(Bloomberg) — Which is cheaper to buy, a gas-powered or electric car? The answer might surprise you.
Whether new or used, gas-powered or purely plug-in, in recent months the Manufacturer’s Suggested Retail Prices (MSRP) on all cars in the United States have caused a serious sticker shock.
In April, the average new-vehicle listing price was over $45,000, according to Cox Automotive, a figure first hit in September (and an all-time high at that time).
Prices reflect low inventories in the United States, caused in large part by continued supply chain disruptions. The total supply of unsold new vehicles available stood at 1.13 million units at the end of April, Cox reported, compared to 1.10 million vehicles in March. This is approximately 800,000 vehicles less than in the same period in 2021; and 2.2 million less than in 2020.
So yes, there are fewer cars of all kinds at U.S. dealerships, driving up the list prices on those vehicles. Still, that doesn’t automatically mean a new electric car will cost you more.
According to a recent report by Energy Innovation Policy and Technology LLC, a climate policy think tank, in many states, across a number of models, electric cars are cheaper to buy than traditional gas-powered cars. . The report focuses on the terms of purchase and financing of electric vehicles, and the monthly cost.
“What is the average consumer looking at? Our research mainly focuses on this question – how people buy cars, how they finance them,” says Robbie Orvis, lead researcher and author of the study. “The day you drive it off the field, you don’t want to spend more on an EV.”
About 85% of car buyers in the United States finance the purchase of vehicles. The key factors for these buyers, the report notes, are “how much they will pay to own and operate a vehicle each month, not necessarily how much a vehicle will save them over its lifetime.”
According to the report’s findings, in most US states, an electric car can be cheaper on a monthly basis than a comparable gas-powered car. Orvis’ analysis looked at: financing costs; state taxes and fees; state and federal tax credits and rebates, in particular the $7,500 federal tax credit; fuel costs; maintenance costs; and insurance costs.
Six EV models were studied, along with related gasoline-powered versions: Volvo XC40 (MSRP $56,395), Nissan Leaf (MSRP $28,425; compared to Nissan Versa), Kia Niro EV EX Premium (MSRP $45,865), the Hyundai Kona Limited (MSRP $43,745). MSRP), the Hyundai Kona SEL (MSRP $35,245) and the Ford F-150 Lightning ($41,669). The goal, says Orvis, was to get a fairly representative group of different size classes; and, as best they could, to “really compare apples to apples”. (The top 5 states with the lowest costs for three of the six models studied are shown on the graph above.)
According to Energy Innovation’s analysis, electric versions of the Kona SEL and F-150 are cheaper to own in every state across the country. “I’m surprised at how economical some vehicles are,” says Orvis. “The fact that two of the models, including the F-150, were cheaper in every state, I didn’t expect to see that.”
Even so, Orvis cautions that “the overall numbers don’t reflect how people pay for their vehicles. When you finance the purchase of a car, it is much more manageable.
Matt Haiken, owner and master dealer of the Prestige Collection Auto Group in northern New Jersey, says EV prices and financing options are even more competitive right now, given supply shortages and declining stocks of traditional gasoline cars. “This makes the delta between electric vehicles and internal combustion engine cars even bigger,” says Haiken. His group is made up of four dealerships (two Volvos, one Lincoln, one Polestar). “Also, there were discounts on cars before that have pretty much disappeared now,” he adds – another factor that makes gas-powered cars more expensive.
This is even more true for sales at Haiken dealerships in New Jersey. “It’s the #1 state in the nation to own an electric vehicle,” says Orvis. The state offers a $5,000 Charge Up New Jersey rebate when you buy or lease the car; In addition, there is no purchase tax on electric vehicles. Then, when combined with other offers and the federal grants and breaks, “these are very good incentives.”
According to research by Orvis, among the worst states for EV purchases, Georgia tops the list, with the highest annual EV tax and no state rebates. And a surprising discovery: California offers many incentives for electric vehicles, but these are offset by the high price of electricity.
Haiken, which says it started buying electric vehicles nationwide in 2016 and 2017 for its dealerships, thinks the United States is near a tipping point. He is convinced that the costs of electric vehicles will start to come down so that cars will be more affordable for a wider range of people.
“It’s different day and night now,” he said. “Everyone comes and asks for electricity. It’s a very diverse group. For those who don’t decide to buy an EV now, they will make a comment like, ‘This is my last ICE [internal combustion engine] vehicle.'”
©2022 Bloomberg LP