By Peter Valdes-Dapena, CNN Business
Gasoline prices that are constantly increasing day by day are encouraging many people to buy an electric vehicle. There’s no doubt that electric vehicles cost significantly less to fuel than gas-powered models, especially with gas prices averaging $5 a gallon, according to AAA.
However, it almost never makes sense to buy a new car just to save money on fuel. New cars tend to cost more money than you’d save on fuel, but if you’re already in the market for a new car, an electric vehicle could be a great option.
“Most of our analysis has shown that, from a financial perspective, if you’re buying a new vehicle, it makes perfect sense for most people to at least strongly consider an electric vehicle if it fits their style. of life,” said Chris Harto. , senior policy analyst for Consumer Reports.
For example, the Environmental Protection Agency estimates that it will cost the average American about $2,900 per year to fuel up a 2022 BMW 430i sedan. (The base-model 4-Series sedan gets 28 miles per gallon in combined city and highway driving, and it uses Premium fuel, which the EPA calculates at a national average of about $5.39 per gallon.) The estimated cost to fuel a 2022 BMW i4 eDrive40, which is essentially the same car but fully electric, costs about $600 for a year. It’s a fifth of the cost.
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Such a large difference assumes that gasoline prices remain as high as they are now, which we can’t really know. (On the other hand, we can’t really assume that they won’t either.) These costs also assume a certain price for electricity, and electricity costs – although usually much lower per mile than gasoline – vary a lot from place to place, and even by time of day. Many electric cars, once plugged in, can be configured to start charging only when electricity prices are at their lowest, much like refueling your gas-powered car only when prices at the pump were at the lowest.
Gas prices and electric prices fluctuate, of course, and vary from place to place, but, generally speaking, electric cars are much cheaper than gas-powered cars on a basic cents per mile. This is partly due to the fact that electric motors are much more efficient than gasoline engines. Over 85% of the energy that passes through an electric motor is converted into motion. For a gasoline engine, this figure is around 40%. So even if electricity and fuel costs were completely equal, an electric car should, in theory, be cheaper to own than a gas-powered car.
But, of course, you don’t usually get a huge reduction in fuel costs for nothing. The i4 costs about $10,000 more than the base model BMW 4 Series with gasoline engine, but the electric BMW i4 is also eligible for a federal tax credit of $7,500, reducing the ultimate price difference. at just $2,500. And that doesn’t take into account state tax refunds or other incentives electric cars may be eligible for. In some states, with combined federal and state incentives, the electric car might even cost less than the gas-powered car, based on list price. However, not all electric cars are eligible for these federal tax credits. Cars from Tesla and General Motors, for example, are no longer eligible.
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So even with the federal tax incentive alone, by opting for the electric BMW over the gas-powered BMW, you’d make up the base purchase price difference in just over a year.
Electric cars tend to cost more than gas-powered cars, mainly due to the high cost of batteries. It’s one of the reasons there are so many more electric vehicle options among luxury brands. There are also mainstream branded options such as the Kia EV6 and Hyundai Ioniq 5. The Chevrolet Bolt EV is also back on the market, following a massive battery recall, and with a new lower price. Toyota also recently released its own electric vehicle, the BZ4X, similar to Subaru’s new electric SUV, the Solterra. Even these mainstream models tend to cost a little more, in terms of list price, than their gas-powered siblings.
Keep in mind that car dealerships are also not required to charge the list price. In the past, customers were usually able to negotiate prices down, but with cars in short supply due to parts shortages, dealers often charge more. This is especially true for electric vehicles, said Ivan Drury, industry analyst at Edmunds.com. This may not be enough to eliminate fuel savings entirely, but supplements can reduce potential savings.
Dealerships charge, on average, $2,700 more than list price for Hyundai’s electric Ioniq5 and $3,100 more for the electric Kia EV6, for example. Mustang Mach-E electric SUVs cost nearly $1,900 off MSRP, according to data from Edmunds.com.
While many cars are overpriced these days, electric cars are marked up, on average, twice as much as gas-powered cars, according to Edmunds.com. While internal combustion cars sell for an average of 1.4% above MSRP, electric vehicles are marked up by an average of 3.4%
Insurance rates are similar between electric and gas-powered cars, according to various experts. Electric cars can cost more to insure just because they are generally more expensive cars to start with.
Electric cars may cost less to maintain, however, according to Consumer Reports, which based its findings on extrapolations from owner survey data. Because they have far fewer moving parts that wear out and require lubrication, electric cars can cost about half as much to maintain as internal combustion cars, Harto said.
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Another thing to keep in mind is that it’s rarely cost effective to buy an electric car if you’re unable to charge at home, or elsewhere, at standard electricity rates. Public chargers are suitable for occasional use when you cannot charge at home, such as on long car trips. Still, even at today’s high gas prices, charging at a public charger can cost significantly less than buying gas, said Aaron Bragman, Detroit bureau chief for the website Cars.com. It usually costs around $20 to $30 to recharge the battery, compared to the more than $60 it often costs to fill up with gas.
However, many car manufacturers offer a certain amount of free public charging for a few years after buying one of their electric cars. Additionally, some public charging providers, like Electrify America, offer discount plans for regular users that can further reduce costs, Bragman said.
The question of the eventual resale value remains unresolved. While Teslas hold their value very well, other electric cars with comparable battery life haven’t been on the market long enough to know if they’ll perform the same in the used-car market, said various experts.
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