It’s cheaper to own an electric vehicle than a comparably sized and equipped gas-powered one, according to a new study from Atlas Public Policy that estimates the cost of ownership over a seven-year period. The results, covering five EV models in different categories, add to mounting evidence that between the EV federal tax credit and lower maintenance and fuel costs, EVs are now more than competitive when it comes to cost. The five models are the Tesla
Model 3 and Model Y, the Ford-150 Lightning, the Chevrolet Bolt and the Volkswagen ID.4.

“If a consumer walks into a dealership and wants to buy one of these electric vehicles today, they can walk out with certainty that they’re going to save money by doing so,” says Nick Nigro, lead author of the analysis and founder of Atlas Public Policy, a firm that creates tech tools to analyze transportation and climate policies.

The research compared each vehicle’s list price (reduced by the federal EV tax credit if available), plus estimated taxes and fees, insurance, fuel and maintenance over the course of ownership, with the resale value subtracted at the end. (The study assumes owners will sell the vehicle after seven years, the typical amount of time a buyer keeps a new vehicle.)

Four of the five electric vehicles in the study are eligible for the federal electric vehicle tax credit, which means they meet certain battery and critical mineral requirements, among other criteria. The credit can reach up to $7,500, and some states offer additional incentives. This year, buyers can take advantage of the federal electric vehicle tax credit at the dealership, a move that brings electric vehicles and gasoline-powered vehicles closer in initial purchase price. It should be noted, however, that high income buyers won’t qualify for the tax credit. (It is limited to buyers with modified adjusted gross income of up to $300,000 for married couples filing jointly; $225,000 for heads of household; and $150,000 for singles and married couples filing separately. You can use your modified AGI from the year you take delivery or the year before, whichever is less.)

In the compact sedan category, the study compared the Chevrolet Bolt EUV to the Toyota Corolla LE. The upfront list price for the Chevy, minus the federal tax credit, was $22,550, compared with $22,050 for the Toyota. But over seven years, with all costs included, and assuming the Chevy owner does most charging at home (which is a common preference), you’ll save an estimated $10,58o with the Bolt.

For compact SUVs, the study found a similar result–the Volkswagen ID.4 Pro is cheaper than the Nissan Rogue SV over time, while costing more upfront. With the $7,500 credit, the EV costs $31,495 upfront while the Nissan costs $29,700.

In the sedan category, the study compared a Tesla Model 3 to a Toyota Camry SE Nightshade. The Tesla Model 3’s upfront price is $38,990 vs. $28,960 for the Camry. Significantly, the Tesla Model 3 base model (the one compared in the study) does not qualify for the federal electric vehicle tax credit because it uses a different battery source, according to Atlas. But higher maintenance and fuel costs for the Toyota add up over seven years, making the Tesla ultimately cheaper to own.

In a head-to-head in the mid-size SUV category, the Tesla Model Y comes out cheaper than a Toyota Highlander L. The Tesla Model Y costs $42,490 upfront after the tax credit, while the Highlander costs $39,270. But over the course of seven years of ownership, the Model Y is 9% cheaper than the Highlander.

For pickup trucks, the Ford F150 Lightning is a cheaper option compared to Ford F150 XL Supercrew. The upfront list price for the Ford F150 Lightning, after the tax credit, is $42,495 – cheaper than its gas-powered sibling, which is $43,515 upfront. The Lightning is also a more sophisticated vehicle, Nigro points out. “These vehicles are cheaper to own, but they also tend to be more advanced and they’re going to have features that aren’t going to be in the conventional vehicle,” he says.

Past research has also pointed to electric vehicles as cheaper to own than their gas-powered counterparts. A study by University of Michigan researchers published this year in the Journal of Industrial Ecology found that small, low-range electric vehicles are less expensive than gas-powered vehicles. And with incentives in certain cities, midsize electric vehicles can reach cost parity. A 2020 study from Consumer Reports found that battery electric vehicles save consumers an estimated 60% on fuel costs compared with gas-powered vehicles.

This past year, light-duty electric vehicles, which includes cars, vans, SUVs and pickups, comprised 9.8% of all new light-duty vehicles sold in the U.S., according to Atlas. In the fourth quarter of 2024, light-duty electric vehicles accounted for 10.5% of the light-duty vehicle market. Electric vehicle market share is up 20% from the fourth quarter of 2022.

But growth of EV sales has been slower than some car makers expected, likely because of concerns consumers have about range and an underdeveloped charging infrastructure. This year, Apple
canceled its electric vehicle plans and Rivian paused indefinitely its construction of a Georgia factory, after a round of layoffs.

There’s still a way to go when it comes to reaching sticker price parity (without the credit) between electric and gas-powered vehicles, explains Nigro. Battery costs, among other production costs, need to go down first. “We’re not there yet,” he says of price parity. “But when it comes to cost parity, the cost of owning the vehicle, we’re there in many, many circumstances”

Read the full article here

Subscribe to our newsletter to get the latest updates directly to your inbox

Please enable JavaScript in your browser to complete this form.
Multiple Choice
2024 © Budget Busters Hub. All Rights Reserved.