Electric cars look set to take to America’s roadways in a big way. The recent Inflation Reduction Act provides tax credits intended to boost the affordability of these cars. And bipartisan infrastructure legislation provides funding for charging networks – all 50 states will receive funding to install charging stations along 75,000 miles of highway. 

But as electric cars become more ubiquitous, it is crucial to understand the hidden costs of EV ownership – keep reading to learn more.

Key Highlights
  • Owning an electric car has many hidden costs, from pricey insurance to higher registration fees. 
  • Some of those costs can be recouped in lower maintenance fees. 
  • Drivers might be willing to pay more to protect the environment. 
Written by:
Chris Kissell
Contributing Researcher
Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.
Reviewed by:
Laura Longero
reviewer icon
Executive Editor
Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.

You’ll pay higher car insurance rates for electric vehicles

When you buy a new car, it is easy to overlook the cost of insuring the vehicle. But it’s also a mistake. 

Cars with higher insurance rates drain money from you year after year. And electric vehicles generally cost more to insure than traditional gas-powered cars. Electric vehicles can be costly to repair, making them more expensive to insure. 

According to Lynne McChristian, director of the Office of Risk Management and Insurance Research at the University of Illinois-Urbana Champaign’s Gies College of Business, there are a couple of reasons why.  

“Typically, the repairs are more expensive. So when an electric car gets damaged, it’s not as simple as just replacing or repairing a fender. There are sensors and electronics that might be damaged. And with electric cars, unlike gas-powered vehicles, you might not be able to repair it. You might have to replace the whole thing. So that’s a difference,” she says.

Insurance costs reflect the cost of claims. 

“And the cost of claims with electric vehicles are just higher,” she says.

McChristian also notes that mass-produced EVs haven’t been around long. And, she says, “because electric vehicles are still relatively new, there’s not decades of claims data. And that uncertainty sometimes adds a complexity to [insurance] pricing.”

However, the cost to insure varies significantly from one EV to another. A 2022 CarInsurance.com analysis of EV insurance rates found that the Mini Cooper SE costs an average of $1,479 to insure annually, while the Audi RS E-tron GT costs $4,150.

The best way to lower these rates is to shop around and compare quotes from various providers.

Here’s what you need to know about insuring an electric car

Expensive battery replacement for electric cars

There is no way to sugarcoat it: The cost of replacing a battery in an EV is exorbitantly high. 

Estimates vary, particularly from model to model. But a recent survey by The Drive found that you can expect to pay $10,000 to $20,000 — and sometimes more — to make this repair. The battery modules in current Tesla models should last 300,000 to 500,000 miles.

Pricey repairs for electric cars

The good news about electric car ownership is that ongoing maintenance costs can be lower than those of traditional gas-powered vehicles. 

In fact, scheduled maintenance costs for a light-duty battery-electric vehicle total about 6.1 cents per mile, compared to 10.1 cents per mile for a conventional internal combustion engine vehicle, according to the U.S. Department of Energy. 

The bad news is that the cost can be steep when you need to repair your electric vehicle. A survey of auto insurance claims by CCC Intelligent Solutions Inc. found that the average EV model costs 27% more to repair than the average non-EV model. 

Despite the lower maintenance costs, drivers perceive them to be higher. In the spring of 2023, CarInsurance.com conducted a nationwide drivers survey on electric vehicles, car insurance companies, inflation and more. The study found that 44% of drivers said electric cars are more expensive to maintain than gas-powered vehicles. Only 16% of drivers said EVs are cheaper to maintain, and 40% said the costs are comparable.

Cost of charging your Tesla at a charging station

Charging your Tesla is not free. The U.S. Department of Energy says it costs an average of $13.96 to charge a Tesla. The precise cost varies by car model and runs between $9.62 and $18.30. However, those charging costs still represent significant savings over filling a tank with gas.

Cost of installing a home charger for an electric car

If you buy an EV, you might need a home charger to keep your vehicle road-ready. The cost of purchasing such a charger typically runs from about $300 to more than $1,000, according to J.D. Power. 

You likely will have to pay around that much to have an electrician install the unit, which adds to the overall cost. J.D. Power notes that if you have a 240-volt outlet to charge the car, you might not need to install a home charger if you want to save money. 

Sticker shock from a higher purchase price

Electric vehicles are not cheap. According to the Natural Resources Defense Council, the average cost of an electric car that was new in 2021 was about $10,000 higher than the average for all cars, including gas-powered and electric vehicles. 

Even with tax incentives, your upfront costs can be high. The high cost of EVs is a big reason they have not yet been widely accepted.

According to the 2023 drivers survey, 44% of drivers said that cost is the main reason they wouldn’t purchase an EV — this was the most popular answer by far: 22% of respondents said not enough charging stations was the reason they wouldn’t buy an EV, followed by short range (13%) and frequency of charging (9%). Thirteen percent of drivers gave an “other” response.

Recent federal Inflation Reduction Act provisions are intended to make these cars more affordable and add a federal tax credit for used electric vehicles – up to $4,000 or 30% of the sales price, whichever is lower.

Electric cars have more expensive registration fees

The fee you pay to register a vehicle is typically based on the car’s value. Because EVs have higher sticker prices than gas-powered vehicles, expect to dig deeper when registering an electric car. Check with your state’s DMV to see the title and registration fees. 

Hidden EV cost: The time spent at a charging station

Filling the tank in a gas-powered vehicle only takes a few minutes. However, you will wait a bit longer to charge your electric vehicle. For example, Tesla says using a Tesla Supercharger is the quickest way to charge your car away from home. However, it still takes 15 minutes to charge your vehicle for up to 200 miles. 

Possibility of future VMT taxes on electric vehicles

While buying an electric vehicle might be good for the planet, it may inflict pain on your wallet as a “vehicle miles traveled” fee, often known as a VMT. This fee is intended to replace the money governments will lose when electric vehicles become the dominant form of transportation in the future and gas taxes become an unsustainable method of funding roads. 

Several states have looked into implementing a VMT fee, and smaller programs featuring these fees are already underway in Oregon and Illinois.

Adam Grant, car specialist and founder of Car Fuel Advisor, says that replacing the gas taxes with VMT charges will raise the commuting costs for users and drivers of mass transit in urban areas and that implementing a VMT tax nationwide could be more expensive than the resulting revenue gains.

“Considering the projected growth of electric vehicles in the United States, there will likely be 19 million electric vehicles on the road by 2030. Around 15.2 million would be battery-electric vehicles that consume no gasoline at all,” Grant says.

“As it turns out, those EV owners don’t pay any federal tax that can contribute to the funds for HTF. To keep the Federal Highway Trust Fund solvent in this situation, there is no other way but to implement a tax on electric vehicles for their use on the highways.”

Paul Miller, managing partner & CPA for Miller & Co. says the increasing popularity of hybrid and electric vehicles is reducing revenues from gas taxes, prompting more states to consider charging fees based on miles driven to help pay for roads and bridges.

“Under some of the current programs, the state installs devices in vehicles to measure the miles driven. Other programs rely on drivers to report the miles they’ve driven, or track miles through year-over-year odometer readings when drivers renew their registrations. Under all states’ existing laws, vehicle owners voluntarily sign up for the programs,” Miller says.

EV tax breaks are not a guarantee

The Inflation Reduction Act introduced new tax credits of up to $7,500 for those who purchase an electric vehicle. But don’t assume that you automatically will get a tax break for any EV you buy. To qualify, the vehicle’s final assembly must happen in North America. Check out this U.S. Department of Energy list of vehicles qualifying for the tax credit. 

Final thoughts: Hidden costs of owning an electric car

Buying an electric car can be expensive, and hidden costs only add to the financial pain. But these cars are generally cheaper to maintain than gas-powered ones, helping you recoup some of the cost. 

In addition, driving an EV helps you contribute to the fight against climate change. Many drivers will likely decide that the extra costs are worth paying if it helps the environment. 

Learn more about what are the cheapest Tesla models to insure

Resources & Methodology


  1. The Drive. “The Replacement Battery Costs for These Six Normal EVs Is Staggeringly High.” Accessed October 2022.
  2. FleetOwner. “Focus on fuel taxes—and prospects for a VMT.” Accessed October 2022.
  3. J.D. Power. “What Does an EV Home Charger Cost?” Accessed October 2022.
  4. Natural Resources Defense Council. “Electric vs. Gas Cars: Is It Cheaper to Drive an EV?” Accessed October 2022.
  5. New York Times. “Electric Cars Too Costly for Many, Even With Aid in Climate Bill.” Accessed October 2022.
  6. Progressive. “Is insurance more expensive for electric vehicles?” Accessed October 2022.
  7. U.S. Department of Energy. “Battery-Electric Vehicles Have Lower Scheduled Maintenance Costs than Other Light-Duty Vehicles.” Accessed October 2022.
  8. U.S. Department of Energy. “Electric Vehicles with Final Assembly in North America.” Accessed October 2022.
  9. U.S. Department of Energy. “How much does it cost to use a Tesla charging station?” Accessed October 2022.
  10. U.S. Department of Transportation. “Historic Step: All Fifty States Plus D.C. and Puerto Rico Greenlit to Move EV Charging Networks Forward, Covering 75,000 Miles of Highway.” Accessed October 2022.
  11. CCC Intelligent Solutions. “Survey of Auto Insurance Claims.” Accessed October 2022.
  12. Tesla. “Charging Your Tesla.” Accessed October 2022.


CarInsurance.com commissioned survey company Slice to survey drivers nationwide in 2023 about their driving habits, favorite driving songs, the best roads and DMVs, inflation and attitudes about car insurance. The survey was conducted March 24 – April 4, 2023. There were 2,300 respondents.

Laura Longero

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Laura Longero

Executive Editor

Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.

John McCormick

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John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.

Leslie Kasperowicz

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Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.

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Contributing Researcher

Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.