EV Buying Guide: Know the Basics – NerdWallet

Electric vehicles have surged in popularity in recent years, as more car buyers have turned to EVs over traditional gas-powered vehicles. In the third quarter of 2024, Kelley Blue Book reported that EV sales in the U.S. grew by 11% year over year.

With EV adoption continuing to climb, car makers have responded by introducing a growing lineup of electric cars, SUVs and trucks. If you’re considering making the switch to an EV, this guide provides all the basics you’ll need to know.

The simple answer is that EVs are powered by electricity, either totally or partially, instead of gasoline or diesel. Their electric motor draws power from a battery that can be charged from an external source. Some vehicles use a combination of electricity and gasoline (more about that later).

The first small-scale electric cars date back to the 1830s, and around the turn of the 20th century some of the first consumer models were electric. Interest in electric vehicles resumed in the 1970s. With technological advancements, environmental awareness and government incentives, the appeal and accessibility of EVs since then has steadily grown.

EVs operate by using a battery or batteries — often called a battery pack — to store electrical energy that powers an electric motor to turn the wheels. The battery is charged by plugging into a power source, such as a wall outlet at home or a public charging station.

Most EVs use regenerative braking, meaning when a driver steps on the brakes, kinetic energy is captured and put back into the battery. Regenerative braking helps minimize energy consumption, improves battery range and reduces brake wear and tear.

There are three main types of electric vehicles on the market, and you’ll hear them referred to by the acronyms BEV, PHEV and HEV. Each one operates differently.

• BEV stands for battery electric vehicle. BEVs are fully electric vehicles powered exclusively by a large battery pack and electric motor.

• PHEVs, or plug-in hybrid electric vehicles, use both an electric motor and a gasoline engine, with a limited electric-only range. PHEVs can be charged to go about 20 to 40 miles using only electricity, and then gas adds another 300 to 500 miles.

• HEVs are hybrid electric vehicles. They combine a small battery, gasoline engine and one or more electric motors, but they don’t plug in to recharge. Instead, the battery is recharged by regenerative braking and the gas engine.

For a novice EV buyer, one of the most important aspects to understand is charging and how that impacts your range.

Range is how far you can drive before needing to recharge. Factors like battery size and capacity, driving speed, outdoor temperature and tire condition affect your range. Most new BEVs have a range between 200 to 400 miles per charge, though it can vary widely.

There are three levels of EV charging. Each uses different equipment, resulting in EV charging times that can go on overnight or take 30 minutes or less for a full charge.

• Level 1 charging uses a standard 120-volt outlet found in most homes, and it adds about 5 miles of range per hour of charging. It’s slower, and charging overnight will add about 40 to 50 miles of range.  

• Level 2 charging requires a 240-volt outlet, which currently isn’t found in most homes. If you want a level 2 charger where you park, you’ll probably need to hire an electrician to install one. Away from home, about 3 in 4 public chargers are level 2. This charging level adds about 25 miles of range or more per hour.

• Level 3, also called direct-current (DC) fast charging, adds hundreds of miles of range in about 30 minutes. Some newer EVs can fully charge in less than 30 minutes using a fast charger.  Typically, you’ll only find these chargers at public charging stations due to their high-power connections.

The public charging infrastructure in the U.S. is still somewhat limited, but it is growing. According to the Federal Highway Administration, as of August 2024 there were 192,000 publicly available charging ports, with about 1,000 new public chargers being added weekly. Semi-public charging stations, such as at workplaces or businesses, are also available.

Most BEVs and PHEVs are powered by lithium-ion batteries, but other types of batteries are used. Lithium-ion batteries are the most common because they charge faster, hold a charge longer and have a longer lifespan. Here are some common terms to know about EV batteries.

• Capacity. The amount of power stored in an EV battery is its capacity. Some EV manufacturers offer options for different battery capacities in the same make and model.

• KWh. Capacity is measured in kilowatt-hours, or kWh. Capacity varies by vehicle, with smaller EVs at around 30 kWh and several larger ones over 200 kWh. A higher-capacity battery will take longer to fully charge, but you can drive farther without having to “fill up” again. EVs with lower-capacity batteries fully charge faster, but you’ll have to charge more often.

• MPGe. Electric vehicles have an MPGe rating, which stands for miles per gallon equivalent. It’s used to compare energy use of EVs and PHEVs to cars without plugs. (PHEVs also have a gas-only miles-per-gallon figure for when the battery is spent.) According to the MPGe formula, using 33.7 kWh of power is equivalent to using 1 gallon of gas. So, an electric vehicle that travels 100 miles on 33.7 kWh would have a 100 MPGe rating.

• mi/kWh. Miles per kilowatt hour is a way to compare fuel efficiency from EV to EV. It reflects how many miles a vehicle can travel per unit of battery energy (kWh), and a higher number means greater fuel efficiency. Typical numbers range from 2.0 to 4.0 mi/kWh.

The cost to replace an EV battery when it’s out of warranty can vary widely — from $5,000 to about $20,000. However, battery prices have been declining due to advances in technology and production.

The good news is that it’s unlikely you’ll ever need to replace an EV battery, because they’re designed to last — often a decade or more. Following manufacturer guidelines, including charging to only 80% full, can help extend battery life. And auto manufacturers offer battery warranties from 8 to 10 years or around 100,000 miles, which covers any significant reduction in capacity.

• Fuel savings.  EV charging costs are generally lower than buying fuel for a gas-powered vehicle, especially if you charge at home. You may pay several thousand dollars upfront to install a level 2 charger, but over time fuel savings can add up. Actual cost depends on factors like the electricity rate where you live. An estimate for charging at home in a state with the lowest electricity rate is around $2.80 to add 100 miles of range.

• Eco-friendly transportation. Fully-electric EVs produce no tailpipe emissions, reducing air pollution and greenhouse gases. PHEVs and HEVs have reduced emissions compared to gas cars, because they run on electricity part of the time. 

• Lower maintenance costs. BEV batteries and motors require little to no maintenance, and there are fewer moving parts to break. Also, there are fewer fluids, such as engine oil, that need to be changed. PHEVs and HEVs do have combustion engines, but the electrical system requires little maintenance. Also, the brakes on EVs tend to last longer thanks to regenerative braking.

Of course, there can also be downsides. If you’re traveling, finding a charging station isn’t as easy as finding a gas station, and it will take you longer to fill up — what takes a few minutes with a gas car can take more or even hours with an EV.

Also, EVs are new enough that they tend to come with an element of the unknown, with many makes and models having a short track record. In a recent Consumer Reports survey of car owners, EVs from the last three model years had 79% more problems than gas-powered vehicles.

When deciding whether to buy an EV or choosing the best make and model for you, here are some things to think about:

• Range needs. Do you mainly drive around town or take long trips? How much range will cover your driving habits?

• Charging access. Consider how you’ll charge. Are public charging stations convenient? (Apps like PlugShare can help you find public charging and check the cost.) What about at work? Are you okay with overnight charging at home, or will you need to install a level 2 charger? And when shopping for EVs, check what charging levels they support, since some aren’t compatible with the high voltage of level 3 chargers.

• BEV vs PHEV vs HEV. BEVs are the most eco-friendly, but with no gasoline option, they’re best for driving short to medium distances. HEVs have better fuel economy than gas-only vehicles, and you don’t have to bother with a plug, but their electric range is shorter than other EVs. PHEVs have a longer range than HEVs and the advantage of a gas option for longer trips.

• New or used. Buying a used EV can have advantages, the obvious being lower cost. According to Cox Automotive, the average transaction price of a new EV in the third quarter of 2024 was $56,328, compared to $37,260 for a used one.  A new EV, on the other hand, has the latest safety and technology features, full warranties and higher incentive savings. If you do buy a used EV, take time to get a professional inspection with a test of the battery health, especially if the battery is no longer under warranty.

As with any vehicle purchase, you’ll also want to check safety ratings from the National Highway Traffic Safety Administration (NHTSA) and Insurance Institute for Highway Safety (IIHS). And as there are electric options across most all vehicle segments — coupes and sedans, hatchbacks and SUVs, trucks and vans — think about your budget, safety features, in-car tech, cargo or trunk space, seating capacity and drivetrain needs.

You can find some EVs that cost less than $40,000. On the other end of the spectrum, luxury models can be well over $100,000. And, while the gap is closing, EVs continue to be more expensive than their gas-powered counterparts.

The trade-off for a higher purchase price is savings from lower fuel and maintenance costs over time. A study by Consumer Reports found that EV owners save an average of $6,000 to $10,000 over the lifetime of their vehicle compared to gas-powered cars.

There’s also a federal EV tax credit of up to $7,500 on the purchase of a new electric vehicle; used electric car buyers may qualify for up to $4,000. And you can choose to transfer the credit to an eligible dealer in order to realize an immediate discount at the point of sale. (All that said, fewer cars are qualifying for the benefit as battery manufacturing restrictions tighten, and the very existence of the credit faces political maneuverings in Washington.)

Beyond the purchase price, you’ll want to factor in other EV ownership costs such as charging equipment, electricity and insurance. And there are a few simple steps you can take to possibly lower your upfront and ongoing expense even more.

• If you’ll be financing, take time to shop lenders and compare to find the lowest interest rate. Some lenders offer electric car loans or green loans that have rate discounts or enable you to include the financing of a home charger.

• Get a preapproved auto loan, and if you’re buying from a car dealer, ask them to beat your preapproved rate. 

• If you must stick to a certain monthly car payment, use an auto loan calculator to determine what interest rate and loan term you’ll need to stay within budget.

• Use online buying guides like Kelley Blue Book and Edmunds to make sure you aren’t overpaying for the vehicle itself.