It is possible to want an electric car but you are not sure if the price will be affordable. You might wonder, “Why are electric cars so much more expensive than gasoline cars ?”
The Nissan Versa, priced at $15,730 plus delivery, is the 2023 gas-engined vehicle with the lowest price in the U.S. The Chevrolet Bolt is the cheapest EV at $25,600 plus destination.
It’s easy to understand why there is a price difference. This is because the expensive battery, which replaces an internal combustion engine, in an electric vehicle (or EV), is large and costly. Karl Brauer, an executive analyst at iSeeCars, said that a lithium-ion battery with ample driving range can run from $10,000 to $20,000.
However, there are many other factors that drive up the cost of EVs. Liz Najman is a climate scientist, communications and research manager at Recurrent Auto. Recurrent Auto is an EV research and analysis firm that focuses on the used-vehicle industry. She cites the continuing supply-chain issues, low inventories, and the fact that EVs need 10 times more semiconductors to run than a gasoline car.
Najman also notes that there is an unprecedented buzz about EVs, triggered by California’s plan to eliminate the sale of gasoline cars before 2035 and the higher incentives provided by the Inflation Reduction Act.
What is the difference between electric cars and gas cars?
Jesse Toprak is chief analyst at Autonomy, an electric car subscription company. He says that looks can deceive when it comes to car pricing. Because EVs are more expensive than gas cars, they have been produced to date.
Najman states that the average cost of an EV is $64,249 and a gas car is $48,281, almost a $16,000 difference. This huge difference is due to the fact that most EV models still come in higher-end vehicles.
Najman points out that there are many “gently-used” EVs on the used-car marketplace starting in 2022 and 2021 which drives up the average cost. Recurrent’s data indicates that the average price for used EVs is $37,597. This is approximately $10,000 more than the average price for used gas cars.
Maintenance costs and incentives
We’ve been focusing on the price of EVs, which is admittedly quite high. There are many factors that can help you choose the right EV.
Najman states that EVs can be very competitive with gasoline cars if you consider the total cost of ownership. “The higher the gas price, the faster EVs catch up .”
These are some factors to consider to help you determine the financial impact of buying an electric vehicle (EV) and to keep your budget within reach.
Tax credits. You can get a federal clean vehicle tax credit up to $7500 when you purchase an electric vehicle. Leasing can help you indirectly by allowing the leasing company or dealership to pass along the credit as a lower monthly installment. For the first time in 2023, used vehicles could be eligible for credit up to $4,000.
Rebates. There are rebates offered by some state and local governments. The California Air Resources Board, for example, offers a rebate of $1,000 to $7,000 to anyone who buys or leases an electric vehicle.
Lower fuel costs. An EV can be charged at a private residence for a fraction of the price of buying gasoline. Commercial fast chargers are almost as expensive as gas.
EVs are less maintenance. There are fewer moving parts so fewer trips to a service bay. Regenerative braking means that EVs don’t need to have their oil changed and the brake pads last longer than those in gas cars.
Less expensive per mile. The recurrent data shows that EVs are less expensive than gas cars at 8.6 cents per mile.
Are affordable EVs coming?
In 2023, there will be a flood of new domestic and foreign EVs. This includes pickup trucks and larger SUVs. EVs could be less expensive if there is more competition.
Toprak states that we could see “EV batteries leaps and bounds better than what is available today” within the next decade. “Manufacturers around the world are fully committed to the EV revolution and there is no turning back .”
Brauer was cautiouser, noting that lithium prices have risen due to the conflict in Ukraine. It’s unpredictable and a breakthrough in battery technology could occur in five or 25 years. “This will make it difficult to sell EVs to mainstream customers in the short term due to their high price span>
Tips for EV buyers
When choosing an EV, keep these key points in mind:
The price on the sticker is not necessarily the actual cost. Incentives, rebates, lower fuel costs, ownership costs, and possibly your negotiation will offset the advertised price.
You should know what incentives are available for the car that you wish to purchase. It’s not easy, but it is worth the effort to find every possible way to lower your initial cost.
You should carefully choose between leasing and buying. Each financing option has its advantages, and each can impact the final cost of your vehicle.
You won’t be able to see the savings until you file your taxes if you plan on using the federal tax credit.
Non-financial benefits can be a reason to consider EVs, which may help you justify the higher price. Owners of EVs enjoy a variety of benefits, including carpool lane access, improved acceleration and handling, and a more quiet ride.
You can use the internet to search for the best deals. You can also buy the car from out-of-state and have it delivered to your home.