Driving an EV can put cash back into an owner’s wallet in the long run.
Despite having higher sticker prices than comparable conventionally-powered models, owning an electric vehicle can still save an owner money over time.
For starters, the cost to run an electric vehicle can be considerably less than fueling a gas-powered ride. On average, the Environmental Protection Agency says the 2018 crop of EVs will cost an owner between $500 and $750 in electricity to drive 15,000 miles annually, depending on the model. That’s between $4,000 and $5,250 less than it will cost to keep the average 2018 gasoline-powered vehicle fueled over a five-year period, based on gas at $2.83 per gallon.
In an apples-to-apples comparison, the Ford Focus Electric, which is rated at the electric equivalent of 107 “e-mpg” in combined city/highway driving, is estimated to cost an owner $500 less to run each year than a gas-powered Focus at 28 mpg.
The leaders in this regard for 2018, with estimated annual electricity costs of $500, are the Hyundai Ioniq Electric at 150 e-mpg and the Tesla Model 3 at 136 e-mpg. They’re closely followed at $550 annually by the Chevrolet Bolt EV at 128 e-mpg, the Volkswagen e-Golf at 126 e-mpg, and the BMW i3 at 126 e-mpg.
Of course, your savings will vary based on local electricity rates and fuel costs. According to a study of energy costs in the 52 largest U.S. cities conducted by Crescent Electric, it’s cheapest to run an EV in New Orleans, LA, while it’s costliest in New York City. At that, the study’s data suggests motorists across the nation can save money by powering their daily commutes with electricity, instead of gasoline.
Electric vehicles are eligible for significant tax incentives. The federal government offers EV buyers a one-time $7,500 tax credit, which effectively cuts the $37,495 Chevrolet Bolt EV’s base sticker price to $29,995. A few states give EV buyers an additional break. If you live in Colorado, you’ll get an additional $5,000 state tax credit for purchasing an EV; in California, it’s as much as $4,500.
On the downside, federal EV incentives are set to phase out once an automaker sells 200,000 EVs, which is a feat Tesla has already accomplished. The $7,500 credit on new Teslas extends through the end of 2018, but will be phased out in three steps over the course of 2019. General Motors is likewise expected to reach the 200K threshold sometime next year on sales of its Chevrolet Volt and Bolt EV models.
Electric vehicles enjoy lower long-term maintenance costs than conventional autos. That’s because they eliminate over two-dozen mechanical components that would normally require periodic service. An EV owner avoids having to pay for things like oil changes, cooling system flushes, transmission servicing and replacing the air filter, spark plugs and drive belts.
On the downside, electric cars don’t hold their values as well as most conventional models, which eats into their long-term ownership costs. They take a bigger initial hit in depreciation thanks to the above tax credits. Plus, demand for used EVs is still relatively limited, and the longer range of newer EVs is making older models that can’t run as many miles on a charge seem dated.
For example, the valuation experts at Kelley Blue Book predict the 2018 Nissan Leaf will be worth only 28 percent of its original value after five years. That means a base sticker price of $33,612 will wither to just $9,358 by 2023. The average vehicle retains 37 percent of its original value after five years.
But there’s a wild card in the deck, and that’s the aforementioned tax credits granted to new EV buyers. Taking the one-time $7,500 federal tax credit effectively reduces the Leaf’s original sticker price to $26,112. Based on the above noted resale value, that means the Leaf retains more like a near-average 36 percent of its original MSRP after five years. And it gets better if you live in a state that grants additional tax breaks for buying an EV,
EVs from Tesla, on the other hand, tend to hold onto their original values much more tenaciously. According to KBB, a 2013 Model S sedan can be expected to retain as much as 70 percent of its original $59,900 MSRP. This is most likely because the operating range of even the original Model S from 2012 remains competitive at an estimated 265 miles, and its forward-looking styling still seems fresh.
Used EV Costs
True penny-pinchers can save the most money by choosing a used EV instead of a new one. They’re dirt cheap in the pre-owned market, given their sub-par resale values. For example, used-car listings on MYEV.com show several five-year-old Nissan Leafs priced at around $8,000 or less with average miles on the odometer. Meanwhile, KBB says a similarly sized gas-fueled 2013 Toyota Corolla should go for around $11,000. Plus, the Leaf would still save an owner around $900 a year in energy costs over the Corolla.