An electric car finally makes financial sense
By Peter Valdes-Dapena, CNN Business
(CNN)Gas prices that keep going up by the day have got a lot of people thinking about buying an electric vehicle. There is no question that electric vehicles cost much, much less to fuel than gasoline-powered models, especially with gas prices at around almost $5 a gallon on average, according to AAA.
It almost never makes sense to buy a new car just to save money on fuel, however. New cars tend to cost more money than you would save on fuel, but if you’re already in the market for a new car, an electric vehicles could be an excellent option.
“Most of our analysis has shown that, from a financial perspective, if you’re buying a new vehicle, it makes a lot of sense for most people to at least strongly consider an electric vehicle if it fits their lifestyle,” said Chris Harto, a senior policy analyst for Consumer Reports.
For instance, the Environmental Protection Agency estimates it will cost around $2,900 a year for the average American to fuel a 2022 BMW 430i sedan. (The base model 4-series sedan gets 28 miles per gallon in combined city and highway driving, and it uses Premium fuel, which the EPA calculates at a national average of about $5.39 a gallon.) The estimated cost to fuel a 2022 BMW i4 eDrive40, which is basically the same car but powered entirely by electricity, is about $600 for a year. That’s one fifth the cost.
A difference that large assumes gas prices stay as high as they currently are, which we can’t really know. (On other hand, we can’t really assume they won’t either.) These costs also assume a certain rate for electricity, and electricity costs — while generally much lower per mile than gasoline — vary a lot from place to place, and even by time of day. Many electric cars, once they’ve been plugged in, can be set to begin charging only when electricity rates are at their lowest, a bit like if you only fueled up your gasoline car when prices at the pump were at their lowest.
Gas prices and electricity prices both fluctuate, of course, and vary from place to place, but, generally speaking, electric cars are vastly cheaper than gas cars on a cents-per-mile basis. That’s partly due to the fact that electric motors are much more efficient than gasoline engines. More than 85% of the energy that goes through an electric motor is converted into movement. For a a gasoline engine, that figure is around 40%. So even if the electricity and fuel costs were completely equal, an electric car should, in theory, be cheaper to own than a gasoline car.
But, of course, you don’t generally get a huge discount on fuel costs for nothing. The i4 costs about $10,000 more than the base model BMW 4-series with a gas engine, but the electric BMW i4 is also eligible for a $7,500 federal tax credit, reducing the ultimate price difference to just $2,500. And that’s not considering state tax rebates or other incentives electric cars may be eligible for. In some states, with federal and state incentives combined, the electric car could even cost less than the gas-powered one, based on sticker price. Not all electric cars are eligible for those federal tax credits, though. Cars from Tesla and General Motors, for instance, are no longer eligible.
So even with the federal tax incentive alone, going with the electric BMW over the gasoline BMW, you would make up the basic purchase price difference in a little over a year.