4 Hidden Costs of Electric Vehicles

Have you budgeted for these?

When people talk about electric vehicles, a lot of the focus is on savings -- saving the environment from pollution and saving money on gas and maintenance over the long run. And while there's definite truth to this, these cars also come with some hidden expenses that people may not realize right away. Here are four you ought to be aware of before you buy an EV.

1. Higher purchase prices

First off, electric vehicles are a lot more expensive to buy than conventional gas-powered vehicles. They employ more complex technology that simply costs more to make, and that's reflected in the price consumers pay. The average electric vehicle cost about $10,000 more than the industry average in 2021, according to the National Resources Defense Council.

The government does offer some tax breaks for those purchasing electric vehicles to encourage the use of this environmentally friendly form of transportation. But even taking these into account, you need quite a bit of cash to purchase an electric vehicle.

Because this technology is still so new, you're not likely to find many used electric cars, so you'll have to buy new, and that in and of itself can make electric cars prohibitively expensive for some.

2. Higher insurance premiums

Because electric vehicles are more expensive than gas-powered vehicles, they're also more expensive to fix in the event of an accident. This is in part due to their expensive components but also because there are fewer mechanics trained in these repairs. Those who are may charge higher labor costs due to their specialized knowledge.

Car insurance companies know all of this, and so they charge owners of electric vehicles higher premiums to account for this extra cost. But usually, it's only a driver's collision and comprehensive coverage that see an increase. This is the coverage that pays to repair a driver's vehicle following an accident, weather damage, or vandalism. Liability coverage, which is required by state law, is unaffected because this doesn't have anything to do with the driver's own vehicle.

3. Higher registration fees

Currently, 30 states charge drivers of electric vehicles higher registration fees than owners of gas-powered vehicles. Exact costs vary by state, but they can be as high as $225 -- and that's on top of the state's standard registration fee for all vehicles.

It might seem counterintuitive to charge these drivers more, but there is a reason behind it. Drivers of gas-powered vehicles pay taxes every time they buy gas, and this money goes into a state transportation fund, which is used to maintain roads, among other things. Drivers of electric vehicles don't pay these taxes, so states charge them more in registration fees to make up for this lost revenue.

4. Charging station costs

Electric vehicle owners will need some sort of charging station in their home to power their vehicles, and these don't come cheap. The least expensive charging stations can cost up to $2,300 to purchase and install, according to Carvana. And more powerful chargers that work more quickly can run you up to $2,700.

Drivers interested in purchasing electric vehicles should factor this into their budget when deciding how much they can afford to spend on an electric vehicle. Without a convenient charging station, they won't be able to drive their car very far.

Is an electric vehicle even worth it?

Electric vehicles might be too expensive for some drivers right now, but it's up to each person to decide that. If you don't think you can afford one today, there's always hope for the future. As electric vehicles become more common, their prices should come down and this will help make them more affordable for everyone.