With gas prices flirting with, and in a few areas exceeding the $4.00 per gallon threshold, buying or leasing a fully electric (EV) or plug-in hybrid (PHEV) car or SUV ) is a cost-effective way to save money at the pump, compared to driving a conventional engine-powered model.
The EPA says electric vehicles can cost as little as $450 to $500 a year to replenish kilowatts, based on 15,000 miles of combined city and highway driving and home charging at national average electric rates. . That’s up to $7,000 less than the average new-vehicle owner will pay over five years to keep a gas tank full. Ownership costs are even lower when you consider the fact that an electric car requires minimal maintenance and repair costs since a battery powertrain has far fewer moving parts than a gasoline engine. gasoline and an automatic transmission, and requires no fluid or belt changes or tune-ups. .
PHEVs come with a larger battery than a standard hybrid that allows them to travel a certain number of miles on electric power alone. With most averages between around 25 and 60 miles on a full charge, some PHEV owners rarely use much gas.
Unfortunately, prices for electric and plug-in hybrid cars remain higher than their conventionally powered counterparts, although that gap is narrowing. Fortunately, the federal government and a number of states still stand ready to help sweeten the deal with financial incentives.
A one-time federal tax credit was established in 2010 to help get plug-in vehicles into showrooms and consumer garages. Buyers of new electric vehicles can deduct the full $7,500 from their income taxes for the year the car is purchased. (Federal credits don’t apply to used electric vehicle sales.) That effectively brings the cost of a Nissan Leaf down from $27,400 to a more affordable $19,900. For those who lease an electric car, the leasing company receives the tax credit and typically applies it directly to the transaction price, reducing the lessee’s monthly payments.
Unfortunately, the federal tax credits are not permanent, and they have already expired for General Motors and Tesla, having since reached the legal limit of 200,000 units for the sale of battery-dependent vehicles, including electric vehicles and plug-in hybrids. The Biden administration has proposed extending the credits to all automakers and even increasing the amount if a given vehicle is built in the United States and unions are involved, but its enactment is so far uncertain.
Several states and even some environmentally conscious cities offer their own incentives for buyers of electric and plug-in hybrid vehicles, which usually take the form of a tax credit or rebate. Provisions and exclusions are plentiful among electric vehicle incentive programs, so be sure to check your state’s web portal for details.
Things are a little more complicated with plug-in hybrids, as the federal tax credit amounts for each model vary depending on its battery capacity. Here’s what’s on offer so far for the 2022 model year according to the Environmental Protection Agency’s fueleconomy.gov website:
- Audi A7 TFSI and Quattro
- Audi Q5 TFSI and Quattro
- BMW X5 xDrive45e
- Chrysler Pacifica PHEV
- Jeep Wrangler PHEV
- Lexus NX PHEV
- Porsche Cayenne PHEV
- Porsche Panamera PHEV
- Toyota RAV4 PHEV
- Volvo S60 PHEV with extended range
- Volvo S90 Extended Range PHEV
- Volvo V60 PHEV with extended range
- Volvo XC60 PHEV with extended range
- Volvo XC90 Extended Range PHEV
- Hyundai Tucson PHEV
- Hyundai Santa Fe PHEV
- Kia Sorento PHEV
- Mitsubishi Outlander PHEV
- Lincoln Aviator Grand Touring
- Ford Escape PHEV
- Lincoln Corsair Grand Touring
- Land Rover Range Rover PHEV
- Land Rover Range Rover Sport PHEV
- BMW 330e/330e xDrive
- BMW 530e xDrive
- BMW 745e xDrive
- Volvo S60 PHEV
- Volvo S90 PHEV
- Volvo V60 PHEV
- Volvo XC60 PHEV
- Volvo XC90 PHEV
- MINI Cooper SE Countryman ALL4
- Hyundai Ioniq PHEV
- Kia Niro PHEV
- Subaru Crosstrek PHEV
- Toyota Prius Prime