Ranked: The 3 Best Hybrids and EVs for Long-Term Savings

Buying a car is tough for your personal finances, because it seems like no matter what you do, you're going to lose money. Either you buy a new car and immediately lose thousands of dollars to depreciation, or buy a cheaper old used car and risk thousands of dollars of car repairs. Understanding the total cost of car ownership can help you make the right choice for your bank account.

If you're interested in buying an electric vehicle (EV) or hybrid car in 2024, you might be excited about the EV tax credits of up to $7,500 for qualifying new EVs. But beyond the tax credits, there can be other financial advantages to owning an EV or hybrid car. Even if your car doesn't qualify for EV tax credits, consider the overall potential to save money on gas and maintenance.

Let's look at a few of the best hybrids and EVs for long-term savings, based on costs of gas and auto insurance.

1. Nissan Leaf ($1,539 saved per year)

The Nissan Leaf is an electric vehicle that won top honors in Zutobi's 2024 Cost-Effective Cars Report for cheapest EV to drive. With an estimated total cost of $3,626 per year for car insurance plus electricity, the Nissan Leaf is one of the cheapest cars on the road. This assumes that the Nissan Leaf is driven the average number of miles per year in the U.S.: 13,476 miles, at $0.14 per mile for electricity costs.

Let's see how the Nissan Leaf compares to the average U.S. gas-powered vehicle. According to The Ascent's research, the average American spends $2,148 per year on gas, and $3,017 on auto insurance. That makes the national average cost of driving a gas-powered car (auto insurance plus gas) about $5,165 per year.

• Gas-powered car -- average cost of insurance plus gas: $5,165
• Nissan Leaf cost of insurance and fuel: $3,626
• Average annual savings with Nissan Leaf: $1,539 per year

2. Ford Mustang Mach-E ($1,539 saved per year)

Sometimes people are reluctant to buy an electric vehicle because they worry that the car will be too small and not have enough power to feel fun to drive. But did you know that a classic American muscle car, the Ford Mustang, also comes as an all-electric option? The Ford Mustang Mach-E also got top ratings from the Zutobi Cost-Effective Cars Report, with average annual costs of (electric) fuel plus insurance of $3,626.

Here's how much you can save per year with the Ford Mustang Mach-E, compared to an average American gas-powered car:

• Gas-powered car -- average cost of insurance plus gas: $5,165
• Ford Mustang Mach-E cost of insurance and (electric) fuel: $3,626
• Average annual savings with Ford Mustang Mach-E: $1,539 per year

3. Toyota Corolla Hybrid ($910 saved per year)

Electric vehicles aren't the only way to save money on gas. You can avoid range anxiety by purchasing a hybrid vehicle that runs on gasoline and never has to be plugged in to recharge. The Toyota Corolla Hybrid got top ratings from Consumer Reports for being more cost effective than a comparable electric vehicle, with average fuel economy of 48 miles per gallon.

Assuming you drive a Toyota Corolla Hybrid (48 mpg) the national average mileage of 13,476 miles per year, and pay national average gas prices of $3.225 per gallon (as of Feb. 13 on AAA.com), here's how much you'd spend on gas:

• 13,476 miles driven per year / 48 miles per gallon = 281 gallons of gas per year
• 281 gallons of gas per year x $3.225 per gallon = $906 spent on gas per year

Let's assume that the cost of auto insurance for your Toyota Corolla Hybrid will be a bit more expensive than average. General insurance industry estimates show that the cost of insuring hybrid vehicles can be 7%-11% higher than gas-powered cars. Let's assume the high end of that range.

National average car insurance premium ($3,017) x 1.11 = $3,349 on hybrid car insurance per year

• Average gas-powered car -- cost of insurance plus gas: $5,165
• Toyota Corolla Hybrid average cost of insurance and gas: $4,255
• Average annual savings with Toyota Corolla Hybrid: $910 per year

This is a conservative estimate of how much you can save with a hybrid vehicle; you might save even more depending on your insurance and driving habits. Don't assume that hybrid cars are always much more expensive to insure -- I drive a Toyota Prius plug-in hybrid, and my insurance premium costs much less than the national average of $3,017 per year.

In such a big country as the United States, it's hard to calculate a true national average for costs of car ownership. Your exact gasoline prices, electricity costs, and auto insurance premiums will be different depending on where you live. But these figures should offer a decent ballpark estimate for how much you could save on fuel and insurance by driving a hybrid or EV.

Bottom line

Choosing a hybrid or electric vehicle can save you hundreds of dollars per year (or more) on gas and auto insurance costs. Even if a hybrid car has a higher sticker price than a fully gas-powered vehicle, you might quickly recoup that cost difference by saving money on gas. Electric vehicles can save you even more money, especially if your vehicle qualifies for an EV tax credit of up to $7,500 for new cars, or up to $4,000 for pre-owned EVs. Shop around for car insurance price quotes before you decide to buy.