It May Not Feel Like It, But It’s Probably Cheaper To Own A New Car In 2025 Than It Was Last Year: Study

I feel like I probably spend a lot less on cars per year than the average person. Not because I don’t own any cars, but because the two cars I do own are incredibly cheap, both in their purchase price and their insurance costs. Plus, because I live in New York City, I only drive them once a week (at most). So my gas bill is pretty low.

Still, I wince at my credit card bills every month as I see the toll and gas charges pile up. Though it feels like the costs for owning a car are going ever upwards, one study has found it’s actually cheaper to own a new car in 2025 versus last year.

AAA released its annual Driving Cost Analysis study last week, offering up some valuable insight into just how much money people are spending each month to own and operate a new car. The study looks at six categories—fuel, maintenance, insurance, registration fees, depreciation, and car price—to determine the effective monthly dollar amount for the privilege of having a new vehicle.

This year’s study revealed that, on average, the cost to own a new car over a yearly period was $11,577, or $964.78 per month. That’s about 5.8 percent down versus 2024. In a world where everything feels like it’s getting prohibitively expensive, this is a bit of a surprise. But after looking at a few other numbers, the study starts to make sense.

Firstly, and most importantly, is the cost of new cars themselves. By the end of 2024, the average price for a new vehicle came in at $49,740, according to Cox Automotive. In the nine months since, that number hasn’t really changed. According to Automotive News, the average price for a new car is hovering at $49,889. A small increase, yes, but nothing substantial enough to make a dent in AAA’s study.

What about the interest costs associated with assuming a loan to buy a new car? Well, according to AAA, that number has actually dropped quite a bit—15 percent to be exact. In 2024, buyers paid $1,332 per year on average for finance-related costs related to their new cars. But in 2025, that number has dropped to $1,131 per year.

AAA cites fuel prices as another big reason for the drop. The study says the average cost of fuel dropped to just 13 cents per mile, down 12.8 percent versus last year. Interestingly, the price of electricity for charging EVs actually went up slightly, from 15.9 cents per kilowatt hour to 16.7 cents.

Those factors, plus all of the other reasons why EVs should be leased and not bought, are why it’s still cheaper overall to own a gas-powered car in America. From the study:

The primary factor affecting the cost differences between electric vehicles (EVs) and gas vehicles this year is fuel prices. While EVs remain more expensive in “ownership costs” (depreciation, insurance, fees, and financing), they have lower “operating costs,” particularly in fuel and maintenance. Last year, EV fuel costs were about one-third of gas vehicle costs.

This year, however, gasoline prices have significantly decreased, while electricity prices have slightly increased. Although EVs still offer fuel savings—less than half of gas vehicle costs—this does not sufficiently offset their higher ownership costs. Consequently, EVs are now more expensive overall across all vehicle categories in this study.

Things are a little different with hybrids. AAA discovered hybrids have the lowest average maintenance costs—even less than EVs. For two of the four vehicle categories studied, medium sedans and pickup trucks, hybrids are actually the cheapest powertrain option, undercutting pure ICE power.

I don’t expect the findings from this study to last for long. Tariff-inflicted price increases have already begun to bleed into new vehicle costs, while some automakers are finally starting to increase MSRPs to keep their margins positive. It’s not just transaction prices, either. If something costs more to replace, that means it’ll cost more to insure. That counts for the car and any parts that have to be imported—stuff like bumper covers and quarter panels aren’t immune to tariffs.

So if you think things are expensive now, just wait until next year.

Top graphic image: Toyota

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