrete yet, but it could be coming soon. The trend is toward fully electric vehicles, but with nothing imminent just yet, it’s something you should simply be aware of and consider depending on when you’re purchasing your next vehicle.

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