Federal Tax Credits for Electric Vehicles End

But long-term savings remain, experts say.

A recently passed bill in Congress eliminates federal tax incentives for electric vehicles, yet experts insist that purchasing them still makes financial sense, especially when considering long-term savings.

Sunset Date Nears

Car buyers have until September 30 to take advantage of existing federal tax credits for EVs. Before this deadline, those buying new electric vehicles could get up to $7,500 in federal tax credits, while people purchasing used EVs could receive as much as $4,000.

Affordability Concerns

These incentives were initially created to help make electric vehicles more affordable. According to recent **Kelley Blue Book** data, new EVs average around $9,000 more than comparable gas-powered cars in the U.S. Used EVs typically cost about $2,000 more than gas-powered counterparts.

Without these credits, **Ingrid Malmgren**, Senior Policy Director at Plug In America, suggests that electric vehicles may become unaffordable for lower- and middle-income households.

“That’s really disappointing because … they’re just a really great way to reduce transportation energy cost burden,” said **Malmgren**.

Long-Term Financial and Environmental Benefits

Although the initial cost might be higher, **Malmgren** suggests that those who can afford to consider the lifetime fuel and maintenance savings will still find EVs to be a sound financial and environmental decision across the country.

Lower Running Costs

Electric vehicles may have a higher initial price, but running costs are typically lower. **Malmgren** notes that even without the tax credits, EV owners can still come out ahead due to savings on fuel and maintenance.

“Quickly you’ll end up paying less than a gas car because it costs much less to fuel, and it needs almost nothing for maintenance,” **Malmgren** stated.

The exact point at which savings outweigh the initial cost varies depending on the vehicle, driving habits, and local fuel and electricity prices, **Malmgren** notes. EVs generally require less maintenance due to fewer moving parts. Online calculators can help determine this point. AAA estimates that the average annual maintenance cost for an EV is about $330 lower than for a gas-powered car (AAA, 2022).

Fuel Savings

A 2020 study in the journal Joule indicated that EV drivers in the U.S. could save approximately $7,700 in fuel costs over 15 years, compared to gasoline cars. Savings can be even higher, exceeding $14,000 in states with affordable electricity when charging at home during off-peak hours. The study didn’t consider purchase price, maintenance costs, or tax credits.

Cleaner Energy

While manufacturing EVs can initially create more pollution than manufacturing gasoline cars, long-term EV usage is considered less polluting.

**Peter Slowik**, U.S. Passenger Vehicles Lead for the International Council on Clean Transportation, says that after about 15,000 miles, the total pollution from manufacturing and driving both types of cars evens out. After that, EVs become cleaner, and by the end of the car’s life, emissions are roughly half those of a gasoline car, according to the U.S. Department of Energy.

“They are a no-brainer,” **Slowik** said. “Electric vehicles are already inherently so much more efficient.”

Reduced Carbon Pollution

A 2023 analysis by Yale Climate Connections found that EVs reduce carbon dioxide pollution, even in regions relying on coal-generated electricity. In West Virginia, one of the most coal-dependent states, EVs still pollute 31% less than gasoline cars, according to the analysis.

**Slowik** explains that EVs are more efficient at converting energy into motion. Popular models like the Tesla Model Y and Model 3 can travel over 100 miles on the energy equivalent of one gallon of gasoline.

“If you compare that to a 25-mpg gasoline vehicle, that’s already four to five times more efficient,” **Slowik** said.