Understanding the Total Cost of Car Ownership (Dollar-Per-Mile)

Why Calculate Cost Per Mile?

For most people, a car is just transportation. Knowing its Total Cost of Ownership (TCO) in Dollars Per Mile (DPM) reveals the true price of every trip. It includes not just gas, but insurance, depreciation, and maintenance.

Dollar-Per-Mile Calculator

Detailed cost breakdown based on your vehicle and usage.

$0.70/ mile

Annual Cost: $10,450•Depreciation: $5,250/yr

You bought a car for $35,000 and plan to drive 15,000 miles annually. Based on your expenses, your true cost of driving is $0.70 per mile.

Commute (20mi)

$13.93/ day

Retail Trip (10mi)

$6.97/ trip

Cheaper than delivery?

Annual Miles

How many miles you drive per year.

15,000

Car Price

Estimated current value. Affects depreciation (15%/yr).

$35,000

Annual Fuel

Gas or charging costs.

$2,000

Insurance

Yearly insurance premium.

$1,500

Maintenance

Oil changes, tires, repairs.

$1,200

Taxes & Fees

Registration and other fees.

$500

According to AAA, the average cost to drive a new car in 2023 was ~$0.81 per mile (at 15k miles/year). Measuring your DPM helps you budget accurately and decide between driving, ride-sharing, or public transit.

The Formula: Fixed vs. Variable Costs

To calculate DPM, split expenses into two categories:

1. Fixed Costs (Annual)

You pay these regardless of how much you drive.

• Depreciation: The value your car loses each year. Usually the single biggest expense (~$4,500/yr for new cars).
• Insurance: Averages ~$1,700/yr but varies significantly by state and driver history.
• Registration & Taxes: License plate fees and property taxes. Highly state-dependent (e.g., $20 in GA vs. $600+ in OR).
• Finance Charges: Interest paid on your auto loan.

2. Variable Costs (Per Mile)

These costs correlate directly with mileage.

• Fuel: Gas or electricity. Highly volatile based on region and vehicle efficiency.
• Maintenance: Tires, oil changes, and repairs. Averages ~$0.10/mile but increases as cars age.

Calculation

$$\text{Total Annual Cost} = \text{Fixed Costs} + (\text{Variable Cost/Mile} \times \text{Annual Miles})$$ $$\text{DPM} = \frac{\text{Total Annual Cost}}{\text{Annual Miles}}$$

Example: A paid-off car with $2,400 fixed costs/year +$0.17/mile variable costs, driven 10,000 miles: \2,400 + (0.17 \times 10,000) = $4,100 $total. DPM =$ $0.41 $/mile.

Key Factors Affecting DPM

1. Location

Location dramatically impacts costs.

• Insurance: Expensive states like Florida (~$2,700) vs. cheap states like Maine (~$1,175) can swing DPM by $0.10+.
• Fuel: Gas prices can vary by $2.00/gallon between states (e.g., CA vs. MS).

2. Vehicle Type

• Sedans: Most economical (~$0.60 -$0.74/mile).
• SUVs: Moderate to high (~$0.80/mile).
• Trucks: Most expensive due to fuel and tires (~$1.06/mile).
• EVs: High upfront depreciation but very low operating costs (~$0.03-$0.05/mile for “fuel”). Best for high-mileage drivers.

3. New vs. Used

• New Cars: High DPM initially due to steep depreciation, but reliable with warranties.
• Used Cars: Lower DPM due to minimal depreciation, but carry higher risk of expensive repairs.

Conclusion

Understanding your Dollar-Per-Mile cost transforms how you view travel. A 30-mile commute isn’t just $4 in gas -- at$0.75/mile, it’s actually $22.50. Whether budgeting or choosing a new vehicle, the DPM metric ensures you’re making decisions based on reality, not just the price at the pump.

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Appendix: State Cost Snapshot (2025 Estimates)

State	Avg. Insurance	Avg. Gas ($/gal)	Notes
Alabama	~$1,860	$2.74	Low costs overall.
California	~$2,416	$4.83	High gas & insurance.
Florida	~$2,694	$3.01	Very high insurance.
Louisiana	~$2,883	$2.71	Highest insurance costs.
Maine	~$1,175	$3.50	Lowest insurance.
Ohio	~$1,350	$3.20	Affordable averages.
Washington	~$1,608	$4.40	High gas, no income tax.