Compared to their gasoline counterparts, electric vehicles tend to be much more expensive.
The Chevrolet Equinox starts at a reasonable $28,600, while its electric counterpart starts at $41,900. The Ford F-150 Crew Cab with a gas engine starts at $43,620, and the Ford F-150 Lightning starts at $62,995. The stylish BMW i5 starts at $66,800, compared to $57,900 for a gas-powered 5 Series.
While opting for an electric vehicle comes at a cost, a new study from JD Power says investing a little extra money in an EV could save you money in the long run compared to cheaper, gas-guzzling vehicles.
Gasoline or electric vehicles: which are cheaper in the long run?
JD Power, a consumer group known for its rankings and awards, conducted a study on the ownership costs of electric vehicles compared to gasoline-powered internal combustion engine (ICE) cars over five years. Over that period, owning an electric car is cheaper than driving a gasoline-powered car in 48 of the 50 states.
According to the report, EV owners living in states like Colorado, Illinois and Nevada saved the most, saving an average of $8,493, $8,751 and $9,216, respectively, compared to equivalent gas-powered cars over a five-year period.
However, drivers in New Jersey save more when they opt for an electric vehicle over a gas-guzzling vehicle they can't charge themselves, saving an average of $10,345 over five years.
On the other hand, owning an electric vehicle in Maine and West Virginia costs drivers $1,619 and $1,800 more over the same period, compared to a gasoline-powered car.
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The JD Power methodology
JD Power came up with these numbers after examining various transaction prices, taxes, local gas prices, electricity rates and various zero-emission vehicle incentives from state and local governments. The organization says the long-term savings highlight the need for today's car buyers to consider the bigger picture: that a relatively “cheap” car can actually be expensive to maintain over time.
“A lot of everyday buyers view their finances through that traditional auto transaction lens, where they're really only looking at the initial transaction price,” said Stewart Stropp, managing director of J.D. Power's electric vehicle practice. Automotive News.
While car buyers expect to pay more to fill up an SUV like a Chevrolet Tahoe than a compact Honda Civic, the specific expenses for electric vehicles are more complex and vary by state.
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A changing landscape for electric vehicles
For example, different states have different electricity rates. Residents of northeastern states like Connecticut, Maine, and New York pay a lot for electricity, which can result in EV owners saving only a small amount on fuel over five years. EV owners in California pay more for car insurance because they tend to prefer premium models with more expensive insurance rates.
However, some states offer better incentives that make buying an electric vehicle very tempting. In Colorado, for example, the $7,500 federal tax credit is added to state incentives that can add up to $5,000 in rebates.
While the study shows that owning an electric vehicle can save its owners a significant amount of money compared to gas-guzzling vehicles, it is essential to keep in mind that the status of electric vehicles and the market for these vehicles will change.
Reliable automakers are producing more affordable electric vehicles, and as more EVs hit the roads, states may take action as they find their gas tax revenues shrinking.
On July 1st a new “Annual registration fee for electric vehicles” was enacted in New Jersey. Electric vehicle owners in the Garden State will have to shell out $250 on top of the annual registration fee, which will rise to $260 next year and increase by $10 during each of the next four years, capped at $290.
Worst of all, new EV owners will have to pay an extra $1,000 up front, on top of the registration fee.
The state says the fee replaces the gas tax and that revenue will go into a “Transportation Trust Fund program” to fund various infrastructure programs.
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