With rising inflation, high gas prices and increasing food prices, many Americans are looking for more ways to save. Transportation is the second largest household expense (after housing) and according to a new KPMG survey, auto executives say more than half car sales in the U.S. will be for electric vehicles by 2030.
If you’re in the market for a new car, here are five ways making the switch from a gasoline-powered car to an all-electric vehicle (AEV) or a plug-in hybrid electric vehicle (PHEV) to help you save money on daily expenses.
1. Fuel Cost Savings From Electric Vehicles
One of the quickest and most obvious ways you would save money by switching to an electric car is the savings from the cost of fuel. Depending on where you live and how much you drive, gas savings could be as high as $1,000 per year or more. Many EVs are also eligible for tax credits and incentives that can lower their sticker price by up to $7,500 (or more if you buy a hybrid).
Additionally, a 2018 study by the University of Michigan found that electric vehicles actually cost less than half as much to drive compared to gas-powered cars. In the U.S., the average cost to drive an EV is $485 per year compared to the average of $1,117 for a gas-powered vehicle.
Aside from the fuel cost savings, electricity rates are much more stable compared to gasoline prices. In the last decade, the cost of fuel ranged from $1.50 to $4 per gallon. California saw especially high gas prices this past year at more than $5 per gallon in many areas across the state, which was more expensive than anywhere else in the nation. To compare, over the last 10 years, electric car owners paid about $1.20 for electricity to drive the same distance. As a result, having a consistent electricity rate is a more budget-friendly and predictable way to fuel an electric car compared to fueling a gas-powered one.
With the evolution of battery technology and its continued improvements, the cost per mile to drive an electric vehicle is significantly less expensive compared to driving gasoline-based cars. The average electric car can drive roughly 100 miles per 30 kilowatt-hours (kWh) of electricity. Electricity rates vary, but if you can buy 1 kWh of electricity for $0.12, then you could travel nearly 36 miles for $1. To put this into perspective, your average gasoline-powered car with a 22 mile per gallon fuel efficiency will only travel about 18 miles for that same $1. In essence, you can enjoy double the mileage for your dollar by driving an electric car.
2. Plug-in Hybrid EVs are More Efficient Than Gas-Powered Vehicles
While all-electric vehicles don’t use any gasoline, plug-in hybrid cars run on electricity and only use gasoline as an alternative when their battery is depleted. While this does equal costs to both charge the car and refuel it, the combination of electric and gasoline power allows the car to use less fuel compared to gasoline-powered engines while still reaping the benefit of better gas mileage.
Also, when switched from battery power to fuel, PHEVs function more like hybrid vehicles than traditional cars. Plug-in hybrids actually use 30% to 60% less gas compared to traditional gasoline-powered engines. This is because their internal combustion engine charges the car battery while driving, which saves on electricity costs and reduces the need to charge the car for hours.
3. Electric Car Owners Can Get Lower Cost Electricity from Their Utility Company
Powering your car with electricity instead of gas is cheaper and more efficient. Some utility companies, like PG&E, also offer lower prices for charging your EV during off-peak hours (at night, for example, when demand for power is low and prices are cheaper). Programs vary by state and utility company, but can include:
- Reduced time-of-use (TOU) rate options to charge your electric vehicle
- Per kilowatt-hour discounts to charge electric cars
- Reduced rates for EV charging during off-peak hours
Each of these options can result in lower-cost electricity to charge your electric car. These reduced rates and discounts effectively reduce the overall day-to-day costs to charge an EV even more.
4. Fewer Maintenance Requirements and Lower Maintenance Costs for EVs
Electric vehicles have fewer moving parts, so there are fewer systems to maintain, which results in lower maintenance costs. Much of the expensive equipment to maintain, such as transmissions, radiators, exhausts, oil and fuel filters and other gas-specific components aren’t a factor in EV car maintenance. Because of this, the cost to maintain an electric vehicle is lower than gas-powered cars. Additionally, most EVs have regenerative braking, which utilizes the electric motor to handle much of the braking. This helps save the brake pads and rotors in electric cars, which reduces maintenance costs even further.
Even if you chose a plug-in hybrid electric vehicle that has an internal combustion engine, your maintenance costs will still be lower. PHEV engines develop less wear and tear on the engine since they run less often than gas-powered engines and use less oil and coolant.
5. Solar Panels Can Generate Electricity to Power Your Electric Vehicle and Maximize Savings
If you have high-powered solar panels on your roof, you can tap into them for free electricity to charge your electric vehicle. When you charge your EV at home, you won’t draw power from the grid, which saves money and reduces fossil fuel consumption. On top of that, an investment in solar panels for EV charging can pay off faster than using your solar panels for powering your home alone because the solar power effectively replaces more expensive gas in addition to grid electricity.
Solar panel systems for EV charging can also provide a strong return on your investment. These systems can generate returns of 10% to 30% annually and once the initial installation cost is paid off, you can utilize free electricity to power your electric vehicle for the lifetime of your solar panel system.
Furthermore, a solar panel system’s average lifespan is 25 to 30 years. This means you can enjoy a high return on your investment and 25+ years of free electricity generation. Plus, your solar panels will likely last longer than your electric vehicle’s lifetime, so your system can fuel additional EVs for years to come.
Finally, adding a solar power system to your home increases your property value. Studies show homes with solar panels are sold at higher values compared to similar homes in the area without them and they sell faster.
When you purchase an electric car and install solar panels, you create room for even more savings over the lifetimes of the EV and your solar energy system. Not only will you reduce your reliance on fossil fuels for charging, but you can effectively offset your electricity costs by installing solar panels and generating free energy to power your home and electric cars for many years to come.