Gas prices have gone down a bit since their highs in the spring and early summer of 2022. However, most people driving today accept one truth: For the most part, gas prices have risen consistently since the 1970s. Prices have especially seen significant increases during the 21st century. That’s one reason that cars running on alternative fuels have also gained prominence during this century. Hybrids were an early contender as fuel-efficient cars that were less dependent on fossil fuels. However, since the introduction of the Tesla in 2008, followed by the Nissan Leaf in 2010 and the Chevy Volt in 2011, electric cars have been at the forefront of the discussion of cars fueled by alternative means. They’ve also risen sharply in popularity. And in California, you won’t even be able to buy a gas-powered car starting in 2035. Electric cars are clearly here to stay and will play an ever-increasing role in our car culture as the years go on.
Sales of electric vehicles doubled in 2021, but there’s one drawback: Electric cars come at a premium. For example, at the beginning of 2022, the average cost of a new electric vehicle was $60,054, but the average price for a gas-powered car was about $45,000. Typically, an EV costs about $10,000 more than a similar car with a gas-powered engine. However, there is some good news. Many experts believe that those prices are about to drop. One reason that the average cost of an EV is higher than the average cost of a traditional car is that many electric vehicles are luxury vehicles, and that’s about to change, with more economical electric vehicles poised to enter the market. Also, the cost of the batteries needed to power electric vehicles is dropping and will continue to drop, which will lower the overall cost of all-electric vehicles.
But even as the car market currently stands, for people who need a new car, it still might make good financial sense to invest in an electric vehicle. While they can be pricey, EVs cost less to own over the long term due to a combination of savings on fuel, government-backed incentives, and the lower maintenance costs of electric vehicles.
Save Money on Gas
Buying an electric car means saying goodbye to the gas station. No more will you need to worry about finding the cheapest gas to get through until your next paycheck. A new electric Volkswagen gets about 250 miles out of every full charge. The average household in America pays around 14 cents for each kilowatt of power used, meaning that a full charge costs about $11. When was the last time any of us went 250 miles on 11 dollars’ worth of gas? Also, some power companies give discounted rates to people with residential electric car chargers, bringing the rate down even more. Let’s say you drive about 12,000 miles a year. You’d spend between $500 and $600 driving the electric Volkswagen, but people who buy a similar Volkswagen with a conventional engine would spend about $2,000 on gas during that same year. Here are a few factors to consider:
- A large electric vehicle uses more energy than a small electric vehicle, just like a larger gas-powered vehicle usually uses more fuel than a smaller car. However, the larger electric vehicle will still be cheaper to run than a similar gas-powered vehicle. A new GMC Hummer EV may need a lot more energy than a Chevy Bolt EV, but it’ll still be cheaper to run than a gas-powered Hummer.
- A faster charger for your home costs somewhere around $600, and that doesn’t include the cost of installation. However, some states, cities, and utility companies are subsidizing this cost or offering rebates to offset it. It’s also true that more companies are entering the market each year, and that’s causing the price of a charger to plummet. Of course, most EVs will also charge if you plug them into a regular power outlet in your garage, but it can take a lot longer to reach a full charge.
- Almost all electric car owners have to charge their cars using public chargers at some point. More and more public chargers come online each week, so finding a place to charge your car has never been easier. These chargers usually do come at a price, though. The same charge that costs about $11 at home can cost up to $25 at a public charger.
Save Money on Taxes
Congress recently passed the Inflation Reduction Act, which modified the long-standing tax credits available for people who purchase electric vehicles. Now, not all electric vehicles qualify for the full $7,500 in tax credits, as the legislation contains provisions aimed at encouraging production of these vehicles in the United States. Electric vehicles that fell off the list include Teslas purchased after 2019.
- Purchasing an electric vehicle on the approved list results in a tax credit, not a tax deduction. What’s the difference? A deduction reduces the amount of income the government taxes you on. A tax credit actually applies directly to the taxes a person owes, meaning that $7,500 applies directly to your tax bill.
- Some states also offer incentive programs. Colorado, for example, offers a tax credit of $2,500. Other states provide credits for installing a charging station at home. Utility companies also sometimes offer rebates. For example, Georgia Power, which serves a large part of the Atlanta area, offers a $250 rebate for residential customers installing home chargers.
Save Money on Maintenance and Repairs
Along with saying goodbye to the gas pump, owners of electric vehicles also can say goodbye to oil changes. Electric vehicles also don’t need tuneups or some other forms of maintenance that are required regularly to keep gasoline-powered cars operating safely, so you’ll save a lot of money in the long run. As battery technology advances and more people buy electric cars, the cost of maintenance is expected to drop even more. Because electric vehicles are still a relatively recent addition to the automotive field, it’s important to remember that a lot of these numbers are still estimates based on predictions: Few electric cars sold 20 years ago are on the road today, so there’s scant real-world data. However, Consumer Reports still estimates that an electric vehicle will save the average American driver thousands of dollars over the life of the vehicle when compared to similar gas-powered models.