Electric cars are cheaper than gas-powered cars in the US, depending on government incentives – International PV Magazine

Owning an electric car can save drivers thousands of dollars a year, with an average savings of $6,000 over the life of the car, but the savings depend on discounts, state fees, and the cost of gas and electricity.

From USA Photoelectric Magazine

With gas prices on the rise in the United States, many Americans are considering electric cars. The initial purchase price is a deal breaker for some, but when you look at the numbers, it seems that, in many US states, owning an electric car is actually cheaper on a monthly basis than a gas-powered one.

A new study by Energy Innovation Policy and Technology LLC finds that in most states, new electric cars are cheaper to own on a monthly basis than petrol cars from the day they hit the market.

The study found that owning an electric vehicle can save consumers an average of $6,000 over the life of the vehicle. However, the big caveat is that savings depend on Congress passing EV consumer incentives. This includes, at a minimum, the $7,500 federal tax credit for electric vehicle sales.

While the tax credit is a useful way to stimulate sales (and purportedly remove gas-powered cars from the roads), it does come with a problem — manufacturers can extend the credit to 200,000 EV sales per year. It’s not unimportant that both Ford and Nissan will likely exceed the federal tax credit ceiling this year. Study results show that increasing the tax credit amount to $10,000 would make electric vehicles cheaper in nearly every comparison to government vehicles in the study’s modeling. Gas prices are currently higher than they were when the modeling was done, but if gas prices fall, tax credits take on greater importance due to the shrinking operating cost differential.

The study reviewed the monthly costs of owning six different electric vehicles, comparing them to their gasoline counterparts.

Source: Energy Innovation Policy & Technology LLC

These costs include financing, taxes, government fees, state and federal deductions, tax credits, fuel, maintenance, and insurance.

Financing costs are about the same between electric vehicles and gas-powered vehicles, except where manufacturers charge interest rates on electric vehicle purchases. The good news is that after the loan is paid off, electric cars become significantly cheaper to own, with some savings as high as $1,500 to $2,000 per year, with some vehicle condition combinations as high as $3,000 per year.

Maintenance costs were found to be about 40% lower for electric vehicles ($0.061/mile) than for gasoline vehicles ($0.101/mile). Annual maintenance costs were estimated using estimates per mile from the Department of Energy and an estimated average annual mileage of 13,469 over the loan period using data from modeling by US Environmental Protection.

Estimated vehicle fueling costs using annual mileage, fuel efficiency from FuelEconomy.gov, current state AAA average gasoline prices as of May 4, 2022 (which have since risen) and average residential electricity prices for 2021. Different electric vehicles charge different fees – many of them set up a “tax” to make up for lost gasoline tax revenue. (The study does not consider costs associated with charging from home using solar energy.) Maintenance, fuel costs, and other charges were added together to get the estimated annual operating costs.

The results show that the Hyundai Kona SEL and Ford F-150 EV models are cheaper in every state to finance and own today than the equivalent gasoline model. The Volvo XC40 and Nissan are only a few dollars or less in many states where it’s cheaper to own the petrol version. For example, the monthly difference for a Nissan Leaf is less than $15 in Idaho, Indiana, Kansas, Minnesota, Mississippi, New Hampshire, Ohio, South Carolina, Tennessee, West Virginia, Wisconsin, and Wyoming and less than $1 a month in some states. The yellow shaded cells below show groups where the acquisition cost of electric vehicles is $15 or less per month. In states with high electricity and/or low gasoline prices, gasoline-powered cars remain cheaper than electric cars. Some of these states include Alaska, Georgia, Hawaii, Michigan, New Hampshire, Rhode Island, and Vermont.

While the initial sticker price for an electric vehicle may prevent some from transitioning to electric vehicles from gas-powered cars, data shows that many models of electric vehicles in many states are cheaper than gasoline-powered cars. However, the report’s authors note that increased adoption of electric vehicles is contingent on a federal tax credit of at least $7,500. General Motors and Tesla have already exceeded the sales cap under this program, and Nissan and Ford are likely to hit the limit this year. Without this incentive, it would cost consumers more per month while paying off the loan to purchase an electric vehicle for nearly all of the vehicle condition comparisons we evaluated.”

Read the full report here.

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