With both Tesla and Ford slashing the prices of their electric vehicles (EVs), many people are wondering if the time is right to make the change. We are too... so we did a little research. What we found is that if you are: a) in the market for a luxury vehicle and, b) have AGI within the federal tax credit limits and, c) are primarily a city driver, the time might be right.
If reducing / eliminating carbon emissions is driving your decision, a full EV is the way to go. Just plan ahead!
The federal tax credit of up to $7500 has been extended through 2032. Not every vehicle, nor every person, qualifies for the tax credit however.
- The credit is phased out if you have adjusted gross income (AGI) above: $150,000 if you file as a single tax payer; $300,000 if you file married filing jointly
- The credit is actually between $2500-$7500 based on battery's capacity
- The price of the car must be less than $55,000 for sedans and $80,000 for SUVs/trucks
- The car must weigh less than 14,000 lbs
- There are requirements of "final assembly in the USA"
- In MA, there is also a state tax incentive of up to $2500
If you want to purchase an EV, you need to either install a charging port at your home (which may cost about $3000 depending on installation costs), or be well aware of charging stations in your local area. As of November, 2022, MA actually has the 5th most charges of all states with about 2600 (usafacts.org). The average 'full charge' is good for about 300 miles. Unfortunately, depending on the charger, a full charge may take anywhere from 45min to 5 hours... If you use a public charging station you need to ensure you will have access to it when necessary.
There are significant gas and maintenance savings on a EV vs. a gasoline powered engine. It costs an average $13.96 to charge a Telsa (news.energysage.com). If you drive 12,000/year that is about 40 full charges/year, or $558. Whereas, it costs an estimated $1680 for the same distance on a gasoline engine that gets 25 miles per gallon with gas at $3.50/gallon. Total savings is approximately $1100. With an EV, there are also no oil changes or other engine maintenance.
Unfortunately the national infrastructure has not caught up with the popularity of EVs. If you plan to take a cross country drive, you will need to map out where the charging stations are and allow plenty of time to charge. This is definitely something to think about.
If you qualify for the tax credits, you may save up to $10,000 on a $55,000 vehicle. $45,000 is still a very high price tag for a car. However, that price is no longer significantly higher than gas powered luxury cars. The inconvenience of finding charging stations may be a trade-off to gas and maintenance savings.
It is difficult to put a price tag on the environmental impact of changing to an EV, but most people agree that less gasoline is better for the environment.
It is an exciting time to ask the question - is it the right time to buy an EV? If you can afford to buy a luxury vehicle, the time might be right. But always keep your budget in mind...don't make a rash decision that may upend your financial goals.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.