August 31, 2022
Note: The Inflation Reduction Act of 2022, signed into law on August 16, 2022, makes changes to the electric vehicle tax credit. This article will be updated after the IRS issues official guidance on eligibility rules. If you have any questions, check with the IRS or your tax advisor for the most up-to-date tax information.
Good to know: Certain federal and state tax incentives may be available to EV owners. For instance, you might be eligible for a federal tax credit of up to $7,500* if you buy a qualifying vehicle. Visit the IRS for more information on the qualified plug-in electric vehicle tax credit.
*Note: This figure is as of 2022
“I’ll get gas in the morning.” How many of us have regretted uttering those words when morning rolls around?
One potential upside to owning an electric vehicle like a plug-in hybrid is not having to go to the gas station as often (or at all if you own an all-electric car). Many electric vehicle owners can “fuel up” by simply plugging in their car and charging it at home.
Aside from the convenience, charging your electric vehicle at home might be less expensive than paying for gas. Overall fuel costs will depend on a number of variables, including how you drive your electric car, its fuel economy rating and the cost of electricity in your state. (Psst...the US Department of Energy has a website that lets you to look up and compare fuel economy ratings between cars.)
Generally speaking, EV owners may spend 60% less to fuel their car, according to a 2020 report by Consumer Reports, an independent consumer interest organization. Their findings show that “fuel savings alone can be $4,700 or more over the first seven years” of ownership.
While EV owners may not have to shell out as much money for gas, there are other fuel-related questions to think about. For example:
Almost every car owner knows that once you’ve purchased a vehicle, you have to take care of it with regularly-scheduled maintenance. This can include oil changes, tire rotations and other general repairs for wear and tear. (In this way, your car really is like your baby!)
Even though it’s hard to break down the costs exactly, there’s a general agreement that EVs and PHEVs typically cost less than gas-powered cars to maintain. And that’s because electric vehicles have fewer moving parts and fluids to swap out or top off, meaning fewer trips to the car shop.
Consumer Reports has found that the average savings are about $4,600 over the lifetime of the vehicle. That said, keep in mind that this estimate can only give you a general sense of what to expect. Actual maintenance and repair costs for electric vehicles can vary depending on how you drive the car, vehicle warranties and auto part costs.
Let’s take the battery unit. How long do electric car batteries last? While many EV batteries are expected to have a long lifespan (sometimes up to 15 years under certain conditions), they’ll eventually need to be replaced. Depending on your specific model, batteries for electric vehicles can run anywhere from $5,000 to $16,000 or more.
Electric vehicles can cost more to insure than gas-powered vehicles. This makes sense if you think about it. As we mentioned earlier, EVs generally come with a higher sticker price compared to gas-powered vehicles. So if you were to completely wreck your electric vehicle, your insurance company would likely have to pay a higher claim to replace it.
We get it – that was a lot of information to digest. And with so many variables to consider, where do you even start?
This might help: Check out the Vehicle Cost Calculator provided by the US Department of Energy. The tool will ask you a few basic questions about your driving habits and then allow you to compare specific electric vehicle models to help give you an idea of their lifetime ownership costs.
The calculator can give you an estimate of the following:
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.