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Better, Quicker, Cheaper: Electric Cars Have Come a Long Way

Posted by The Savvy Retiree on October 31, 2019 in Money Saving Strategies

When electric cars briefly came onto the market in the 1990s there was a concerted effort from auto manufacturers and oil companies to kill them off as quickly as they arrived. They were threatened by the new technology and how it might affect their bottom line. They undermined the power, the speed, the efficiency, and the viability of electric cars. And for a while they slowed progress.

But electric cars have made their comeback, and this time there is no denying the many advantages they offer. Most famously, the Tesla has proven that electric cars don’t just compete with their combustion engine rivals, but, on many metrics, they surpass them. The electric car is here to stay, and for savvy consumers who are willing to crunch the numbers, there are huge savings to be made.

When your car runs on electricity, the EPA estimates that you’ll save about half of what it would cost to run a car on gas. If you’re an average mileage driver (about 13,000 miles per year) with average gas and electric prices, you’ll save about $600 per year on fuel, meaning you’ll be $6,000 richer at the end of 10 years. Your driving habits and fuel costs can make this number significantly higher or lower, so run the numbers for yourself. This calculator from the Office of Energy and Efficiency and Renewable Energy is a useful tool for figuring out cost savings.

You have two choices when selecting an electric vehicle: one that runs solely on electricity (EV) or a plug-in hybrid (PHEV), which can run on electricity for a limited range before switching over to gas.

If you go all-electric, you will also save significantly on maintenance. Since EVs have no combustion engine and fewer moving parts, they require very little maintenance. No oil changes or engine tune-ups, just new wipers and tire rotations. With both PHEVs and EVs, there’s also considerably less wear on brakes because they use engine braking to slow the car and recharge the battery. Brakes should need replacing less often than in traditional vehicles.

If you often travel long distances, and would worry about needing to recharge your car, PHEVs offer the best of both worlds—though you sacrifice some efficiency. You can run entirely on fuelsaving batteries for short trips you make around town and have the peace of mind that your car can take you over 600 miles before you need to refuel. The average car journey in the U.S. is under 10 miles, so as long as you keep your battery topped up, you may not have to visit a gas station until your next big road trip. A few all-electric vehicles can go over 200 miles without charging. Since 99% of all trips taken in the U.S. are under 70 miles, an EV is certainly worth considering for the additional savings they offer.

The federal rebates change the total price for the vehicle significantly, in some cases—though not all—bringing them in range or even below that of comparable conventional cars. Most EVs qualify for a $7,500 tax credit, and most PHEVs for a $4,500 credit, although a few PHEVs currently have $7,500 rebates available.

The Kia Niro PHEV, for example, is a lower-price crossover vehicle. The traditional version starts at around $24,000, while the plug-in is about $3,500 more. But the federal rebate is $4,500, making the conventional vehicle both more expensive to buy and more expensive to run.

If you’re comfortable going all-electric, the Nissan Leaf starts at $30,000, but the $7,500 federal tax rebate brings that down below $23,000, about the same as Nissan’s higher-end Altima and well below many other popular conventional vehicles. The more expensive all-electric Chevy Bolt ($38,000 before $7,500 rebate) has one of the longest ranges—238 miles before it needs to be recharged as compared to the Leaf’s 151-mile range.

Whether you choose an EV or PHEV might depend on your driving habits. Many drivers who want to go long distances or who live far from charging stations aren’t comfortable trying to fit their trips within the all-electric range, although the Chevy Bolt’s 238-mile range may alleviate what’s known as “range anxiety” for the majority of drivers. Note also that cold weather can lower the range of the battery.

The network of public charging stations is expanding as more of us switch to electric vehicles. You can see where your nearest stations are with this app. Some stations don’t even charge a fee.

If you choose an all-electric vehicle, you may want a high-speed charger in your home. This will cost approximately $1,000 to install (though you may find state incentives). However, you can still use a conventional outlet, and for PHEV that’s all you would need.

Some utilities also have off-peak rates that allow you to charge up your car for less. If you’ve invested in rooftop solar, you essentially get to charge your car for free.

If you’re looking to buy an electric vehicle at a lower price point, be sure to check out the used options in your area. A number of later model PHEVs and EVs come off lease and are sold for about half the new sticker price. You won’t qualify for a federal rebate. Also, note that battery technology improves each year, so an older model might have a weaker range than a newer one.

How Much Can You Save?

Federal tax credit for EVs: $7,500.

Federal tax credit for PHEVs: $4,500, with a few at $7,500.

Average savings for driving electric: 50% (about $600 for the average driver).

Written by Susannah Shmurak