What can you mention to customers as possible incentives that can help reduce the cost of buying an EV?
Federal Tax Credits
The federal government offers tax credits up to $7,500 for qualifying new electric vehicles purchased in the US. This tax credit lowers the purchase price, making EVs more affordable.
The amount of credit depends on the vehicle’s battery capacity and manufacturer. Once an automaker sells over 200,000 qualified EVs in the US, the tax credit begins to phase out over a year. For example, Tesla and GM tax credits have already been phased out.
Currently, most EV models from Ford, Volkswagen, Hyundai, and others still qualify for the full $7,500 tax credit as of 2023. The credit will remain at this level until a manufacturer reaches the 200,000 unit cap [1].
The federal tax credit is a powerful incentive that can reduce the upfront cost of an EV by thousands of dollars. This makes EVs much more affordable for customers to purchase.
State/Local Incentives
Many states offer additional incentives on top of the federal tax credit to further reduce the cost of buying an electric vehicle. These state and local incentives can include tax credits or rebates, reduced registration/licensing fees, and access to HOV or carpool lanes.
For example, Colorado offers an income tax credit of up to $2,500 for the purchase or lease of a new EV. California offers rebates up to $2,000 for the purchase or lease of a new EV depending on income. New Jersey offers a sales and use tax exemption on the purchase of an EV [1].
Some states like California, Florida, and Georgia allow solo drivers of EVs to use HOV or carpool lanes, even without passengers [2]. This can save significant time especially during rush hour commutes.
Checking for state and local incentives is an important step when considering an EV purchase. The savings from state tax credits, rebates, reduced fees, and HOV lane access can make EVs even more affordable.
[1] https://www.kbb.com/car-advice/electric-car-rebates-and-incentives-what-to-know-by-state/
[2] https://www.thezebra.com/resources/personal-finance/best-ev-tax-rebates-by-state/
Utility Company Rebates
One of the most compelling incentives for EVs are rebates offered by utility companies, which can defray thousands in upfront costs. Many local utility providers offer rebates to customers who purchase or lease a new EV, with amounts ranging from $300 to $5,000 depending on location.
For example, in California Pacific Gas and Electric offers EV rebates up to $800 for the purchase or lease of a new EV. Southern California Edison provides rebates up to $1,000 for new EV purchases. According to the California Energy Commission, the average EV rebate amount from California utility companies is around $4,379 per charging connector [1].
To qualify for utility rebates, customers generally need to be located in the provider’s service area and submit proof of a new EV purchase or lease. The vehicle must be registered in the state and service territory. Customers fill out online applications and provide documentation to verify eligibility. Rebates are issued in 6-8 weeks via check or account credit.
Charging Station Incentives
The federal government and many state/local governments offer funding for EV charging station installation through various programs. The U.S. Department of Transportation provides grants to fund charging stations, especially in rural areas (source). These government programs can cover up to 80% of charging equipment and installation costs.
Many electric utility companies offer rebates on home charging station equipment and installation costs. For example, Silicon Valley Power provides rebates up to $500 for installing an EV charger (source). Check with your local electric utility to see what incentives may be available.
Public charging networks like ChargePoint offer unlimited charging plans that provide access to a large network of public charging stations for a monthly fee. This makes it easy and affordable to charge on the go.
Reduced Electricity Costs
Charging an electric vehicle at home costs significantly less than fueling a gas-powered car. According to the NRDC, electricity prices equate to about $1 per gallon of gasoline, while gas prices average around $3.50 per gallon nationwide. This means fueling an EV is about 3-4 times cheaper than a gas vehicle.
Over the lifetime of the vehicle, an EV can save $6,000 – $10,000 in fuel costs compared to a similar gas car, depending on battery size and electricity rates. With gas prices fluctuating and electricity prices remaining relatively stable, these savings will likely grow over time.
Many utilities also offer special time-of-use rate plans for EV charging that provide lower rates overnight when demand is lower. Charging during these off-peak hours can further reduce electricity costs.
Sources:
https://www.nrdc.org/stories/electric-vs-gas-cars-it-cheaper-drive-ev
Low Maintenance Costs
One of the biggest operating cost differences between EVs and gas vehicles is lower maintenance costs. EVs have far fewer moving parts and mechanical complexity compared to internal combustion engines in gas cars. For example, there’s no engine oil to change, fuel filters to replace, spark plugs that need changing, or emission control systems that require upkeep.
This translates into significant savings on routine maintenance items like oil changes, tune-ups, engine air filters, etc. According to analysis by Consumer Reports, EV drivers save between $3,000 to $6,000 over the life of the vehicle on maintenance and repairs compared to gas car owners.
EVs also benefit from substantially lower brake maintenance costs thanks to regenerative braking systems that capture energy and slow the vehicle down by converting momentum into electricity. This allows the friction brakes to be used much less, reducing wear and tear.
Special Purchase Discounts
Many automakers offer discounts and incentives for customers who purchase electric vehicles. These can help reduce the upfront cost of buying an EV.
For example, Hyundai currently offers up to $3,500 off the purchase price of the 2024 Ioniq 5 EV for eligible buyers (https://cars.usnews.com/cars-trucks/advice/best-ev-deals). Kia is promoting a deal on the 2023 Niro EV that includes a $239/month lease for 3 years with just $3,999 due at signing (https://electrek.co/best-electric-vehicle-prices/).
In addition to purchase discounts, automakers and lenders provide attractive leasing and financing options on many EVs. Nissan is offering 0% APR financing for up to 36 months on the 2023 Ariya EV, plus up to $7,500 in potential federal tax credits depending on the model (https://www.capitalone.com/cars/learn/getting-a-good-deal/the-best-ev-deals-this-month/1879).
Shoppers should research available purchase discounts, special offers, and flexible leasing/financing options that can reduce the initial EV purchase cost. Taking advantage of these incentives can make buying an EV more affordable.
Resale Value
A common misperception about EVs is that they depreciate at faster rates than gas vehicles. However, in the first few years of ownership, EVs actually retain their value better than comparable gas models, as shown in cost comparisons from Elmo. While gas car values can fall by up to 60% in the first 3 years, EV depreciation is more gradual. Over the longer term, EVs are projected to have higher resale values as demand increases and technology improves.
The resale value of an EV is an important factor when calculating total cost of ownership. Even with higher upfront purchase prices, the long-term savings from lower depreciation help offset other ownership costs. Emphasizing the favorable depreciation rates in the early years of ownership can help customers see EVs as a smart financial decision, not just an environmental one.
Non-Monetary Savings
There are environmental benefits to driving an electric vehicle (EV) that do not directly save money but are still compelling incentives. EVs produce no tailpipe emissions, meaning they do not emit greenhouse gases or other air pollutants from the vehicle itself. This can greatly reduce a driver’s environmental footprint, especially in areas with high concentrations of gas-powered vehicles. According to the EPA, the average gasoline car produces about 4.6 metric tons of carbon dioxide per year, while an EV produces none [1]. This helps improve local air quality and reduce an individuals’ contribution to climate change.
In addition to emission reductions, EVs produce very little noise pollution compared to standard vehicles with internal combustion engines. The electric motor runs very quietly, reducing noise from streets and highways. This creates a more peaceful environment for drivers, passengers, and communities. Some cities are even paving the way for EVs by designating certain low-noise zones that can only be accessed by electric vehicles [2].
Many localities also allow EVs access to high occupancy vehicle (HOV) lanes, even with a single occupant. This can greatly reduce commute times, especially in high-traffic areas. However, HOV lane policies vary by state so drivers should verify eligibility in their area [3].
Total Cost of Ownership
When considering EVs versus gas-powered vehicles, it’s important to look beyond the sticker price and calculate total cost of ownership. This includes not just the purchase price, but factors like maintenance, fueling costs, insurance, tax incentives, and projected resale value over the lifetime of owning the vehicle.
According to a Car and Driver analysis, EVs often come out ahead in total cost of ownership calculations despite typically higher upfront prices. For example, they estimated the Hyundai Kona Electric would cost $10,164 less to own over 5 years compared to the gas-powered Kona. Savings on fuel and maintenance helped offset the increased purchase price.
Incentives can play a big role in lowering the total cost of EVs. Tax credits, rebates, discounted electricity rates, and other perks offered by federal, state, and local governments or utilities effectively reduce the purchase price. These savings make EVs more affordable and competitive on total ownership costs with gas-powered alternatives.
When calculating total cost, it’s important to use accurate assumptions on factors like annual miles driven, fuel and electricity costs in your area, insurance rates for EVs, and available purchase incentives. Online total cost of ownership calculators from sources like the EPA and Consumer Reports can provide customized estimates.