Things you need to know about purchasing an electric vehicle after federal tax incentives end

The massive tax and spending reduction bill passed by Congress on Thursday will end federal tax incentives for electric vehicles.

Buyers must qualify for the federal tax credit until September 30th before EVS ends. But experts say there are still strong financial reasons to consider purchasing a vehicle even without those incentives.

Before the bill was passed, the new electric vehicle had a federal tax credit of $7,500 and used EVs with up to $4,000. These incentives were originally designed to help make the vehicle more affordable. According to the latest data from the Kelley Blue Book, the average purchase price for a new EV is about $9,000 more than the average new gas-powered vehicle in the US. The EVs used averaged $2,000 more than comparable gas cars.

These credits are combined with other incentives in many states, and have helped to close that price gap. Without them, Ingrid Malmgren, senior policy director for Plugin America, a nonprofit advocacy group, said it would be affordable for many low- and middle-income Americans.

“That’s a real shame… because they’re a really great way to reduce the burden of transport energy costs,” Malm Glen said.

While the cost of upfront electric vehicles can be high, for those who can afford to consider savings on fuel and maintenance for life, Malmgren said EVs are still a great financial and environmental move in all states.

EVs are usually cheaper to own for the long term

That’s because buying an electric car may not be cheap, but it’s cheaper to drive it. Malmgren said that even without the federal tax credit, electric vehicle owners will still be coming out ahead.

“It costs less than gasoline vehicles right away, so fuel costs are much less and requires little maintenance,” Malm Glen said.

Malmgren said the point where savings on fuel and maintenance EV drivers outweigh the initial price increases will change. It depends on the type of car, how often they are driven, and the cost of gasoline and electricity in your area. She said EV owners pay less for maintenance because they have fewer normal moving parts to maintain their cars and require frequent service. There is an online multi-pool cal crater that identifies the moment based on some of those criteria.

According to a 2020 study by the Academic Journal Joule, the US average EV saves drivers $7,700 in fuel costs over a 15-year lifespan, compared to filling gas in a car when charged with a typical combination of public and private chargers. Savings vary by state. The study found that people charging their cars at home during off-peak hours, which is considered the best scenario, could save more than $14,000 in 15 years in Washington, where electricity is relatively affordable. The study states that state EV drivers who exhibit typical driving and charging behaviors save money on fuel costs. This study did not take into account the car purchase price, maintenance costs, or related tax credits.

EVs are still clean even when charging coal electricity

Typically, manufacturing an electric vehicle produces more pollution than traditional gas-powered ones. However, experts say driving an EV for a long period of time is still less contaminated than a gas car.

Both drive around 15,000 miles (24,000 km) more than the average American drive a year, making the total pollution applied to the manufacture and driving of each type of car, said Peter Srowik, International Council Leader on Clean Transport. Every mile afterwards, the gap between cleaner electric vehicles and more polluting gas vehicles expands. By the end of the lifespan of a car, the emissions caused by the average EV are about half that of the average gas vehicle, according to the US Department of Energy.

So, unless you buy a new car every year, EVs are a cleaner choice, he said.

“They’re easy,” Sloik said. “Electric cars are already much more efficient in nature.”

A 2023 analysis with Yale’s Climate Connection found that even in areas where electricity is used for charging, electric vehicles are responsible for carbon dioxide pollution. Analysis shows that one of the most coal-addicted states, West Virginia, EVs, are still 31% less contaminated than comparable gas-powered vehicles.

Slowik said it was because electric cars are excellent at translating energy forward. For example, the Tesla Model Y and Tesla Model 3, the most popular EVs in the United States, can drive more than 100 miles (161 km) with the energy equivalent to what gasoline offers.

“If you compare it to a 25 mpg gasoline vehicle, it’s already 4-5 times more efficient,” Slowik says.

©2025 Associated Press. Unauthorized reproduction is prohibited. This material will not be published, broadcast, rewritten or redistributed without permission.