4 Ways Electric Vehicles Save You Money

Starting with the release of the Nissan Leaf electric car in 2010, fully electric vehicles (EVs) have risen from obscurity to a viable car option over the past decade. While probably still not considered mainstream, more manufacturers are announcing electric vehicle options each year, appealing to a broad range of buyers.

In the beginning, most electric vehicles were hatchbacks due to their aerodynamic and functional design. Nowadays, electric vehicles come in all shapes and sizes, from sports cars to SUVs to minivans.

While a comparably equipped electric vehicle still costs a few thousand dollars more than a comparably equipped gasoline car, their prices are dropping each year as the cost to produce the battery packs decrease due to economies of scale and improved battery development.

However, the initial cost of a car is only one aspect to consider for the total cost of the car over its lifespan. While there are many benefits to driving an electric vehicle that I may go over in another separate post, the reasons I’ll be going over today solely relate to cost benefits.

Note: The scope of this post primarily refers to fully electric vehicles, often referred to as Battery Electric Vehicles (BEV). Plug-in Hybrid Electric Vehicles (PHEV) receive many of the benefits listed below as well, but not all of them.

Gas Costs

The most obvious area of savings of an electric vehicle is its ability to avoid using gasoline as its source of fuel. This means no longer having to stop at gas stations to fill up every week. Now, you will still need to plug your electric car in to charge it up. Ideally, you will be able to do this at your place of residence (garage). Even better will be if your employer provides free or subsidized charging for electric vehicles.

So how much will it cost to charge up an electric car? Well, that depends on the specific car and also your electricity rates. Check this website to see your state’s average electricity rate.

As an example, the new 2018 Nissan Leaf has a 40 kWh battery and can travel an estimated 151 miles on a full charge. Assuming an average 13¢ per kWh electricity rate, that would come out to $5.20 to charge from empty to full, resulting in a cost of 3.4¢ per mile.

In comparison, at the time of this writing, the current average price for regular gas in the USA is $2.90 per gallon. Assuming a car that averages 25 mpg, in order to travel the same 151 miles as a Nissan Leaf, it will cost a gas car $17.52 (or 11.6¢ per mile). So to travel in an electric car costs less than a third of the cost compared to a traditional gasoline engine car.

An additional benefit of using electricity as energy vs gasoline is that the cost of electricity is significantly more stable than the price of gasoline. Electricity charges do not go through the peaks and valleys like they go through with gas prices. This makes estimating your monthly expenses for transportation more predictable.

Furthermore, your utility provider may provide cheaper electricity rates based on an optional Time-of-Use (TOU) plan, where your electricity rate is cheaper during certain hours of the day, usually from late evening to early morning.

Tax Credits & Rebates

In order to spur the adoption and growth of electric vehicles, many countries have adopted government incentives for buyers of these vehicles. Currently in the United States, you can receive a tax credit up to $7,500 for most electric vehicle purchase. That is quite a bit of money.

On a $30,000 car, that is 25% of the cost of the car. To be clear, this is a tax credit that is claimed when you file your taxes and is not given at the time of purchase. Additionally, you must have a tax liability of at least $7,500 in order to claim the full credit (this does not mean you need to “owe” $7,500 to the IRS).

Additionally, currently over a dozen states also offer rebates for the purchase or lease of a new electric vehicle. This can be as high as $5,000 for the purchase of a new EV in Colorado. This is usually claimed as an application to the State soon after you purchase or lease the car.

Furthermore, your local utility provider may also provide additional rebates for an electric vehicle. These are usually a lower amount, in the area of a couple of hundred dollars. Some utility companies may also provide assistance or reimbursement for the installation of EV chargers in your home.

Maintenance & Repairs

Even though the operation of a car is fairly straightforward, when you stop to think about it, your car really is an engineering marvel made up of dozens of different parts all made to work together in order to make the car go. There are a lot of moving parts like belts, pumps, valves, transmissions and piston heads.

The problem with all these components is that each of them is just another point of failure that can prevent the car from working. Additionally, there is a lot of heat and vibration generated from regular cars since each time gasoline is ignited in the engine, it is essentially a mini explosion happening. All that heat and vibration wears out components even faster.

The design of electric vehicles does away with most of these problems. There are significantly fewer components and moving parts in an electric car. Due to this, there are fewer things to repair and replace over the life of the car.

Also, what is the one maintenance activity everyone who’s had a car is familiar with having to go through? The oil change (you ARE getting your oil changed regularly, right?).

For most people, it’s at least a once per year activity. Electric cars don’t use engine oil so it’s another maintenance cost you don’t need to worry about. The added benefit of this is not having to worry about oil leaks from your car due to leaky gaskets, which usually eventually happens on older cars due to heat and vibration.

Time Savings

They often say time is money, and I think one of the unseen cost benefits of owning an electric car is the time that you will save. Despite the often cited complaint regarding charging times for electric cars, there’s a good chance driving electric will still save you time.

If you regularly commute to work, several states provide electric cars with carpool lane access privileges, even if you are the only passenger. This can cut down on your commute time and give you more time for other things.

The other area is charging your car. The hassle of having to make a stop at a gas station to fill up your car every week will be a thing of the past. Assuming you are able to charge your electric vehicle at home, you will just need to spend 10 seconds plugging in your vehicle when you get home in the evening and by the time you wake up the next morning, your car will be ready to go with a full charge.

The third area of time savings relates to the maintenance and repairs benefit mentioned above. Since you can expect fewer repairs and no oil changes over the life of the vehicle, that translates to less time spent bringing your car to the dealership or auto mechanic and being without your car.

Conclusion

As you can see, there are many ways that driving an electric vehicle can save you money. There are even more reasons why driving an electric vehicle is more enjoyable than a gasoline car that I didn’t go over in this post. While current electric vehicles may still have their limitations, driving one now can still offer you the opportunity to save money. Have you owned or leased an electric vehicle before? Are you interested in learning more about the benefits of electric vehicles? Let me know your thoughts in the comments below.