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Does getting an electric vehicle make financial sense?

Good Question: Does Buying An Electric Vehicle Make Financial Sense?
Good Question: Does Buying An Electric Vehicle Make Financial Sense? 03:20

MINNEAPOLIS -- Gas prices continue to reach record levels. On Friday, the national average teetered on the edge of $5 a gallon. In Minnesota, the state average is $4.74/gallon, which is almost $2 higher than this time last year.

So, does it make financial sense to switch to an EV? Good Question.

"I'm so grateful now to be driving an electric vehicle," said Diana McKeown, owner of a 2019 Nissan Leaf. She says her EV gives her great pick-up, time savings and, after a federal tax credit, more money in her pocket.

Electric vehicles make up about 2% of new car sales in Minnesota. Scott Lambert, President of the Minnesota Auto Dealers Association, says it's too early to tell if gas prices will cause increased demand for EVs in Minnesota, but says he's looking to the end of the summer for more data.

"It's going to vary with what you're driving and what you're switching to," said Moaz Uddin, Electric Vehicle Policy Specialist for Great Plains Institute.

He says studies have shown eight years as an average point where a person would save more with an EV. If gas prices continue at these levels, that number may drop.

"Most people when they talk about an EV want to know about upfront costs, then you want to know about maintenance and the third is fuel costs," said Uddin. "These three are very important when it comes to cost."

The calculations for each individual scenario will differ, but Uddin gave a framework on how to determine the cost implications if considering an EV.

First, to calculate how much the average person spends on gas per year, assume the cost of gas is $4.66/gal, the average gas powered car gets 26mpg and the average American drives 15,000 miles/year. That would be about $2,688/year spent on gas.

Compare that to the power costs of charging with similar numbers and it's $562/year, assuming $0.15/kWh. The average annual cost to charge drops to $150 if someone charges overnight at $0.04/kWh.

Second, maintenance costs are lower with electric vehicles. Savings can range here, but Consumer Reports estimates about 50%. AAA finds the maintenance savings to be slightly less.

Third, the upfront costs of buying an electric vehicle are higher. Again, there is a wide range with this calculation, but Kelley Blue Book estimates the average EV is about $10,000 more than a gas-powered vehicle.

Right now, the federal government offers a $7,500 tax credit for fully electric vehicles. Tesla and General Motors vehicles are exempt because those companies have reached 200,000 in unit sales.

Fourth, people should factor in the cost of charger at their home given 80% of EV charging happens at homes. Chargers can cost between $500 to $1500, in addition to the cost of installation.

Whether a person decides to switch to an electric for financial, environmental or lifestyle reasons, it's not easy to find an EV right now. Like their gas counterparts, there are waiting lists for many models.

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