Why Driving an Electric Car Could Actually Save You Money
Did you know that driving an electric car in New England is already lower in emissions than 100 mpg equivalent? Compare that to an average compact/midsize gasoline only vehicle at only around 29 mpg. And did you know that on average in the United States, driving an electric car will result just half the lifetime emissions of a comparable gasoline car, even when emissions from battery manufacturing are accounted for? This is according to the latest 2017 research published by the Union of Concerned Scientists, which shows that charging an EV in the Northeast results in as little CO2 as a gasoline vehicle if it were somehow getting 102 mpg. However most prospective buyers are still hesitant to go electric due to the higher initial price (MSRP), according to a Harris consumer poll conducted in 2015.
The good news is —whether vehicle emissions are a personal concern of yours or not — there’s little reason to wait to go electric (and start reaping all an EV’s other personal benefits) in terms of actual cost to you. With current federal and state incentives, an electric may now even cost less than the average vehicle to buy (at over $33,500 in 2016) — and thanks to something called TCO (Total Cost of Ownership), driving an electric car may actually save you a lot money long term over a comparable gasoline on car, and cost less to own total than even an gasoline “economy” car.
Click on image to link to full New England and average US analysis: https://www.facebook.com/DriveElectricCarsNewEngland/posts/1571827852833250/
But before we get to incentives and savings, first let’s review the basics of what’s out there to buy or lease. There are essentially two types of EVs: BEVs — Battery only electrics that require a charge when the battery gets low, and PHEVs — Plug in Hybrid Electrics that drive like EV (for the first 14 to 114 miles, depending on model), then switch to a long range hybrid mode only if the battery gets low — providing 100% of something called Range Confidence. According to the consumer information site Nerdwallet, an EV is priced from $3,000 to $10,000 more than similar gasoline-fueled models before incentives. For example, a typical BEV has an MSRP of around $30,000 while a typical PHEV starts around $34,000. However, since consumers benefit from both federal and state incentives, this initial price premium could be all but erased. In fact, Connecticut offers up to $10,500 in incentives, and some are available the moment you buy.
The $7,500 federal EV tax credit is a nationwide incentive that has been around since the last decade. You won’t receive a direct chunk of money when you purchase the vehicle; instead, it will come as a credit when you file your taxes the following year. If your tax liability doesn’t meet or exceed $7,500 (this represents having around $50,000 in taxable income), you will miss out on the part of the credit. You also won’t qualify for the tax credit if you buy a used electric vehicle or if you lease it. However in the case of a lease, any reputable dealer will apply the majority of the credit towards the lease, meaning you would still benefit in the form of a lower payment. Leasing is a great way for those with lower taxable incomes to go electric today, and for those who want to try out the technology with fewer strings attached. Visit the IRS website or consult with your tax preparer if you are not sure if you fully qualify for this credit.
State incentives are often even more enticing as they can take the form of a rebate. Connecticut has one of the best EV rebate programs in the nation, an up-to $3,000 point-of-sale rebate. Any Connecticut resident is eligible for this rebate, regardless of your tax situation. The dealer will immediately apply the amount to your down payment, either in a purchase or a lease. In many cases this could mean zero money down deals, and combined with the federal EV tax credit benefits, a low cost lease payment that is no more per month than the car you drive now. The rebate only applies to new vehicle purchases or leases from a licensed Connecticut franchised new automobile dealership. The program is not funded by tax dollars, rather is through a commitment by Eversource as part of a broader commitment to energy efficiency and related initiatives set forth in a Settlement Agreement related to a 2010 merger. To find out more about eligible vehicles and the easy steps to apply, visit www.ct.gov/deep/CHEAPR. (If you live in Massachusetts, check out https://mor-ev.org/ to learn about their up to $2,500 in EV rebates.)
This takes us to the final story on why driving electric could save you money, thanks to the aforementioned TCO. This means that electric vehicle drivers could save thousands of dollars in total ownership, often over just five years compared with driving a comparable gasoline car. The savings come about because of the lower average cost to “fuel” and maintain electric vehicles, which can quickly add up to big savings in just a few years of average driving. According to NerdWallet’s analysis, drivers of the best-selling mid-size BEV can expect to spend $4,691 less than owners of the best-selling mid-size gasoline only car. Drive Electric Cars New England has conducted its own one-page TCO analysis specific to New England region fuel costs and incentives, which you can download for free from the DECNE facebook page. It shows that in less than 5 years, a driver’s total average costs from driving an electric vehicle will be less than a comparable gasoline only vehicle — and that over longer period or the life of the vehicle, an electric could save the driver thousands of dollars. See figures 1 and 2 that compare the average 5 year and average lifetime (160,000 miles) total ownership costs of an gasoline only “economy” car (Honda Civic) to a BEV (Nissan LEAF) or a PHEV (Chevy Volt).
So when it comes to today’s electric car choices, going green can actually end up putting a lot of “green” back into your wallet. Just how much you save depends on your personal situation, such as tax liability and how many miles you typically drive each year. There are online tools available at energy.gov and other consumer sites to help estimate these costs. It’s great to know that while saving money on fuel and maintenance, we can also reduce the amount of harmful emissions, and help to protect the future and health our planet and people alike.
Mark Renburke is Executive Director of Drive Electric Cars New England non-profit consumer advocacy group, and also produces multimedia EV education and outreach content for Drive Electric America. Mark has driven the same electric car for over 5 years and over 120,000 miles, avoiding the burning of over 3,000 gallons of gasoline and saving over $8,000 in fuel costs alone. Visit DECNE’s facebook page or youtube channel to watch the latest video episode ‘Why you can Expect Reliability from an Electric Car”, and please subscribe and share.
This article was updated 19Nov17 to include a reference to a more recent article on the benefits of driving an electric car.