In this article:
Buying an electric car can be a prudent financial move in the long term, but it commonly results in higher upfront costs. That's why buying an electric car can be a balancing act of compromises for many people who are doing so in order to save on transportation costs.
If you're thinking about upgrading your gas-guzzler for an electric vehicle, here are some benefits and drawbacks to consider before you pull the trigger.
Benefits of Buying an Electric Car
There are a handful of reasons to consider going electric with your next vehicle, both for your wallet and for the environment:
You Can Save on Gas and Maintenance Costs
Charging the battery on an electric car isn't free, but it's a lot cheaper than paying for gasoline. The cost of electricity can vary depending on where you live, but according to data analyzed by the Yale Center for Environmental Communication, the average equivalent cost per "gallon" to charge an electric vehicle in the U.S. is $1.41. As of September 2022, the average price per gallon of gas around the nation is $3.74, according to AAA.
Electric vehicles also tend to require less maintenance because there are fewer moving parts compared to a car with an internal combustion engine.
You May Be Able to Get Tax Credits
Electric vehicles can be expensive, but depending on the model you buy, you may be able to get a tax credit of up to $7,500—the same goes for some plug-in hybrid vehicles. The U.S. Department of Energy maintains a list of eligible models and their corresponding credits.
Just keep in mind that tax credits are earned when you file your tax return for the year in which you purchased your electric car, so it won't reduce your upfront costs immediately. Also, there are income limits depending on your filing status and whether the vehicle is new or used.
Consult with a tax professional to get more information.
You'll Have a Smaller Impact on the Environment
Electric vehicles aren't entirely emission-free because they still rely on coal-powered energy sources. But according to the Department of Energy, they still reduce your emissions significantly compared to gas-powered vehicles.
Based on data gathered by the federal agency, the average annual emissions per vehicle nationwide are 3,932 pounds of carbon dioxide equivalent for all-electric vehicles and 11,435 pounds of carbon dioxide equivalent for gas-powered cars.
You'll Enjoy Higher Performance
Electric vehicles tend to be quieter than gas-powered vehicles, making for a more enjoyable driving experience. They also react more quickly than gas-powered engines and provide more energy efficiency when you're idling.
Your Commute Could Be Shorter
Depending on where you live, you may be able to access the carpool lane while driving an electric vehicle—even if nobody else is in the car. This could significantly reduce your commuting time in some cities.
Downsides of Buying an Electric Car
While there are clear advantages to owning an electric car over a traditional vehicle, you may also run into some drawbacks. Here are some to consider.
Higher Upfront Costs
In July 2022, the average cost of a new electric vehicle surpassed $66,000, according to Kelley Blue Book. That's far above the average for all new cars sold in America, which reached $48,182 in that same month.
Although there are less-expensive options available, you can generally expect to pay more for an electric car compared to a comparable gas-powered car.
More Expensive to Insure
Although you'll save money on gas and maintenance, you can expect to pay a higher insurance premium. This is due not only to the higher price tag for an electric car but also because their more complex nature may require specialty tools and training for repairs.
Limited Battery Life and Long Charge Times
You can generally expect to get between 250 and 350 miles on a single charge with an electric vehicle, compared to up to a 400-mile range with a gas-powered vehicle.
What's more, gassing up a car at the pump may take just a few minutes, while getting a full charge on your electric car can take anywhere between 30 minutes and 12 hours, depending on the model, the size of the battery, the power source and even the weather.
Finally, if you're not close to home, it can be difficult in some states to find charging stations nearby.
Higher Utility Costs
Again, you'll save on gas costs, but keeping your car's battery charged won't be free. If you set up a home charging station, you'll need to pay for that upfront—it can cost between $600 and $1,800 for the equipment and installation.
Additionally, your home electricity costs will go up, which you'll need to incorporate into your budget.
How to Decide Whether to Buy an Electric Car
The decision of which vehicle to buy is a very personal one, and when it comes to an electric vehicle vs. a gas-powered car, it's important to consider both your values and the financial impact of the decision.
If you can afford the upfront costs of an electric car and you plan on holding onto the vehicle for a long time, the long-term savings can be worth it. Reducing your impact on the environment can also provide some peace of mind.
But if the higher monthly payment on a car loan would be detrimental to your budget, or you're concerned about usability with charging times, accessibility and distances, you may consider waiting until you can afford it or charging options improve. You could even compromise with a hybrid vehicle, giving you the best of both worlds.
The important thing is that you take your time to research all of your options and carefully consider what's best for you.
Make Sure Your Credit Is Ready for a Vehicle Purchase
Unless you plan on buying your next car outright, it's important to ensure that your credit is in good enough condition to get approved with favorable terms. Check your credit score and credit report to get an idea of your overall credit health and also to spot areas where you can improve.
Depending on where your credit stands and which steps you need to take, it can take a while to get your score to where you want it to be. But the long-term savings can be particularly beneficial if you're going for a more expensive electric vehicle.