4 Little-Known Ways an Electric Car Can Save You Money

Electric cars are becoming increasingly popular, but their high price tags are enough to give even some of the most environmentally conscious drivers pause. Add in the cost of financing and auto insurance, and an electric vehicle can feel completely out of reach.

But if you can stomach the initial costs, there are several ways that electric cars can save you money. We'll look at four of them below.

1. Federal tax credits

The federal government is offering a tax credit of up to $7,500 for those who purchase new, qualifying electric vehicles. There's also a tax credit of up to $4,000 for the purchase of used electric vehicles. In 2023, you have to wait until you file your tax return to get this credit. But starting in 2024, you'll be able to deduct it from the purchase price of the vehicle. This could take some of the sting out of that high upfront investment.

Be sure that the electric vehicle you're interested in will qualify for the tax credit before you buy. You can verify a vehicle's eligibility by looking it up on FuelEconomy.gov. Note that the list of qualifying vehicles for 2024 isn't available yet.

2. State tax credits

Currently, 18 states offer tax credits of their own to electric vehicle owners. Some of these are rebates rather than actual tax credits. They vary in amount from $750 to $5,500. 

It's a good idea to check with your state's department of taxation or a local accountant to learn how purchasing an electric vehicle could affect your tax bill. Keep in mind that laws can change over time. Just because a state does or doesn't offer a tax break for electric vehicles now doesn't mean this will be the case in the future.

3. Lower maintenance costs

A comprehensive analysis of electric vehicles versus gas cars by Car and Driver found that electric vehicles have lower maintenance costs than gas-powered vehicles. But it's important to recognize that this was looking at average maintenance costs over a five-year period. 

Electric vehicles may have higher maintenance costs per visit. But they typically need less maintenance than their gas-powered counterparts. 

4. Lower fueling costs

The same Car and Driver study found that, over the long term, the cost of fueling an electric vehicle over a three-year period was cheaper than fueling a gas-powered vehicle over the same time.

Exact savings will depend on where you live and average gas and utility prices. Drivers who charge their vehicles overnight at home may be able to take advantage of off-peak electricity rates to save even more.

Things are changing quickly

Electric vehicles will only become more popular as time goes on, and history tells us that new technology typically becomes more affordable over time. So even if you can't afford an electric vehicle today, there's a good chance you'll be able to buy one, maintain it, and insure it in the future.

But it's also important to note that regulations regarding electric vehicles may change as well, and not always in a favorable way. Some states are now charging electric vehicles higher registration fees or imposing a tax on electric vehicle charging stations to offset lost gas tax revenues. And changing federal tax credit requirements could mean that some electric vehicles now eligible for credits won't be in the future.

So it's important to keep up to date on the latest law changes regarding electric vehicles in your state and the nation. Be sure to weigh these factors in addition to the initial purchase price when deciding whether an electric vehicle is the right move for you.