Electric cars are becoming more affordable amid rising gas prices

With gas prices up more than 58% compared to last year, you might consider switching to an electric vehicle to save money.

But given that electric cars tend to be more expensive than gas-powered cars, and that electricity has its own costs, is it actually cheaper to go electric? The short answer is yes – although it also depends on your driving habits, where you live and what kind of car you buy as well. You may even want to consider a hybrid car that has a gas and electric motor.

Here’s a look at how electric car costs compare to gas-only cars.

Electric cars have a higher upfront cost

The average deal price for an electric vehicle (EV) is $56,437, according to Kelley Blue Book — about $10,000 higher than the overall industry average of $46,329 that includes gas and electric vehicles. In terms of pricing, the EV is equivalent to an entry-level luxury car.

To save time charging electric vehicles and extend battery life, many drivers also install what are known as “level 2” chargers in their homes, for a total cost of about $2,000, installation included. With a Level 2 charger, it will take less than eight hours to charge your car, according to JD Power.

Most electric vehicles come with a level 1 charging cable that can be plugged into a common 120-volt household electrical outlet, but it can take up to 40 hours to fully charge your vehicle. It is cheaper, but less convenient.

Tax credits can be the lower cost of an electric car

While surveys show that the price gap between electric and gas-powered vehicles is expected to narrow in the next decade, this will depend on continued improvements in battery technology, which could lead to cheaper production costs.

In the meantime, customers can offset some of the premiums paid for electric vehicles with tax credits. The federal government offers a $2,500 to $7,500 non-refundable tax credit for newly purchased electric vehicles manufactured after 2010.

However, the credit only applies to the first 200,000 cars the factory sells. Tesla and General Motors have already exceeded this number, so no credit is available from these manufacturers. A list of electric vehicles that are still eligible for the federal tax credit can be found here.

It is also possible for your state to offer its own tax credit or deduction. Plug In America, an advocacy group for electric cars, has an interactive map showing electric vehicle incentives in each state. New York, for example, offers a discount of up to $2,000.

Electric cars tend to have cheaper fuel and lower maintenance costs

While electric vehicles usually have higher upfront purchase prices, owners can save a lot on operating expenses. A 2020 Consumer Reports study found that electric vehicle owners, on average, spend 60% less on fuel than internal combustion engine vehicles.

This calculation includes the average usage of commercial charging stations (11 visits per 15,000 miles, for a car with a 200-mile range), which can be two to three times more expensive than charging your car at home. Prices vary when charging at commercial stations, but the total cost per session is approximately $10-$45 to fully recharge your car battery.

For home charging, local electricity prices vary by state, based on a number of factors such as regulation and how the electricity is generated, but the average monthly cost is about $25 a month.

And because electric vehicles have fewer parts than gas-powered cars (no oil to change, and no spark plugs to replace), they tend to have lower maintenance costs, too. A recent report from the analytics firm We Predict revealed that after 36 months on the road, service costs for electric vehicles and light trucks are 31% lower compared to gasoline-powered vehicles.

So which is cheaper overall?

A report from the US Department of Energy shows that after 15 years, electric vehicles generally cost less than similar gas-only models, when you factor in price, maintenance, financing, repairs, federal tax cuts, and fuel costs. The electric version of the small SUV costs $0.4508 per mile, which is $0.0219 less than $0.4727 per mile using a similar gas-based model.

Based on the car’s average life — 200,000 miles, according to Car and Driver — the cost of a gas-powered vehicle would then be $94,540, while a similar electric vehicle would be $90,160, a difference of $4,380. Note that this total does not include potential state tax credits, however, since they were not included as part of the study.

While electric vehicles are generally cheaper than their long-term gas-powered counterparts, newer electric vehicles with a battery range of more than 300 miles can end up costing more. Light electric vehicles that cover 300 miles on a single battery charge per mile cost four cents higher than comparable gas models, although this is mostly because they are modern, high-end electric vehicles that sell for luxury car prices.

While electric cars are cheaper, they come with trade-offs

One of the biggest blows against electric vehicles is that charging a car battery is not appropriate if you don’t have access to commercial charging stations or at least a level 2 charger at home. Even with the faster Level 3 chargers you find at commercial stations, it can still take up to 30 minutes to fully charge your electric vehicle.

“Time is money if you have to sit for a few hours waiting for your car to be charged,” says Matt DiLorenzo, senior managing editor at Kelley Blue Book. “This is the competitive disadvantage of electric vehicles, they are inflexible when it comes to refueling requirements, whereas a gas-powered vehicle has only a few minutes at a gas station and back on the road.”

Since there are only about 46,000 commercial charging stations compared to 150,000 gas stations, potential buyers will want to make sure there is a nearby station available, using this interactive map. And since electric vehicles have an average range of less than 200 miles, you may want to consider a hybrid electric vehicle if you frequently drive long trips. The hybrid has an electric motor and a gas motor, allowing you to switch between the two depending on how far you plan to drive.

“If you only have one car, I think you’d be better off having a plug-in hybrid,” DeLorenzo suggests. Gas at $5 a gallon [in some parts of California]You’ll get a car with an electric range of 30 to 50 miles, and if you only travel 15 to 20 miles, you can mostly use it as an electric car. But if you have a road trip, or a blackout happens, you have a gas engine to get back on.”

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