Electric Vehicles Remain a Smart Choice Despite Loss of Federal Tax Credits
The recent congressional decision to end federal tax incentives for electric vehicles (EVs) has sparked concern among potential buyers. The $7,500 federal tax credit for new EVs and up to $4,000 for used EVs will expire on September 30, 2025. However, experts argue that EVs still offer significant financial and environmental benefits.
According to Kelley Blue Book, the average purchase price of a new EV is roughly $9,000 higher than the average new gas-powered car in the United States. Used EVs also cost $2,000 more than comparable gas cars. Ingrid Malmgren, Senior Policy Director of Plug In America, notes that the loss of federal tax credits will make EVs less affordable for lower- and middle-income Americans.
“That’s really disappointing because they’re just a really great way to reduce transportation energy cost burden,” Malmgren said.
Despite the higher upfront cost, EVs remain a good financial move in the long term. “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 explained. The point at which EV owners break even depends on factors such as the type of car, driving frequency, and local fuel and electricity costs.
A 2020 study published in the academic journal Joule found that the average EV in the U.S. saves drivers $7,700 in fuel costs over a 15-year lifespan compared to gas-powered cars. In states with affordable electricity, such as Washington, drivers can save over $14,000 during the same period.
EVs are also the cleaner choice, even when charged using coal power. Peter Slowik of the International Council on Clean Transportation explained that while manufacturing EVs generates more pollution than traditional gas-powered cars, this difference is offset after about 15,000 miles of driving. Beyond this point, EVs continue to have a lower environmental impact.
“They are a no-brainer,” Slowik said. “Electric vehicles are already inherently so much more efficient.”
An analysis by Yale Climate Connections found that EVs produce less carbon dioxide pollution even in coal-reliant states like West Virginia. In such areas, EVs still pollute 31% less than equivalent gas-powered cars.
As the EV market continues to evolve, consumers can still benefit financially and environmentally from choosing electric vehicles, despite the end of federal tax credits.
