With the wide range of vehicle options available today – from traditional internal combustion engine (ICE) models to fully electric vehicles (EVs) and hybrids – car buyers have more to consider, Mercury Insurance has highlighted. But which vehicles really cost more?
According to the carrier, it’s crucial to assess the total cost of ownership, as it can help avoid unexpected financial burdens over the life of the vehicle.
“The ‘total cost of ownership’ equation includes factors like insurance premiums, fuel efficiency, repair expenses, and home charging infrastructure if purchasing an electric vehicle, among other aspects,” explained Chong Gao, product management R&D director at Mercury Insurance.
“An EV, for example, might seem appealing for its expected fuel savings and lower maintenance costs, but insurance for them is on average 20% higher compared with an ICE vehicle, and they are typically more expensive to insure versus hybrids as well. However, as more people adopt EVs and insurance companies gather more data in the future, their insurance costs will likely even out.”
When weighing the pros and cons between an ICE vehicle, hybrid, or EV, key considerations include fueling or charging costs, maintenance, and insurance.
Mercury Insurance pointed out that hybrid cars typically offer better fuel efficiency than ICE vehicles because they can alternate between their gas engine and electric motor. Unlike EVs, hybrids don’t need to be plugged in, as their battery is recharged using the gas engine, removing the need for home charging infrastructure or access to public chargers.
On the other hand, most EV charging happens at home – about 80%, according to the US Department of Energy. Setting up a home charging system, particularly a Level 2 charger, often requires hiring an electrician, though some localities offer rebates or incentives to help cover installation costs. Public charging, meanwhile, remains a pain point, with consumer satisfaction ratings for these stations still notably low.
When it comes to maintenance, both ICE and hybrid vehicles require regular services such as oil changes and air filter replacements. These vehicles have similar maintenance schedules and costs. However, hybrid owners should anticipate a potential future expense: replacing the battery. US regulations mandate that hybrids come with battery warranties of at least eight years or 100,000 miles, offering some financial protection.
EVs, by contrast, require less routine maintenance since they lack traditional engine components like pistons and valves. This results in lower ongoing maintenance costs, though EV tires tend to wear out faster, according to J.D. Power. Like hybrids, EV batteries will eventually need replacing, but all new electric vehicles include robust battery warranties.
While electric vehicles can save money on fuel and maintenance, their insurance premiums are generally higher. “EVs cost more to insure versus their ICE counterparts because they generally cost more to buy, and consequently more to repair or replace,” noted Stephen Crewdson, senior director of insurance business intelligence at J.D. Power.
Ultimately, choosing between an ICE vehicle, hybrid, or EV will depend on a motorist’s budget, personal preferences, and driving habits. As Gao notes, hybrids offer a balanced option: “Hybrids serve as a great bridge between ICE and EVs by offering fuel efficiency and a reduced carbon footprint for consumers who aren’t yet ready to make the leap to an EV.”
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