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Should you buy an electric car?
Between lower costs and the environmental benefits, many families are wondering if now’s the time to go electric. Should you? Find out with our guide.
Tax incentives are kicking in. Infrastructure is coming into place. New cars — and new-to-electric carmakers — are hitting the market. (Oh, and climate change persists at a terrifying rate).
So maybe it’s time to go electric.
And maybe it’s not. After all, interest rates remain high, which means the cost of borrowing money — to pay off a car loan, say — is high, too. And while an electric car is almost certainly better for the environment than a gas-guzzler, there is an environmental cost to discarding a still-working vehicle. And public transportation remains an optimal play, too.
So here are the key things you should consider if you’re thinking of buying an electric vehicle now, and an answer to the question of whether you should.
In this article:
Before we begin…
This is a complicated topic, but at Haven Life we believe in making life simple. Therefore, we’re going to start this article with what we think is the bottom line. However, if you want to think the question through yourself, or be better equipped to evaluate your own personal circumstances in terms of electric vehicle purchase (which vary state by state and car to car), we suggest you read on.
The short answer to our headline question is that if you are thinking of getting a new car (or replacing the one you have), an electric vehicle should save you money over the course of three or more years versus a gas-powered car, and it is better for the planet (though how much better depends on where you live).
However, the financial savings are not so huge that you should immediately get rid of your perfectly good internal combustion car and go electric for money alone — purchase price is still significant. It’s also worth bearing in mind that some analysts think EVs will get cheaper in the next few years due to cheaper manufacturing costs and more options from Asia.
That’s no reason to not buy a car if you need one, but it could be a reason to wait if you don’t.
And here are those details…
Purchase price, including tax credits
There is now an electric vehicle tax credit (part of the Inflation Reduction Act) of up to $7,500 in place until 2032, which makes many (but not all) electric vehicles cheaper for most people (but not for some high earners).
If all the brackets in that last sentence make it sound like the tax credit is complicated, it is a little. Check this article to see if you and the vehicles you’re interested in would qualify for it, but there’s a good chance the answer is yes. (There are also additional state and local tax credits across the country.)
Even taking the tax credit into account, however, an electric vehicle will still cost you more than its gas-powered equivalent. A $12,000 price difference between equivalent models — one electric, one gas-powered — is not uncommon. The average price of EVs is a lot higher than the average price of gas-powered cars, but that’s partly because there are more low-end gas options than EV options, which drive down the gas-powered average price.
The Bottom Line: EVs have a higher sticker price.
While the sticker price of an EV is higher than that of a regular car, the fuel costs are a whole lot lower. It’s unhelpful to put a dollar amount on the savings because the prices of gas and electricity vary over time and from location to location, and different people drive (and thus refuel) with different frequencies.
However, a 2020 study concluded that EV drivers save 60% in fuel costs, and that was before the war in Ukraine (which increased gas prices), so today’s saving is likely higher. Also, charging at home at night can reduce charging costs by a further 24%.
The Bottom Line: EV fuel is way cheaper.
Where to charge
The Inflation Reduction Act includes a 30% tax credit for electric vehicle charging stations for businesses and homes, and President Biden has a plan to build 500,000 charging stations across the US by 2030. All told, the amount of charging stations in the US is set to grow significantly, and of course it’s now more affordable to install one at home.
That said, if you’re thinking of buying an EV, the important question is where can you charge your car now, not in 2030. If you mainly use your car close to home for commuting, consider whether your office or parking garage has a charging station.
Or if you have space for an at-home charger, that is almost certainly the best way to save money and time. Charging your car at home overnight takes as much effort as charging your phone, and perhaps you should think about it the same way: what would your life be like if you couldn’t charge your phone at home or at work?
If you won’t be charging at home or work, think hard about how you’ll deal with that. The amount of fast charging stations in the US is still low.
The Bottom Line: If you can’t charge at home or work, an EV may not be for you.
Simply put: EVs are cheaper and easier to maintain (no valves, spark plugs, oil changes, hoses…). The federal Office of Energy Efficiency and Renewable Energy says that the average maintenance costs of an EV are 40% less than for internal combustion cars. This adds up to $600 in annual savings for the average US driver (who does a bit less than 15,000 miles a year) and, obviously, greater savings for those who drive more.
Bottom line: Less cash, less fuss.
So, taking it all into account, is it more expensive?
As you can see above, once you take everything into account, calculating the cost of an EV versus a regular car is tricky. Luckily, someone has made a good stab at it, and the bottom line is, as mentioned above, that once you take the new tax credit and other savings into account, an EV is likely to be cheaper than its gas-powered equivalent for most people over the course of three years.
Of course, there are concerns other than money…
If you mostly use your car in-town and have your charging figured out (see above) an EV will easily go the distance you require on less than a single charge. However, if you won’t be able to charge at home or at work, intend to travel long distances and/or drive in extreme cold and/or carry heavy loads (both of which drain EV batteries relatively fast), then you should do some research (where will you charge?) and some math (how often will you need to do so?).
The range of EVs is constantly growing as batteries improve and charging stations increase in number, but for some drivers it is still a thing which requires consideration. For now, if miles of range is an issue, consider a Tesla: They have the largest network of fast charging (“supercharger”) stations and their long-range vehicles can go more than 300 miles between charges.
The bottom line: Don’t worry about EV range for in-town use; do consider it if you make a lot of longer journeys or other battery-draining activities.
How do they drive?
While different EVs handle differently, in general they drive smoothly and have quick pick-up. Unlike regular automatics, you can’t feel the gears change, because there are none. If you’re used to stick, it will be an adjustment, but you’ll probably find that it feels the way you thought an automatic actually would: genuinely seamless.
The bottom line: It’s nice.
A key reason for buying an EV is that it pollutes less: But how much? The EPA says that, mile-per-mile, on average an EV produces two-thirds less emissions than a gas-powered car. Over the car’s life-cycle, which includes manufacture and delivery, an EV’s total emissions are less than half of an internal combustion car’s, and manufacturers have a financial interest in recycling the components of EVs.
However, electricity is only as benign as its source, and that source varies from state to state. If you live in California, which uses a relatively large amount of renewable energy in its grid, your EV will produce a quarter of the emissions it would generate in a state which relies heavily on coal (though even then it would pollute less than a gas-powered car).
While EVs are better for the planet, bear in mind that the thing that’s even better is not driving. Every time you take public transport, walk or cycle, you’re doing more for the environment than you can by driving an electric vehicle. And you’re saving money.
About Michael DavisRead more by Michael Davis
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus
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