Electric vs. Gas: Which Is Really Cheaper in 2025?

As we round out 2025, the cost debate between electric and gas-powered vehicles has never been more nuanced. Upfront price gaps, fluctuating fuel costs, evolving incentives, and long-term ownership economics all play into the equation. Let’s break it down.

1. Upfront Cost: Still Higher for Electric

Electric vehicles (EVs) typically come with a higher sticker price. In the U.S., the average EV transaction price stands at $55,544, compared to $49,740 for gas-powered cars—about a $5,800 premium.
In the U.K., upfront cost gaps are even larger: EVs average between £48,000–£50,873, while petrol vehicles hover around £21,964.

However, federal incentives help narrow this divide:

In the U.S., buyers can qualify for up to $7,500 in EV tax credits (new vehicles), which expires on September 30, 2025.

2. Fuel & Operating Costs: Electric Comes Out Ahead

Fueling with electricity is substantially cheaper:

EVs cost around $675 per year in electricity for 15,000 miles, versus $2,220 for gasoline—saving roughly $1,545 annually.
A different source estimates electricity costs at $3–$5 per 100 miles, compared to $12–$15 per 100 miles for gas.
NRDC notes average U.S. fuel expenses: $485/year for EVs, compared to $1,117/year for gas cars.

In markets like Massachusetts and Rhode Island, per‑mile electricity costs (including distribution) range from $0.07 to $0.10, versus gas—resulting in savings of 1 to 4 cents per mile.

Within household energy budgets, gasoline remains costlier: U.S. households spent $2,930 on gas versus $1,860 on electricity last year.

3. Maintenance & Total Cost of Ownership (TCO)

EVs shine in lower maintenance costs:

EVs incur 31–50% lower maintenance costs, saving about $6,000–$12,000 over 7–15 years compared to gas vehicles.
In the U.S., maintenance savings over a vehicle’s lifetime can reach $8,000.
EVs have fewer moving parts, no oil changes, regenerative braking, and simpler systems.

All told, total cost of ownership favors EVs in both the U.S. and EU, driven by lower fuel and maintenance costs.

4. Incentives & Policy Landscape

U.S. federal EV tax credits (up to $7,500) apply only through September 30, 2025, after which they will expire.
Manufacturers themselves are offering discounts—average EV price recently dropped to $44,300, below gas vehicles’ $45,700, partly due to promotions ahead of expiring credits.

In the U.K., switching from gas boilers to electric heat pumps could halve heating bills (saving ~£555/year), if pricing reforms are implemented—highlighting electric’s growing appeal in home heating as well.

5. Real-World Bottom Line: Who Wins?

Short-Term (2025):

EVs still cost more upfront, but generous subsidies and incentives are softening the impact.
Daily fueling and maintenance costs are significantly lower for EVs.
Total cost of ownership already favors EVs—especially for high-mileage drivers with access to home charging.

Medium to Long-Term (Beyond 2025):

Depreciating batteries and evolving tech will likely close the upfront price gap further.
Fuel savings and low maintenance offer consistent economic advantage.
Once tax incentives expire after September, upfront costs for EVs rise—but TCO advantage remains.\

Electric Vehicles

In 2025, electric vehicles are clearly cheaper over the long run—despite a higher upfront cost. Fuel and maintenance savings, combined with still-available incentives, tilt the scales strongly toward EVs. Once those incentives expire and battery costs continue dropping, EVs will become even more cost-effective. For drivers with moderate to high mileage and access to charging, choosing electric is not just smarter—it’s cheaper.