Electric vehicles: should you buy this year?
Has pump pain and You’re here (TSLA) Has envy gotten you pumped about electric vehicles?
An electric or hybrid-powered car will surely lower your driving costs per mile and you’ll get some racy tax credits and rebates, right?
In fact, take the slow lane on this decision and do your homework. The benefits of an electric or hybrid vehicle depend on the vehicle you buy, state incentives, your income, the price and markups you’ll pay, and your driving habits.
That Tesla you covet? It doesn’t even qualify for federal electric vehicle tax credits. Neither General Motors’ (GM) Chevrolet EV.
“I don’t think most consumers know that,” said Edmunds consumer advice editor Ronald Montoya. Edmunds is one of the best consumer guides for buying new and used cars.
Additionally, prices and markups – the amount dealers charge above the manufacturer’s suggested retail price (MSRP) – are sky high right now, due to chip shortages, hardware chain issues supply and inflation. Montoya said consumers are paying markups of “$2,000 to $5,000 per EV.”
Electric vehicles: who is on the right track?
Elon Musk carries a target as many automakers try to catch up to his company’s lead. Companies including BMW (BMWYY), Ford (F), Kia (KRW), Nissan (NSANY), hyundai (HYMTF), volkswagen (VWAPY) and others, have brought electric vehicles to market in the United States and elsewhere.
Chinese electric vehicle manufacturers BYD (BYDDF), Li-Auto (LI), Xpeng (XPEV) and Nio (NIO) are expanding rapidly outside the United States
Automakers are investing heavily in electric vehicles. And governments are talking about the transition to cleaner cars.
Many automakers will soon have more new models of electric vehicles ready to roll.
Electric vehicles, however, are not cheap. Consumers paid 14.6% more in May for an electric vehicle than a year ago, according to Kelley Blue Book (KBB), a Cox Automotive company. KBB says the average price of an EV in May was $64,338, down from $56,140 in May 2021, not including consumer incentives applied.
Demand and shortage drive prices up. Thus, dealers can charge these large markups. “Nowadays, the posted price is considered a good price,” Montoya said. And this will probably continue “until 2023”.
Dealers also raise prices with dealer-added accessories. “These can cost thousands of dollars more and are non-negotiable because they are already on the car,” Montoya said.
Fewer cars on the grounds is another frustration. “Dealers have gotten used to making big profits with fewer vehicles,” Montoya said.
Another cost? Car insurance. Some electric and hybrid vehicles can cost more than gas-powered cars to insure. This is due to the more expensive parts that need to be replaced in the event of an accident, Montoya explains.
Tax credit, Rebates
Still want to buy? Be sure to study tax credits and refunds and how they apply.
First, only electric vehicles and plug-in hybrids from manufacturers who have sold fewer than 200,000 electric vehicles are currently eligible for the federal electric vehicle tax credit. Plug-in hybrids can be charged at home or at EV power stations. They use electric power until it runs out, then switch to gasoline engines. Standard hybrids use their gas and electric motors interchangeably, and their batteries charge while you drive.
Standard hybrids “are not eligible for any incentives,” according to Scooter Doll, a writer at Electrek, a website that covers electric mobility.
The federal credit can be up to $7,500, but you only get it when you do your taxes for the year. And that doesn’t apply to the selling price of the car or your payments, Montoya says.
One caveat: if you lease an electric vehicle that qualifies for the federal electric vehicle tax credit, the credit goes to the automaker. Some automakers may give you a discount on your lease because of this, Montoya says.
Also, you only get the portion of this credit that you can apply to your income for the year. So if you’re retired and have little taxable income, you could get a credit well below $7,500. Plus, “if you can’t take it all in, you can’t put it off,” Montoya said.
States are also offering rebates and incentives for electric vehicle purchases. For example, in California, buyers of electric vehicles can receive a rebate of $2,000 to $4,500 or a subsidy of up to $5,000 under the Clean Vehicle Assistance Program in addition to any federal credit received (all rebate and grant amounts are income-based), according to Doll. Some EV buyers can also access priority traffic lanes and prime EV parking, Doll notes.
And if you’ve got your heart set on an EV from a major automaker that’s been in the EV market for a while, now might be the time to shop around. Why? Because their EVs could be on the verge of losing the federal tax credit when they hit the 200,000 EV sales limit.
“The biggest worry is Toyota (TM), which is about to hit the 200,000 threshold,” Doll said.
Maintenance and autonomy anxiety
The primary concern of electric vehicle buyers is often range. But Montoya says distance anxiety can be overdone. “The perception is that you need a ton of range in your car,” he said. But in reality, “most people don’t drive more than 40 or 50 miles a day.”
However, if you’re road tripping in an electric vehicle, it takes a bit more planning to power it up. On a fast charging station, it takes “18 to 30 minutes to reach 80% charge”, specifies Doll.
If you’re considering an electric vehicle or plug-in hybrid, you’ll also want to have a 240-volt outlet in your garage. You may already have one, or you may have needed one installed by an electrician. full charge” on your EV, Doll said.
And keep in mind that plug-in hybrids have short electric ranges — between 30 and 50 miles, Doll says. But their overall autonomy is quite high, since they also have the gasoline engine.
However, with any hybrid car, you will always retain a gasoline engine. With a pure VE, “longevity is increased and the risk of problems is decreased,” Doll said.
With battery-powered vehicles “you’ve removed so many moving components, and none of them require fire, oil, or gasoline to operate,” Doll said. “They’re so streamlined that it’s just easier to drive and maintain them.”
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