Are The Savings Worth The Higher Price Tag On Electric Cars?

Are The Savings Worth The Higher Price Tag On Electric Cars?

More and more car companies are coming out with electric cars. Whether it is the Nissan Leaf, the Tesla Model 3, the Chevrolet Bolt EV, or any of the other electric cars out on the market, people have been buying these up. Statistics show that the Tesla Model 3 is the 6th best selling car in the United States. These cars are definitely popular but that doesn’t mean that they are actually saving people money.

Educated consumers are wanting to know whether the savings of an electric car are worth the higher price tag of these vehicles. Let’s break this down and find out whether or not you will be saving anything.

One of the first things that you need to consider when buying an electric car is whether you are trying to save money on gas or save the environment. Electric cars are great for the environment and do not emit nearly as much harmful pollutants. In that sense, you will be saving the environment. Most people are just as concerned about saving their bank account too.

In the United States, the average consumer vehicle costs about $36,000. On the other hand, the average price of an electric car is just over $55,000. This price tag may initially turn you away from getting an electric vehicle but there are a few things to consider that may make this price tag worth it to you.

First, Tesla now sells the Model 3 at a retail price of $38,990 before any kind of incentives or dealership deals. This is only $3,000 over the average consumer car cost. If you are looking for a Tesla, this price is not that much higher and the amount of money you will save on gas compared to a car of a similar size will help to offset the several thousand dollars more. A Nissan Leaf is even more affordable at $29,990.

A federal tax credit for electric vehicles in the United States starts at $2,500. For the first 5 KW hours, you get another $417 of tax credit. After that, you get another $417 for every additional KW hour after the first 5. This tax credit is claimed in the year that you purchase the car. While you may have to pay the full price of the car upfront, you can potentially get the maximum federal tax credit of $7,500 depending on the specs of the EV you choose.

Many states have programs that offer additional savings to go with the federal credit. One of the common benefits is that you are exempt from fuel emission inspections, this saves you testing fees and time when it comes to renewing your vehicle registration. Another common benefit is an exemption from state sales tax or reduced sales tax on the sale of an electric vehicle. Some states have an electric rebate for the installation (and sometimes the use of) electric vehicle chargers.

The average cost of gas for a person driving an electric vehicle in the US is about $1,100 a year. The cost of charging an electric car is about $450. That leaves you with about a $650 savings a year.

It is also hard to determine the exact nature of savings from maintenance but from what we have seen of electric vehicles, they do not require nearly as much maintenance. Fewer parts reduce the amount of wear and tear on a car. 

Depending on what state you live in, you can significantly reduce the cost of buying an electric car. With just the federal tax credit, you can reduce the price of a Nissan Leaf down to the price of a typical entry-level car. You may end up paying more upfront but you can definitely make buying an electric car worth it.