What to know about buying electric vehicles after tax incentives end
By CALEIGH WELLS
The recent tax and spending cut bill passed by Congress on Thursday has put an end to federal tax incentives for electric vehicles.
Consumers now have until September 30 to take advantage of the federal tax credits on EVs before they are phased out. Despite this change, experts suggest that there are still compelling financial reasons to consider purchasing electric vehicles even without these incentives.
Prior to the passing of the bill, new electric vehicles were eligible for a $7,500 federal tax credit, while used EVs could receive up to $4,000. These incentives were implemented to make EVs more affordable, as data from Kelley Blue Book shows that the average purchase price of a new EV in the United States is approximately $9,000 higher than that of a new gas-powered car. Similarly, used EVs tend to cost around $2,000 more than comparable gasoline vehicles.
With the elimination of these tax credits, Ingrid Malmgren, Senior Policy Director at Plug In America, expressed concern that EVs may become unattainable for many lower- and middle-income Americans.
Despite the higher upfront cost of electric vehicles, Malmgren emphasizes that for those who can afford to consider the long-term fuel and maintenance savings, EVs remain a sound financial and environmental choice in every state.
Electric Vehicles Still Offer Long-Term Savings
While electric vehicles may not be cheaper to purchase initially, they ultimately prove to be more cost-effective to operate. Malmgren asserts that even without federal tax credits, EV owners will benefit from lower fuel costs and minimal maintenance expenses.
According to Malmgren, the point at which an EV driver’s savings on fuel and maintenance surpass the higher initial price varies depending on factors such as driving habits, fuel and electricity costs, and the type of vehicle. Online calculators are available to help determine this tipping point based on specific criteria.
A study published in the academic journal Joule in 2020 found that the average EV in the U.S., when charged using a mix of public and private chargers, saves the driver $7,700 in fuel costs over a 15-year period compared to a gas-powered car. Savings vary by state, with potential savings exceeding $14,000 over 15 years in certain regions with affordable electricity rates.
Electric Vehicles Remain Environmentally Friendly
Although manufacturing an electric vehicle may generate more pollution than producing a traditional gas-powered car, experts argue that over the long term, driving an EV is still more environmentally sustainable.
According to Peter Slowik, U.S. Passenger Vehicles Lead at the International Council on Clean Transportation, the total pollution generated by manufacturing and operating an EV evens out with that of a gas car after driving approximately 15,000 miles. Beyond this point, the environmental advantages of an electric vehicle become more apparent, with emissions from EVs being roughly half that of gas cars by the end of their lifespan.
Slowik emphasizes that unless one purchases a new car annually, opting for an EV is the cleaner choice due to its inherent efficiency. Electric vehicles continue to be a viable option for reducing carbon emissions, even in regions where the electricity grid relies on coal power.
Overall, electric vehicles offer a sustainable and economical alternative to traditional gas-powered vehicles, contributing to both cost savings and environmental conservation.
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