Despite the higher price of a new electric vehicle, the long-term costs of owning one are often lower than those of a gas-powered vehicle.
Cost is typically one of the main considerations for drivers deciding what kind of vehicle to purchase next.
One of the top three reasons that drivers hesitate to switch to an EV is the relative price compared to similar gas-powered vehicles, according to a survey conducted by Autolist.
This concern reflects short-term costs, and it’s not for nothing. The average cost of a new gas-powered vehicle in 2019 was $36,600, whereas the average cost of a new EV was $55,600. That’s a $19,000 difference.
However, the future of green automobiles is changing rapidly. While the average cost of a new EV is high, it dropped 13.4% from 2018 to 2019. On the flip side, the cost of a new gas-powered vehicle increased 2% in the same time span.
As demand for EVs goes up, options will increase and consumers will be more able to find a vehicle that matches their financial needs as well as their preferences. There are even useful tools like AAA’s Green Car Guide that can help you find the perfect EV for your budget.
For these reasons, the high initial cost of an EV shouldn’t hold you back — at least not until you’ve considered all of your options.
What’s likely even more convincing, however, is that the long-term costs of owning an EV are often lower than those of a gas-powered vehicle.
You read that right. Even with the higher cost of a new vehicle, you might save money by switching to an EV.
Here’s how.
EV drivers are eligible for tax deductions
Switching to an EV despite the higher average upfront cost is an act of social responsibility.
The more people who switch to EVs, the less greenhouse gas will be emitted into the atmosphere, bringing our global temperatures down and driving (pun intended) the world toward a brighter future.
For this reason, EV drivers can receive a tax deduction of up to $7,500.
The deduction amount depends on the capacity of the battery used to power the vehicle. The deduction also varies by state.
Typically, there are no tax deductions involved in driving a gas-powered vehicle, so from a tax perspective, EVs are the financially smart option.
EVs can cost less to power
One of the perks of owning an EV is that you don’t have to fill it with gasoline. You do, however, have to charge it, and there is a cost associated with that. Whether or not it ends up being cheaper to power an EV than a gas-powered vehicle highly depends on the state in which you live.
Gasoline prices vary dramatically across the country. In fact, in 2019, the average cost of a gallon of gas on the West Coast was 46% higher than it was in neighborhoods around the Gulf of Mexico, according to the National Resources Defense Council.
In some states, the payoff of owning an EV is huge from a fuel perspective. For example, the average cost of charging an EV for 15 years in Washington state is $14,480 lower than the cost of routinely filling a vehicle with gasoline over the same period of time.
Additionally, with an EV, drivers aren’t subjected to frequently changing gasoline prices. Crude oil costs impact retail gas prices significantly, causing them to fluctuate drastically over a period of time.
Electricity prices, on the other hand, vary on an hourly basis that EV owners can strategically work around. For example, charging your EV at home overnight when electricity demands are low can cost 30% less than charging it during the day.
EVs are often cheaper to maintain and repair
Gas-powered vehicles have a lot of moving parts, are highly complex and generally require more maintenance than EV vehicles do.
First off, gas-powered vehicles need frequent oil and transmission fluid changes that EVs do not require.
Additionally, gas-powered vehicles involve more machinery, making potential problems harder to troubleshoot and take longer to fix. This drives up costs from the mechanic.
Finally, EVs typically come with regenerative brakes, which use the kinetic energy of the vehicle to decelerate. This causes less wear and tear on the brakes, resulting in reduced need for brake maintenance as well.
These savings can come to a significant total. For example, the Chevy Bolt, an EV, cost $204 to maintain over the course of 2018, while the maintenance costs of the gas-powered Ford Focus came to $1,805 in the same year, according to a study conducted by New York City.
What does this mean for the future of EVs?
That higher average price tag for EVs is still a deterrent for people considering buying a new car. However, drivers are beginning to realize the long-term savings that EVs can generate. For many, this could incentivize making the switch.
To learn more about the financial benefits of EVs, contact us today.
