Consumers are attracted to electric vehicles (EV) for many reasons — efficiency, fossil fuel independence, eco-friendliness and the cool factor, just to name a few. Plus, EVs are fast and fun to drive, with powerful engines that are as quiet as a whisper. But are these vehicles truly all they’re cracked up to be? Are there any bumps in the road to be wary of before plunking down premium dollars on that new Tesla Model 3 or Nissan Leaf? Here are several considerations to keep in mind if you’re weighing the possibility of an EV purchase.
Service and Repair
A 2021 study from the U.S. Department of Energy’s Argonne National Laboratory analyzed the cost of vehicle ownership across different engine types. Overall, they found maintenance costs are 40% lower for EVs compared to cars with a gas-powered engine. That’s potentially good news if you’re looking to reduce the time your ride spends in the service center — and the expense that goes with it. But it’s only part of the ownership picture...
A Less Costly Ride?
Electric cars generally cost more to purchase than their gas-engine counterparts, though government incentives can help offset the additional expense. As of December 2021, the base tax incentive for an EV purchase stands at $4,000. But that amount increases to $7,500 if your EV’s battery capacity meets a defined threshold. At the time of publication, legislation under review in Congress could further reduce costs with additional credit for vehicles made by U.S. companies that employ union workers and are powered by domestically manufactured batteries.
Watts vs. Gallons
One burning question likely on the minds of potential EV buyers is whether they’ll save on “fuel” costs. And according to a recent Wall Street Journal study, the answer is yes — provided you’re charging from home. Fuel costs for a combustion engine are considerably higher than what you’ll pay to “fill up” an EV strictly from a home-based charger. But when charging outside the home, the opposite can actually be true. WSJ says that gas-engine cars win out in this scenario because of the higher cost of using fast-charging stations.
Insurance and More
A car’s purchase price typically affects insurance premiums, so the higher sticker price of an EV would generally mean you’ll tend to pay more for insurance. In fact, a recent ValuePenguin study found that, on average, it costs nearly 40% more to insure an EV over a comparable gas-powered model. The study also notes that more than two-thirds of consumers aren’t aware of this additional cost.
To EV or Not to EV?
There are other factors to consider, including practical issues beyond the impact on your budget. For example, do you often need to drive long distances? Charging stations are becoming more and more common, but making sure they’re available where and when you need them may take a little preplanning. Plus, once you’re there, it takes longer to “refuel” compared to filling a traditional tank with gas.
Weigh the pros and cons of EVs carefully. Just like any big ticket purchase, selecting the car that’s right for you involves a careful review of your budget and resources. A qualified financial professional can help you make a decision that best fits your needs — and your wallet.